EU HRC buyers limit purchases as concerns grow about capacity restarts
Real demand remained poor with prices supported by production cuts implemented across the EU in the second half of 2023.
Several mills, including ArcelorMittal’s Bremen and Salzgitter in Germany, and Tata Steel’s in the Netherlands, halted their operations because of low demand.
“The price rise was driven by [an] artificial shortage and not by real demand,” a service center source in Germany said. “And the situation will not change next year.”
As some of those steelmakers plan to restart their idled blast furnaces, buyers grew uncertain about demand being strong enough to absorb additional volumes and to support prices.
A source reported deals at Eur670-680/mt ex-works Ruhr. The information was not widely confirmed in the market and sources estimated tradable values at Eur680-710/mt EXW Ruhr.
Steelmakers, in the meantime, have been offering at Eur720-730/mt EXW Ruhr.
Platts assessed the price of domestic HRC in Northwest Europe down Eur10 on the day at Eur680/mt EXW Ruhr Dec. 5.
Mills remained bullish as they had no volumes left to offer for January shipment and a lack of competitive imports also supported the sentiment.
Asian exporters redirected export tonnages to the US because of higher domestic prices in the country, keeping the number of offers in the EU low. Additionally, longer lead times deterred the majority of European buyers from considering imports.
Import offers were reported at Eur630-640/mt CIF Antwerp for February shipment.
Platts assessed the price of imported coil in NWE stable at Eur640/mt CIF Antwerp.
In southern Europe, offers for domestic HRC were reported at Eur680-720/mt delivered Italy, with deals heard at Eur670-680/mt delivered Italy.
Platts assessed the price of domestic HRC in southern Europe down Eur10 on the day at Eur665/mt EXW Italy Dec. 5.
Author Rituparna Nath, Maria Tanatar
Environmental groups lobby US to reach clean metals deal with EU
Several US environmental groups sent a letter Dec. 5 to President Joe Biden and US Trade Representative Katherine Tai urging the US to expedite negotiations with the EU on the Global Arrangement on Sustainable Steel and Aluminum after the governments missed an October deadline.
“We strongly support the United States and the European Union coming to an agreement that would incentivize countries to lower the carbon intensity of steel and aluminum production,” the groups said in the letter. “We are deeply concerned by recent reports that talks on GASSA are stalled.”
“As groups committed to industrial decarbonization, we call on you to ensure that GASSA reflects strong climate objectives that tie market access to the carbon intensity of goods,” they added.
The letter was penned by nine groups including the liberal think tank the Center for American Progress and environmental groups the National Wildlife Federation, Natural Resources Defense Council and the Sierra Club. The groups proposed that a framework should be finalized by the end of the year with a timeline for implementation produced next year.
“A strong GASSA is necessary to reduce global emissions and ensure a level playing field where a commitment to climate does not result in a competitive disadvantage in the global market,” the environmental groups said. “An agreement to tie market access to the carbon intensity of goods should be attainable in 2023, as both non-market excess capacity and climate were included repeatedly in the political mandate from the highest levels, and Europe has already been leading on integration of trade and climate.”
The US and EU reached a deal in October 2021 in which the US would replace its steel and aluminum tariffs on imports from EU countries with a tariff-quota system, with the EU also removing retaliatory tariffs it imposed on other products.
As part of the deal, the two governments agreed to pursue a partnership addressing global overcapacity and emissions in the steel and aluminum industry with an expectation that a framework could be finalized by October 2023. The sides failed to reach an agreement at a recent summit meeting.
The import tariffs of 25% on steel and 10% on aluminum on most countries were introduced by former President Donald Trump in March 2018 using a national security justification under Section 232 of the Trade Expansion Act of 1962. Many countries have since been given exemptions or have had the tariffs replaced by tariff-quota arrangements.
Details of potential deal
A potential deal between the US and EU involving sustainable steel and aluminum could see the two governments impose tariffs or bans on metal imports into their respective nations based on the carbon intensity profile of the shipments. However, such an arrangement would also seek to protect the respective steel and aluminum industries of the US and EU.
“While more details are needed to assess the specific merits of these approaches, both would set a watershed precedent that market access in the 21st century should be conditioned on decarbonization — which could be replicated in other industries and with other trading partners as well,” the environmental groups said in the letter.
The groups also suggested that the US pursue similar deals with Canada, Australia and other countries while the talks progress with the EU.
Representatives for the White House and USTR’s office were not immediately available for comment Dec. 5.
Author Nick Lazzaro
European HRC prices trend up on higher offers; trading remains subdued
In Northern Europe, producers were targeting prices around €720-730 ($783-794) per tonne ex-works for February-delivery HRC, sources said.
But two buyer sources said that some mills are ready to give a discount and offer at €700 per tonne ex-works, “but not below.”
“Mills are feeling no pressure, no rush; they have good order books and wait for customers to accept new offers. There are not many alternative in the market,” a steel service center told Fastmarkets.
Buyers’ estimations of tradeable levels were heard at €670-680 per tonne ex-works in the region.
“Only low-tonnage deals we hear of recently. [We have] realized that prices will increase from domestic and import coil suppliers, but the ‘rush’ is still not there,” a steel-service center said.
“End-user demand is not there. Yes, some volumes are present, but by far not that level which is needed and expected,” he added.
Nevertheless, most sources agreed that HRC prices in the region were likely to climb higher before the end of the year, with output cuts and a lack of import options supporting the trend.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €676.67 ($736.14) per tonne on Monday, up by €5.79 per tonne from €670.88 per tonne the previous day.
The index was up by €6.79 per tonne week on week and by €46.25 per tonne month on month.
Meanwhile, Fastmarkets calculated its daily steel HRC index, domestic, exw Italy at €670 per tonne on Monday, up by €10 per tonne from the previous calculation at €660 per tonne on Friday December 1.
The Italy index was up by €10 per tonne week on week and by €55 per tonne month on month.
February-delivery HRC was offered in the nation at €720 per tonne delivered (around €700-705 per tonne ex-works).
The new price levels have yet to be confirmed in deals, sources said, with buyer estimates of achievable prices not exceeding €700 per tonne delivered (around €680-685 per tonne ex-works). But that price level also has not been achieved in deals yet, source said.
Meanwhile, January-delivery HRC was traded at roughly €680 per tonne delivered (around €660-665 per tonne ex-works).
Sources expected HRC prices in the nation to keep climbing slowly, supported by reduced supply rather than improved demand.
“Slow consumption is a major point of concern for the market. Plus, in the secondary market, prices are rising very slowly,” a distributor in the nation said.
In the secondary market, prices for hot-rolled sheet continued to be reported at around €750 per tonne CPT, largely flat week on week.
Meanwhile, import HRC offers were also trending higher. The uptrend, coupled with long lead times, was limiting buying interest for import coil in the European Union.
HRC offers from Vietnam, South Korea and Japan were heard at around €630-650 per tonne CFR for February shipment, sources told Fastmarkets.
Offers from India, also for February shipment, were reported at €640-650 per tonne CFR.
And Turkish mills were offering January-shipment coil at 670-680 per tonne CFR, including anti-dumping duties.
Published by: Julia Bolotova
ArcelorMittal to close Krakow pipe mill
ArcelorMittal Tubular Products plans to cease production at its Krakow welded pipe mill by end-March 2024 due to the weak market situation and negative economic outlook, Kallanish notes.
The firm is in talks with trade unions to find solutions for the workers affected by the closure of the plant, which produces up to 250,000 tonnes/year of pipe.
Earlier this month, ArcelorMittal Poland (AMP) said it will idle its Krakow coke plant due mainly to weak demand, but also the narrowed differential between coke and coking coal prices (see Kallanish passim). This comes after the firm idled its Sosnowiec wire rod mill from 18-26 November, also amid weak demand.
In 2020, AMP closed its Krakow hot-end for good after idling it in late 2019 on account of reduced demand and a large volume of imports into the EU. The Krakow plant has since been sourcing slab feedstock from AMP’s flagship Dabrowa Gornicza steelworks to continue hot and cold rolled coil production.
Adam Smith Poland
ArcelorMittal appoints new German coil mills’ chief
Thomas Bünger will succeed Reiner Blaschek as chief executive of the ArcelorMittal Bremen and Eisenhüttenstadt plants on 1 February 2024, Kallanish learns from the group.
He will be responsible for the Germany cluster at ArcelorMittal Europe – Flat Products, following Blaschek’s appointment as ceo for the entire European flat steel business (see Kallanish passim). Blaschek will also take over the role of chairman of the management board of ArcelorMittal Germany Holding at a later date.
Bünger was most recently ceo of London-based tin mining development company First Tin. Prior to this, he held several important positions at Aurubis in Hamburg, where he was responsible for operations and technology. Bünger studied at the Mining Institute in St. Petersburg, Russia, and at the Institute for Non-Ferrous Metallurgy and High-Purity Materials at the TU Bergakademie Freiberg.
Christian Koehl Germany
European HRC producers continue pushing up prices
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €670.88 ($733.18) per tonne on Friday, down by €1.62 per tonne from €672.50 per tonne the previous day.
The index was up by €4.21 per tonne week on week and by €48.38 per tonne month on month.
Integrated steelmakers in Europe raised HRC offers to €700-720 per tonne ex-works for February delivery, sources said.
Buyer sources estimated tradable levels at €660-680 per tonne ex-works for HRC in the region. This is in line with transactions for January-delivery material.
Despite cautious buying, most sources agreed that there was still room for price rises in the region due to reduced supply.
“In the new round of sales, we see [HRC] prices climbing to €700 [per tonne ex-works], but I’m not sure about higher values; prices for processed HRC downstream are not really rising,” a trading source told Fastmarkets.
“[The] market feels insecure [because] idled furnaces and rolling lines will come back in to production in the first quarter [of 2024] some people say,” a distributor in the Benelux area said.
“Therefore [there are] no speculations; buyers only send in contracts for what they need and to cover January’s demand. The fact is that contracts these days are booked at levels of €660-680 [per tonne ex-works],” a steel service center source in the region said.
Fastmarkets calculated its daily steel HRC index, domestic, exw Italy at €660 per tonne on Friday, stable day on day.
The Italy index was up by €1.12 per tonne week on week and by €56.25 per tonne month on month.
Trading in Italy has slowed following the price increase announcement from local mills at the end of November.
New offers for February delivery were heard at €700-720 per tonne delivered, but no trades have been reported at that level.
This compares with offers and transactions for January-delivery coil in the nation at €680 per tonne delivered (€660-665 per tonne ex-works).
In the secondary market, prices for HR sheet continued to be reported at €750 per tonne CPT, largely flat week on week.
“It is still hard to consolidate higher prices for HR sheet downstream, so new HRC price increases are unrealistic,” an Italian trader said.
HRC offers from Vietnam, South Korea and Japan were at €620-650 per tonne CFR for February shipments, sources told Fastmarkets.
Offers of January-shipment HRC from Turkey were heard at €670-680 per tonne CFR, including anti-dumping duties.
Published by: Julia Bolotova
Eurofer decries EU delay on Russian steel sanctions
Prolonged delays in enforcing EU sanctions on Russian steel semis contributes to unfair competition and would serve to empower President Vladimir Putin’s military actions in Ukraine, the European Steel Association (Eurofer) said on Friday.
Eurofer urges the EU Council to reject exemption requests from some member states aiming to protect the interests of a few steel rerollers profiting from Russian steel imports. The association emphasizes that the import of cheap Russian steel contributes to Russia’s military capabilities and conflicts with the objectives of EU sanctions, Kallanish notes.
Any additional exemptions for Russian steel imports must be firmly rejected by EU member states, as weakening the existing sanctions against Russia would be not only counterproductive but also a significant historical mistake, accoring to Axel Eggert, director general of Eurofer.
“The opportunistic interest of a handful of steel processing enterprises in the EU is undermining the overall objective of EU sanctions against Russia, where steel plays a strategic role not only in the overall Russian economy but directly in the Russian military machine engaged in the unlawful war against Ukraine. The EU member states should not perpetuate such a perverse system by approving another exemption, having already accepted a two-year delay in banning the import of Russian semifinished steel products into the EU,” Eggert said.
Failure to enforce steel sanctions against Russian semifinished steel leads to unfair competition and creates an imbalanced landscape within the EU’s domestic steel market, Eurofer contends.
The European integrated steel industry, performing its complete production process within Europe, is dedicated to optimising industrial, economic, environmental and social value creation within the EU. This stands in contrast to certain European rerollers who rely on leveraging cost benefits obtained from low-cost imports sourced from Russia. Additionally, integrated steel producers in the EU have swiftly complied with EU sanctions by halting the import of Russian coal.
The import quota for Russian slab, allowed by the EU’s eight sanctions package and totalling 3.74 million tonnes, is to expire in October 2024. Russian billet was assigned a quota of 85,260t in October-December 2023 and 48,720t in January-March 2024. Additionally, steel products processed in third countries using steel originating from Russia are not permitted in Europe as of 30 September 2023.
At the same time, EU importers did not exhaust the first-year quota for Russia-origin slab imports permitted by the bloc’s eighth sanctions package effective October 2022. EU imports of this product reached 2.89mt between October 2022 and September 2023, versus the quota of 3.748mt.
The EU’s 12th sanctions package against Russia is under discussion and may propose new restrictions on Russian pig iron, copper wire, aluminium wire, foil, tube and pipe, alongside other commodities, according to reports.
The Czech Republic is advocating for an extended exemption period for importing steel from Russian steelmaker NLMK.
Elina Virchenko UAE
Thyssenkrupp reassigns responsibilities of executive board
Thyssenkrupp AG will add Volkmar Dinstuhl, Ilse Henne and Jens Schulte as new members of the executive board, Kallanish hears from the company.
Jens Schulte, currently cfo of Schott AG, will succeed Klaus Keysberg as cfo of thyssenkrupp AG. Keysberg’s wish to leave the company at the end of his current contract was announced in early September. The change in office is expected to take place in spring.
Volkmar Dinstuhl, most recently ceo of thyssenkrupp Multi Tracks and responsible for M&A projects, and Ilse Henne, board member at tk Materials Services, will join the board of tk AG effective 1 January. In addition to the cross-divisional functions of strategy, human resources and finance, their appointments will result in a new focus of the board on operational management concentrating on performance and portfolio development.
The new schedule of responsibilities assigns the business segments to the following members from January 2024: Automotive Technology to Volkmar Dinstuhl, Decarbon Technologies and Steel Europe to Miguel López, Marine Systems to Oliver Burkhard and Materials Services to Ilse Henne.
Christian Koehl Germany
CBAM implementation confuses traders
The introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) from 1 October has been a model case “of how not to do it,” says Alexander M. Julius of trading company Macrometal.
Speaking at the opening presentation of EUROMETAL’s Steel Trade Day in Düsseldorf, Julius recalled that “as of 1 October, customs did not have the system ready and could not tell what they needed from us … and we did not really get help from Brussels either,” Kallanish heard him say at the event. He pointed at Germany as “the best example for the mess,” as Berlin has not yet decided which departments are actually in charge of CBAM.
Another speaker that day, Simon Göss of Berlin-based company Carboneer, tried to give a fuller picture of the CBAM and how it works but could not answer all questions. An example from Julius: “If you work with more than one agent in the port of entry, will you need to have more than one declarant?”
On the positive side, he told of meetings with mills in the Middle East, where he “was amazed how well-prepared they were, about their efforts to measure emissions in detail.” And he expressed optimism that the mills with keen interest in the European market will be doing their homework in this regard.
But still, it means a lot of extra work on the receiving end for the trader. “It is a nightmare,” said Maruan El Daghma at the closing panel session. “But we will have to do the work and see our customers through it.”
Christian Koehl Germany
EUROMETAL brought together Steel Traders in Düsseldorf
EUROMETAL brought together Steel Traders, Steel Stockholding Distributors and Steel Service Centers in Düsseldorf.
This event allowed participants to interact on topics of relevance to European Steel Distribution, such as the CBAM, EU Steel Safeguards and other trade defense measures, the Economic Outlook for Europe, potential discontinuities in Steel Supply Chains, the EU-US Global Arrangement on Steel and Aluminum and the world steel excess capacity.
The event had participants such as Prof. Roland Döhrn from the University Duisburg-Essen, Dr. Benedikt Zeumer from McKinsey & Company, Xiaoyi Tang from Dentons Europe LLP, Luciano Giua from OECD ( Matthew Watkins from CRU, Stanislav Zinchenko from GMK Center, Simon Göß from carboneer and Alexander Siryk from Metal Consulting International.
The event ended with a panel discussion on Challenges, Threats and Chances for Steel Trading moderated by Colin Richardson from Argus Media and the panelists Alexander Julius – Macrometal, Julian Verden – Stemcor, Tayfun İşeri – Yisad / Çolakoğlu, Jose F. Gasca – AMSCI / Metrading and Maruan El Daghma – Primex Steel Trading.
The EUROMETAL Steel Trade Day Düsseldorf was attended by 90 participants.