German fabricators deepen pessimism, launch image campaign
Production at Germany’s steel and metal processing companies fell by 2.9% in the third quarter compared to Q2, according to their association, WSM.
This is the second decline in a row, meaning that the industry is in a recession, WSM states. The previous year’s figures were not reached for the third time in succession, Kallanish learns from the association. In the nine-month period from January through September, production fell by 2.6% year-on-year.
The outlook for Q4 is determined by incoming orders, which were 3.8% below the previous year’s level after nine months. Orders in Q3 were 9.5% lower than in the preceding quarter and companies in the sector are correspondingly pessimistic about their business development.
The share of entrepreneurs who describe their business situation as “good” in WSM’s November poll fell to below 20%. “And business expectations for the next six months are developing even more dramatically,” the federation notes: 49% expect the business situation to deteriorate – 4 percentage points more than in October. Only 6% remain optimistic about their business expectations.
According to Christian Vietmeyer, WSM’s managing director, the current figures are “cause for great concern”, especially as the forecast for the year as a whole had to be revised downwards again to a 3% drop due to the continuing weakness in demand.
Together with 12 other trade associations in the manufacturing industries, WSM has launched a media campaign to raise awareness of the significance of small and medium-sized companies in Germany.
Under the slogan “Wir. Formen. Fortschritt.” (We. Shape. Progress.), the industries address the broader public and, especially, the government. They aim to improve the image of their role in the industrial transformation towards climate-friendly production. In the campaign, they emphasise that they are not part of the problem, but part of the solution, as makers of products and components for renewable energies.
Christian Koehl Germany
ArcelorMittal Zenica halts production amid market conditions
ArcelorMittal’s Bosnia-based Zenica long steelworks has temporarily paused production, due to weak market conditions.
“After carefully considering and evaluating all available options, ArcelorMittal Zenica temporarily idled its blast furnace on 11 November and production is being gradually suspended in other facilities, like the rolling mills, which stopped on 2 November,” a spokesperson tells Kallanish. “The plant intends to resume normal operations as soon as there is a demand recovery at a level that allows the business to operate sustainably.”
The European steel market is currently in a downcycle, with the downturn in EU apparent steel consumption having begun in the second quarter of 2022. This was due to the war in Ukraine, and unprecedented rises in energy prices, production costs and inflation, all amid growing economic uncertainty, the firm adds.
According to the company, demand conditions have significantly worsened in the second half of 2023, and this negative cycle is expected to continue, driven by ongoing economic uncertainty resulting from high inflation.
“ArcelorMittal Zenica started facing business challenges in the middle of last year, due to global trends in the steel and raw materials market. Coking coal prices have increased by 300% since 2021, electricity price has increased by 44% and natural gas price by 80%. Rail transportation cost has also increased by 25% since 2021,” it observes.
“In the same period, the Fe content of the ore in the mines that supply ArcelorMittal Zenica has dropped from 53% to 47%, meaning that more ore has to be purchased for the same steel output,” the enterprise claims. “In addition, sales quotas to the EU market are restricted, due to the safeguard regime imposed by the EU, and we are faced with cheap imports of steel products from Turkey, produced from the electric-arc furnace route using scrap.”
This will also affect the group’s supplies of iron ore, since ArcelorMittal Zenica has stopped the delivery of ore from its Prijedor mines during the production suspension.
ArcelorMittal Zenica is the largest producer of long products in the Balkans with a production capacity of 700,000 tonnes/year. The basic product range includes rebar in bars and coils, wire rod, mesh and lattice girders.
Svetoslav Abrossimov Bulgaria
Decarbonisation demands nuclear; scrap, hydrogen supply lacking: conference
The requirements of decarbonisation may lead to the rebirth of nuclear power to fuel the low-emission steelmaking transition, while hydrogen will not be viable in the short term due to lacking infrastructure. So said participants at a decarbonisation conference last week held at Acciaierie d’Italia’s Taranto steelworks.
In Europe, there are 60 steelmaking decarbonisation projects aiming for completion by 2030, with the potential to cut CO2 emissions by as much as 81.5 million tonnes/year. This is more than a third of current emissions, Eurofer director Adolfo Aiello said at the event followed by Kallanish.
The estimated amount of electricity required for these projects is around 165 terawatt-hours, including 90TWh for the production of green hydrogen from electrolysis. Aiello expects the total investment to hover at €31 billion ($33 billion) and operating expenses at about €54 billion.
The decarbonisation of primary steelmaking has started and will see the first results within 2-3 years. The longer-term achievement goal is 10-20 years, during which various technological issues will have to be resolved including the development of new clean energy sources and green hydrogen.
A first decarbonisation strategy may involve the integration of synthesis gas in the current blast furnace supply chain produced from waste and combined with CO2 carbon capture systems, as well as direct reduction iron plants. The success of the DRI option however relies on the availability of gas and mineral supply.
Considering the limitations connected to intermittency of renewable energy sources, “it seems necessary to ask ourselves whether this growing demand will not lead to the rebirth of nuclear power, with a view to coupling small modular nuclear power plants with steel mills, possibly powered by thorium and not uranium, making them completely independent and decarbonised,” chemical engineering association AIDIC said at the event.
According to the University of Pisa, hydrogen is not a short-term solution for the steel industry due to the lack of related storage transport and distribution infrastructure. Engineering and certification body Rina argued green hydrogen has the potential to replace fossil fuels but requires expensive processes and the revamping of existing steelmaking equipment. “Technologies capable of using hydrogen are already present, for which further parallel R&D, optimisation and training activities will however be necessary,” observed Rina’s Filippo Cirilli.
According to Paul Wurth’s Cristiano Castagnola, the DRI and electric arc furnace systems also present several challenges including the availability of suitable iron ore, the need to offset green hydrogen with green ammonia when the former cannot be produced competitively, and the need for high volumes of scrap and clean energy capacities, which also need to be doubled to achieve Europe’s 2050 decarbonisation objectives.
Acciaierie d’Italia has invested almost €2 billion in the decarbonisation of Taranto. It will focus on energy efficiency and optimisation, CO2 carbon capture and storage technology, the electrification of the hot-end area and DRI plant addition, and low-emission energy plant installation.
Natalia Capra France
Polish rebar, wire rod prices hold steady in quiet conditions
Polish mills kept their offers stable for both products during the assessment period.
Local producers have been trying to achieve higher prices for weeks because their production costs have risen, sources said. But most market participants estimated current levels to be too high.
Thus, no major deals were heard in either the rebar or wire rod market this past week.
Rebar
Polish mills continued offering rebar at 2,800 Polish zloty ($693) per tonne CPT in the week to Friday, which nets back to 2,780 zloty per tonne ex-works, sources told Fastmarkets.
But higher offers nearer to 2,850 zloty per tonne CPT were also heard in the market, which nets back to around 2,820 zloty per tonne ex-works. Fastmarkets did not include this level in its weekly assessment, because most participants did not consider it to be representative of the wider market.
The workable level for Polish domestic rebar varied between 2,730 and 2,750 zloty per tonne CPT, which nets back to 2,710 and 2,730 zloty per tonne ex-works respectively, according to buyer and distributor sources.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, exw Poland was 2,710-2,780 zloty per tonne on Friday, narrowing upward by 10 zloty per tonne from 2,700-2,780 zloty per tonne on November 10.
“Demand for domestic rebar is quite stable now. It is a bit better than last week,” a distributor source told Fastmarkets.
A second source also confirmed that demand had improved slightly, but not as much they had expected.
Demand in Poland remained moderate this week, without significant fresh deals, according to a third market source. The third source added that most market participants were waiting for a large local producer to update their prices next week.
Prices for domestic rebar in the secondary market were heard at 2,760-2,780 zloty per tonne CPT, which was close to the levels from the previous week.
Prices for Polish rebar will remain steady until the end of the year, according to a distributor source, who added that they did not expect any significant price increases or decreases.
Offers of imported material from Germany were heard at around €610 ($662) per tonne CPT.
Offers of imported material from Ukraine were heard at €560 per tonne DAP border.
A strengthening zloty versus the euro also incentivized import business this week, a producer source told Fastmarkets.
For instance, €1 was worth 4.38 zloty on Friday, according to currency exchange website Oanda.com. This compares with €1 to 4.45 zloty on November 1 and €1 to 4.62 zloty on October 1.
Wire rod
Polish mills continued offering wire rod in the range of 2,900-3,100 Polish zloty per tonne CPT this week, sources told Fastmarkets.
But the market remained largely flat, and no major deals were heard.
Workable levels were estimated to be in a range of 2,850-2,900 zloty per tonne CPT, according to sources. Levels higher than this were not accepted by the wider market.
Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,850-2,900 zloty per tonne on Friday, unchanged from November 10.
Offers of imported material from European producers were heard at around €625-630 per tonne CPT.
Offers of imported mesh-grade material from Ukraine were heard at €605 per tonne ex-works. Some small quantities were also traded at this price during the assessment week, sources said.
Published by: Darina Kahramanova
ArcelorMittal Poland idles rod mill, tests electric truck
ArcelorMittal Poland (AMP) has idled the wire rod mill at its Sosnowiec plant from 18-26 November due to the difficult situation in the domestic market, it says.
This follows an “in-depth analysis of all options,” the steelmaker adds. It cites Polish Steel Association figures showing apparent steel consumption in Poland is down 17% on-year.
In other news, AMP carried out the first test at ArcelorMittal Europe of transporting steel to a customer on an electric truck. The vehicle travelled from Silesia to Krakow and back, transporting a total of 200 tonnes of galv. The Volvo FH Electric truck equipped with eight batteries made ten trips in five days and covered a total distance of over 1,000km. This cut CO2 emissions from the firm’s land transport by over 1.5 tonnes.
The ArcelorMittal Group aims to reduce its CO2 emissions by 35% by 2030, with decarbonising product transport being an important component, Kallanish notes.
“We have a long way to go before a possible transition to electric transport; we must remember the challenges we face in the area of energy and infrastructure, but I believe that electricity is the future in short-distance logistics and internal transport, which allows us to make the most of the possibilities of electric vehicles,” says AMP chief executive Wojciech Koszuta.
Deliveries made solely by electric vehicles are still a long way off, with the new solution currently very expensive, while public infrastructure for passenger cars is used to charge trucks, AMP observes. However, this will become a more viable option for industry going forward.
AMP plans to convert its Dabrowa Gornicza blast furnace steelworks into an electric arc furnace operation in future. The firm saw crude steel production fall 15% on-year in 2022 to 3.4 million tonnes, thereby dropping below 2020-pandemic output of 3.9mt.
Adam Smith Poland
China stimulus firms 2024 steel outlook: Cargill
Steel supply and demand is in balance towards the end of the year, with global EAF-based production having been curtailed as Chinese exports increased this year, while expectations for Chinese stimulus are firming sentiment into 2024, according to Cargill Metals managing director Lee Kirk.
Over 100 million tonnes fewer of scrap were consumed this year globally excluding China, but with no resulting downward pressure on scrap prices. This has prevented EAF mills from increasing their margins and ramping up steel production. China has meanwhile exported 19 million tonnes of steel more on-year so far in 2023, with the year expected to end at 25mt up on-year.
The Chinese market is “starting to get excited about 2024,” Kirk said during last week’s Capital Markets Update hosted by Cargill partner and iron ore miner Rana Gruber. “Sentiment is starting to shift. What we haven’t yet seen is a real increase in demand. We are in a situation where iron ore prices are starting to improve to the kind of highs we’ve seen in the last 24 months but largely because of expectations.”
“If we get a continuation of the stimulus rhetoric that turns into a real demand increase and we come out of Chinese New Year with stronger demand, then I think we have a very positive outlook for next year,” Kirk added during his presentation monitored by Kallanish.
The risks to this outlook are two-fold. The words around stimulus may not really turn into real demand, and the US may end up with some form of recession, he continued.
As for future low-emission steelmaking, although there is still uncertainty over the cost of producing hydrogen, the cost of coal-based production will simultaneously increase due to carbon taxes and reduced coal production. On the other side, green premiums are being established to account for the delta in steel, said Cargill customer and sustainability lead Leon Davies.
“We’ve seen, anecdotally, green steel traded, which is not green steel of the future but mass balanced green steel where steelmakers lower their overall carbon footprint by, say, 5% and then sell 5% of their steel as mass-balanced green steel … You’ve seen this trading in the market at around €150/tonne [premium] but with limited liquidity and transparency. But you’re also seeing clear established green premiums in some of the new green steel projects for the future as well. So, you’re getting both a cost impact on traditional steelmaking and a green premium for low-carbon steelmaking of the future.”
Adam Smith Poland
Italian re-rollers push for higher plate prices on expected slab costs rise
Italian re-rollers have been aiming for higher prices for heavy plate and achieved some increase in transactions in the week to Nov. 17 due to rising production costs.
Demand in the meantime has decreased as distributors had already booked required volumes earlier this month.
“Expected slab price rise is the main reason the re-rollers have had to push for higher plate prices,” an Italian re-roller said.
Offers of slab from Asia were heard at $620/mt CIF Italy and buyers’ price indications were at $600/mt CIF Italy.
Platts assessed prices for imported slab in South Europe up $10/mt on the week at $610/mt CIF Italy Nov. 17.
European re-rollers were expected to settle the next round of the semi-finished product purchases by the end of November.
Offers of heavy plate were reported at Eur730-750/mt ex-works Italy and the latest transactions in the domestic market were at Eur730/mt ex-works Italy. Although the mills were still able to give discounts selling to other European countries.
Platts assessed domestic prices for heavy plate in South Europe up Eur5/mt on the week at Eur730/mt ex-works Italy Nov. 17.
In Northwest Europe, German mills have been focused on deliveries under long-term and project contracts, and their presence in the spot market has been limited.
Platts assessed domestic prices for heavy plate in Northwest Europe up Eur10/mt on the week at Eur800/mt ex-works Ruhr Nov. 17.
Both tradable values and the lower end of offers were reported at Eur800/mt ex-works Ruhr.
Platts is part of S&P Global Commodity Insights.
Author: Maria Tanatar
Restocking drives Northwest European HRC prices higher on day
Northwest European domestic hot-rolled coil prices moved up on Nov. 17, driven by distributors’ need to replenish stocks.
The real demand, however, remained limited, and market participants had largely bearish outlook for steel consumption for 2024.
“Currently distributors are restocking, but the volumes are limited due to negative outlook for real demand in the first and second quarter of 2024,” a service center source said.
Meanwhile, another service center source said mills were in position to push for higher prices.
“Many buyers want to book as they had been avoiding booking for a long time, some for too long and now they have to pay higher prices as otherwise they would end up with empty stocks,” the second service center source added.
The majority of deals were concluded at Eur660-680/mt ex-works Ruhr, with some larger volumes booked at Eur630-640/mt ex-works Ruhr.
Platts assessed the price of domestic hot-rolled coil prices in Northwest Europe up Eur10 on the day at Eur665/mt ex-works Ruhr on Nov. 17.
“There are some flagship deals done for smaller volumes and higher prices and mills use them as a reason to push prices up,” a mill source said.
A couple of market sources said that steelmakers were preparing to further increase offers targeting prices above Eur700/mt ex-works Ruhr for the first quarter delivery.
Mills have also been pushing spot prices up to have more leverage in long-term contracts negotiations for 2024, sources said.
Platts assessed domestic prices for hot-rolled coil in South Europe down by Eur5 on the day at Eur645/mt ex-works Italy on Nov. 17, reflecting tradable values reported at Eur640-650/mt ex-works Italy.
Europe-based buyers have been showing limited interest in HRC originating from Far East due to longer lead times, as the material ordered now would be custom cleared in the second quarter of 2024 in order to fit into quotas for other countries.
Some deals, however, have been settled for the material from Turkey and India due to shorter lead times and country-specific safeguard quotas, which were not filled for January-March 2024.
In Southern Europe, deals for HRC from Turkey were heard at Eur630/mt CIF Italy, including anti-dumping duties. Deals for HRC coming from India were also heard at the same price level.
Platts assessed the import price of hot-rolled coil in South Europe up Eur10 on the day at Eur630/mt CIF Italy on Nov. 17.
Authors: Maria Tanatar, Rituparna Nath
Southern European long steel market remains subdued, prices broadly stable
Mills looked to increase offer prices in early November, but these price rises have not been accepted by the market.
Participants remained uncertain of the price trend for the remainder of the year.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €600-620 ($652-673) per tonne on Wednesday, stable from November 8.
Slow demand resulted in thin trading in the Italian rebar market, sources told Fastmarkets.
Most sources expect small price rises in the coming weeks, given high feedstock costs and production cuts.
Workable prices were reported by buyers at around €600-610 per tonne ex-works, while offer prices were closer to €620 per tonne ex-works.
“The price in Italy now is stable at around €610 per tonne for rebar. The forecast for next week is probably €620 per tonne ex-works. The market is still flat but costs, like scrap and electricity, are increasing,” a buyer source said.
“Demand is low these days and customers don’t believe in price rises. Mills will look to raise prices to €620-630 per tonne ex-works before the Christmas holidays, but whether these offer prices will be realized remains to be seen,” a trader source said.
“The price of the steel is stable and market conditions are stable at the moment,” a second buyer source said.
At the same time, Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain was €590-615 per tonne, also unchanged week on week.
Southern European wire rod
Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Southern Europe was €575-585 per tonne on Wednesday, down by €10-15 per tonne from €585-600 per tonne on November 8.
Prices dipped in the wire rod market.
Sources, however, forecast that prices rises are on the horizon given production cuts and the scarcity of import offers, Fastmarkets heard.
Published by: India-Inés Levy
Weak consumption from construction sector in Northern Europe drags down rebar prices
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €605-630 ($605-684) per tonne on Wednesday down by €5 per tonne from €610-630 week-on-week.
Demand remained slow in the Northern European rebar market.
An ongoing bearish outlook and weak demand resulted in minimal volumes being reported, Fastmarkets heard.
Despite depressed market conditions, high input costs like gas and energy and production cuts resulted in prices remaining unchanged.
Meanwhile, the corresponding Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was €600-610 per tonne stable week on week.
Sources reported weak demand, high logistical costs, and an overall bearish outlook.
Published by: India-Inés Levy