Italian longs demand continues to drag
Although reduced, in line with all long products, Italian demand for sections has remained reliable in October and November so far. Prices have been dragged down on-month, however, by cheaper imports and the general negative sentiment pervading the distribution sector.
Distributors and agents say they managed to achieve acceptable results in October and this month, thanks to beam sales, with purchases continuing for small but frequent volumes. The product continues to enjoy a balance between supply and demand thanks to the numerous production slowdowns over recent months. Sales are seen slowing towards the second half of November, in view of the slower seasonal period in December.
Distribution activity is stagnating. One company reports reaching its targets thanks to beams and other higher value-added products sales last month, but order intake for December-delivery is now slowing. An agent agrees on the good order intake for beams in October. The fist category of beams is hovering at €785/tonne ($852) delivered on average, Kallanish notes.
Meanwhile, prices seem to have reached rock bottom for merchant bar. Values remain stable on-week at €690-710/t ex-works including extras, Italian sources suggest.
Natalia Capra France
EU proposes Russia pig iron sanctions: reports
The draft of the EU’s 12th package of Russia sanctions proposes import restrictions on Russian pig iron alongside other commodities, according to reports from Bloomberg, Politico as well as Russian media.
European Commission spokesperson Daniel Ferrie confirmed to Kallanish the Joint Proposals from the Commission and the High Representative as part of the proposed 12th sanctions package have been adopted by the Commission. However, the Commission did not comment on the inclusion of pig iron in the new sanctions package.
Commission President von der Leyen recently stated that the upcoming package will introduce new import and export bans, efforts to strengthen the oil price cap, and stringent measures targeting third-country companies that attempt to bypass the sanctions. Furthermore, the package intends to diminish the remaining revenue that Russia earns from exporting diamonds to Europe and associated partners.
It is now for Member States to adopt the package, including proposals from the High Representative, by unanimity, Ferrie added.
According to reports, the proposals also include restrictions on copper wire, aluminium wire, foil, tube, pipe, and liquefied propane.
The Commission has also introduced a proposal to prohibit the export of machine tools and machinery parts to Russia, intended for the production of weapons targeting Ukraine. Additionally, the EU aims to extend its list of restricted goods related to Russia’s military efforts against Ukraine, encompassing chemicals, lithium batteries, thermostats, motors, and servomotors used in drone technology, according to reports.
The proposed measures, if approved, would also expand the list of restricted entities to include over 30 companies. This list would comprise firms from various regions, including Kazakhstan, Uzbekistan, Singapore, and several Russian machine-building companies.
Elina Virchenko UAE
Korf-Kallanish podcast debates vastly complex decarbonisation challenges
Decarbonising steelmaking requires vast joined-up thinking, the likes of which has not happened in the last 100 years, while Europe urgently needs to fix its energy supply if it wants to decarbonise its steel industry. European mills are also ignoring thin slab casting at their peril. These were some of the conclusions by the hosts of the Green Steel Challenge Podcast produced by the Willy Korf Foundation in partnership with Kallanish Commodities.
Astrid Korf-Wolman, founder and chair of the Willy Korf Foundation, said of the podcast in a roundtable discussion on Tuesday: “We want to use the foundation as an independent platform to promote discussion around the production of green steel … We want to increase awareness about the importance of steel in daily life … and we want to get young people back into the industry.”
Consultant and foundation director Mike Walsh said the podcast is aptly named, since decarbonising steel is a major challenge, much more complicated than simply replacing blast furnaces with electric arc furnaces. While the US converted its steel industry wholesale, “Europe is converting legacy plants asset by asset,” Walsh observed. “If Europe wants to make steel … if it wants to decarbonise its steel production then it really has to sort out its energy supply.”
The steel industry will look vastly different in a decade’s time. DRI-making in Europe is unlikely to feature. Metallics are more likely to be imported from regions such as Australia and the Middle East, which have renewable energy supply and availability of raw materials, Walsh added. Although over 30 million tonnes/year of DRI capacity are planned in Europe, there is scepticism over whether this will materialise, given the need for competitive natural gas and green hydrogen supply.
On the question of hydrogen availability, “until the technology is sorted out, until we’ve built the renewables infrastructure to generate the power, there’s not going to be enough hydrogen”, stressed consultant James Moss. A host of European mills are going “gung-ho” with hydrogen-based steelmaking investments, despite all saying there probably will not be enough hydrogen, Walsh added.
The European industry is “surprisingly” confident over rapid technological developments being able to resolve the issues of insufficient renewables and hydrogen supply, Walsh said. Nuclear power expansion will also play an indispensable role in decarbonising steelmaking, Moss pointed out.
The conservatism of the big European producers means none of the low-emission steelmaking investments announced include a thin slab caster, meaning they will struggle to make the high-quality strip US mills can produce, said Walsh.
As for the concerns over EAF steel quality for high-end applications, in the US, “a lot has been learned about how to control the process, computer power is much more sophisticated to control the process. So thin slab casters have become extremely good at making 95% of sheet qualities – exposed automotive grade may be beyond their reach now, but given the technical ground they’ve covered in the last 30 years, there’s no reason why that shouldn’t be possible going forward,” Moss said.
As decarbonisation progresses, the remaining 5% of the market “will be a little bit more forgiving and will accept steel that might not normally have been accepted”, Walsh added.
On getting youngsters excited in a steel industry career, Korf-Wolman concluded: “We want to bring this podcast to business schools, to young people who are at the crossroads in their career, so they see it’s actually an attractive industry to get into … They can play a big part in saving the planet and put their own [stamp] on it.”
The full roundtable discussion video will soon be available on the Kallanish website. The Green Steel Challenge Podcast features discussions with a host of top steel industry executives about decarbonising steelmaking. The first episode is scheduled for release in December.
Adam Smith Poland
EU processed coil premiums fail to cover costs
The premiums fetched for cold rolled and hot-dip galvanized coil over hot rolled coil by no means reflect the extra costs involved in the required processing, according to an EU mill representative.
The customary premium that has been valid for years is €80/tonne for CRC and €100/t for HDG ($87/$108).
This varies by mill and other parameters, and some players even apply the same premium for CRC and HDG.
In the current market climate, these premiums are still used nominally. In the case of CRC, some argue that the gulf has shrunk to around €50/t, as it is the product suffering most from low demand and cheap import offers.
However, as part of a functional pricing structure in a healthy market environment, the premiums would have to be much higher to reflect the increased costs of processing, Kallanish is told by a mill manager.
“Production costs for galvanized have risen stronger than for HRC over the last 2-3 years, mainly because of the higher energy prices,” he says. In addition, many galvanizing plants are located away from the steelmaking mill, thus being unable to benefit from the on-site power production, and have to buy their power on the open market, he argues.
He assesses the real premiums over HRC currently at €150/t for HDG and €130/t for CRC. “Making CRC does not pay off for any steelmaker now: we are better off selling pickled HRC instead,” the manager says. Pickling normally fetches €10-20 over the plain base price, “but these days we do not add it”, he adds.
Imports are hurting domestic European CRC production as they are now taking 35% of the EU market, according to the manager. For HDG, the share is 28%. However, imported HDG is rarely qualified for use by EU carmakers, and so goes mostly to other industries. “And of the other industries, imports now take as much as 50%,” he concludes.
Christian Koehl Germany
French rebar ticks up in stagnant market
French rebar deal values are ticking up by €10/tonne ($10.7) on-week. However, demand remains stagnant and the distribution sector does not foresee any changes in consumption or prices until the end of the first quarter of next year, Kallanish learns from market sources.
Sentiment remains negative. Despite having low stocks, distributors are refusing to commit to higher volumes. While the public construction sector is somewhat supporting the market, the private residential segment is suffering due to lower sales, high production costs and high interest rates. The rebar contracts implemented so far in November continue to be for small volumes.
Both steelmakers and distributors are suffering from tight margins. After companies across the supply chain posted very high earnings in 2021 and 2022, this year, distributors and construction companies will cover their costs but will not make any profit. The outlook for the first quarter of 2024 is no different from Q4 this year. The market is beginning to see payment delays.
French rebar prices are hovering at €620/t delivered on average, sources suggest.
Natalia Capra France
Assofermet warns of low scrap availability
The Italian scrap price downtrend has come to an end, as sentiment has radically changed compared to last month, Italian steel trade association Assofermet says in its market note monitored by Kallanish.
“Some behaviours are being noted in the market, such as an increasingly marked verticalisation, the total control of scrap collection and, lastly, some steel mills have purchased scrap demanding delivery in the month following the date of purchase agreement, storing material at their suppliers,” the note says. The main concern is material availability in case scrap demand from mills increases. “Therefore, we are looking very carefully at steelmakers’ production plans,” the association adds.
October was a month of low scrap purchases and price stability. Demand was different for each Italian region and mill depending on production schedule. Demand and supply were mostly in line, which caused prices to remain mostly stable. However, in October, scrap availability showed a steep decline. The general negative sentiment in October pushed most merchants to sell as much as they could.
Meanwhile, the association points out the persisting spread between pig iron quotes in the European and US markets, with the latter mostly supplied by Brazil. Material availability at Italian ports is at good levels and, thanks to the improving sentiment, a demand recovery and price hikes may take place this month. At an international level, Assofermet is registering a slight, $10/t pig iron price increase in Turkey but a $10-15/t decline in Asian markets.
The association noted low demand for ferroalloys last month due to the several production stoppages across Europe. Steelmakers are however asking for quotes and material for first-quarter-2024 delivery. In October, ferroalloys prices see-sawed but declined moderately, Assofermet concludes.
Natalia Capra France
Steel HRC prices firm in Europe, but higher offers yet to be accepted
HRC prices in Europe have started to pick up in recent deals, with all European steelmakers announcing higher offers.
For deliveries of HRC within 6-8 weeks, offers were reported at €680-700 ($727-748) per tonne ex-works from integrated mills in Northern Europe.
Transactions have been reported at €640-660 per tonne ex-works in the region, but traded volumes were still limited, because buyers wanted to wait and see if the increases were sustainable given the slow end-user demand.
“It seems that buyers realize now that prices will go up, by €30 or €50 per tonne [compared with October spot sales], so we will have to see [what will happen next],” a trading source in Northern Europe said. “But all will be determined by demand developments. There is still no clear vision, and some people expect an increase for the first quarter [of 2024], while others see stable [but] low demand for at least the first half of 2024.”
Market sources also said that European mills might put forward another round of price rises for coil with February-March lead times, to €700-730 per tonne ex-works.
“It will be hard to consolidate higher prices in deals while demand remains low,” a second trading source in the region told Fastmarkets. “I don’t think ‘anything starting with a 7’ [meaning prices of €700 per tonne or higher] is unrealistic at the moment.”
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €653.00 ($697.99) per tonne on November 14, up by €0.71 per tonne compared with €652.29 per tonne on November 13.
The index was up by €13.00 per tonne week on week and by €35.92 per tonne month on month.
In Southern Europe, Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy, at €630.00 per tonne on Tuesday, unchanged since November 10.
The Italian index was up by €8.75 per tonne week on week and up by €36.98 per tonne month on month.
The Italian market was also quiet on Tuesday, with some steelmakers still holding back offers, while the general mood remained bullish.
For December delivery, offers of HRC from integrated mills were heard at €630 per tonne ex-works, with another rise by €30 per tonne ex-works under consideration for January deliveries.
Consumption was still weak in Italy, but price rises were backed by some restocking activity and production cuts.
Imported coil was still uncompetitive in Europe due to the long lead times, low estimated quota allocations, and rather high offer levels in general.
January-shipment HRC offers from Vietnam were heard at €610 per tonne CFR to Italy, sources said.
January-shipment offers of HRC from South Korea and Japan were reported at €615-620 per tonne CFR.
And Turkey-origin coil for December shipment was offered to European ports at €640 per tonne CFR, without anti-dumping duty.
Published by: Julia Bolotova
Green transition of UK steelmaking requires government subsidies for energy bills
UK steel industry to become more energy-intensive
In the past several months, two key UK steelmakers, British Steel in England and Tata Steel in Wales, have both announced ambitious plans to replace their old blast furnace-basic oxygen furnace (BF-BOF) based steelmaking capacities with electric-arc furnaces (EAFs).
Scrap-consuming EAFs could be a strong alternative to the prevailing integrated steelmaking business model in the UK, given the country’s large surplus of steel scrap and the lack of domestic consumers for such material, Fastmarkets understands.
But at the same time, UK Steel expressed concerns about how the decarbonization transition could undermine the competitiveness of British steelmakers because of the high prices they must pay for energy.
“Steelmakers in the UK pay nearly twice as much as Germany and France’s industrial electricity prices. This is partly due to higher grid connection costs in the UK, which the government could reduce,” UK Steel said.
The average non-household electricity price faced by UK steelmakers in 2023 was about £113 ($138) per MWh. In Germany and France, the corresponding price was around £61 ($75) per MWh.
“That’s a price gap of £52 [$64] per MWh, meaning that we will pay £117 million [$143 million] more for our electricity this year than our European competitors,” UK Steel said.
The energy-intensive nature of steel production leads to high electricity consumption, and these costs can represent as much as 180% of steel producers’ gross value added (GVA) in the UK. With a switch to electric-arc furnaces, it would be expected that the sector’s electricity consumption would roughly double, UK Steel said.
Currently, UK steelmaking is mainly by BF-BOF production, which is less energy-intensive than using the EAF-route.
According to the World Steel Association, about 89% of a BF-BOF’s energy input comes from coal, 7% from electricity, 3% from natural gas and 1% from other gases and sources. In EAF steelmaking, the energy input from coal accounts for 11%, electricity 50%, natural gas 38% and 1% from other sources.
Measures suggested
To protect the British steelmaking industry and ensure a level playing field for it to compete with other steelmakers globally, UK steel has suggested measures to curb electricity costs for energy-intensive industries (EIIs).
Notably, the association has urged the UK government to compensate industry for 90% of its network charges, matching the levels of such support in France and Germany. Also, UK Steel suggests tracking industrial energy price disparities between countries.
The association has also emphasized the need to implement the British Industry Supercharger (BIS) package by April 2024. The BIS package was supposed to include three measures, such as an increase in the subsidy under the existing EII Renewable Levy Exemption scheme to 100% from 85%.
Second, there should be a new full exemption from the indirect costs associated with the British Capacity Market, UK Steel said. Finally, it proposed a compensation scheme for the charges paid to use the UK national electricity grid, through the EII Network Charging Cost Compensation Scheme.
The BIS package was introduced in February 2023 and was intended to reduce electricity costs for EIIs by £20 per MWh by 2025, to bring electricity costs for EIIs in Britain closer into line with those in the world’s major economies.
UK steel industry in figures
The UK produced just 6.10 million tonnes of steel in 2022, down by 15.6% year on year, according to World Steel Association data.
Primary steelmaking in the nation was now represented by British Steel, Tata Steel and Celsa.
British Steel has installed capacity for 4.3 million tonnes per year of pig iron, and four BFs at its ironmaking site in Scunthorpe, northeast England. The company produces sections, wire rod, rail, beam and plate. But of the four BFs at the site, only two were still operational, according to industry sources.
Tata Steel Port Talbot, in south Wales, is equipped with two BFs with combined capacity for 5 million tpy and two basic-oxygen furnaces with capacity for around 4.8 million tpy. The site at Port Talbot produces hot-rolled and cold-rolled coil, as well as tubes.
Both companies have plans to switch to EAFs.
Celsa Group in Cardiff, also in south Wales, has two EAFs with total capacity for 1.2 million tpy. The company is focused on long steel production.
Published by: Julia Bolotova
Polish rebar, wire rod prices remain broadly unchanged amid subdued demand
Rebar
Polish mills offered rebar at about 2,800 Polish zloty ($675) per tonne CPT during the assessment week, which nets back to about 2,780 zloty per tonne ex-works, sources told Fastmarkets.
Demand remained soft and no major deals were heard in the market.
Buyers continued to push for lower prices. Bids for larger quantities of about 1,000 tonnes were heard at 2,720 zloty per tonne CPT, which nets back to about 2,700 zloty per tonne ex-works.
But, according to a buyer source, the workable level for Polish domestic rebar is 2,750 zloty per tonne CPT, which nets back to about 2,730 zloty per tonne ex-works.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, exw Poland was 2,700-2,780 zloty per tonne in the week to November 10, widening downward 30 zloty per tonne from 2,730-2,780 zloty per tonne on November 3.
“Demand is generally weak. There is no restocking because the traders still have material bought at below 2,700 zloty per tonne CPT. In addition, the demand from the construction sector and the prefabrication producers is weaker [in the week to November 10],” a distributor source told Fastmarkets.
Prices of domestic rebar in the secondary market decreased slightly to 2,770-2,780 zloty per tonne CPT, compared to 2,780-2,800 zloty per tonne in the previous week.
Offers of imported material from Italy were heard at around €620-630 ($662-673) per tonne CPT, but these levels were not widely accepted by the market.
“Italy seems to be out of the market with these prices,” a second distributor source told Fastmarkets. Even lower offers of imported rebar from Italy at €615 were considered too high for the Polish market.
Offers of imported material from Ukraine were heard at €560 per tonne DAP border.
Wire rod
Polish mills continued offering wire rod in the range of 2,900-3,100 Polish zloty per tonne CPT this past week, sources told Fastmarkets.
But demand for the material remained moderate and no major deals were heard.
According to Fastmarkets’ sources, the workable level for wire rod varied between 2,850 zloty and 2,900 zloty per tonne CPT.
Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,850-2,900 zloty per tonne on November 10, narrowing upward by 50 zloty per tonne from 2,800-2,900 zloty per tonne on November 3.
A market source told Fastmarkets that Polish producers considered increasing wire rod prices by €30 for November-rolling material but gave up the idea due to the poor demand.
According to a third distributor source, the demand for wire rod was slightly better during the assessment period, but it remained still weak.
“It is not restocking yet, [but] the end users need wire rod for their production”, the source said.
Offers of imported material from Italy were heard between €620-640 per tonne CPT depending on the destination.
Published by: Julia Bolotova, Darina Kahramanova
Prices unchanged in European HRC market; little market activity reported
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €652.29 ($696.90) per tonne on Monday, down by €0.38 per tonne from €652.67 per tonne on Friday November 10.
The index was up by €9.79 per tonne week on week and by €35.21 per tonne month on month.
Minimal market activity was reported on Monday. Tradeable values were pegged at €640-660 per tonne ex-works.
Meanwhile, HRC for December-January delivery was on offer from mills in the region at €680-700 per tonne ex-works, Fastmarkets heard.
During the week to November 10, mills were reported to be attempting further price rises at around €680-700 per tonne ex-works.
But some buyers challenged the sustainability of price rises given ongoing low consumption from the automotive and construction industries, Fastmarkets heard.
In Southern Europe, Fastmarkets calculated its daily steel HRC index, domestic, exw Italy at €630 per tonne on Monday, unchanged from November 10.
The Italian index was up by €2.50 per tonne week on week and up by €36.98 per tonne month on month.
Buyer estimates were reported at around €630 per tonne ex-works.
During the week to November 10, producers were reported to be selling at similar levels.
Italian mills were also reported to be eyeing higher prices of €655-665 per tonne exw bolstered by buyer restocking and constricted supply as a result of production cuts, Fastmarkets heard.
No fresh import offers were reported on Monday amid safeguarding risks and long lead times.
Published by: India-Inés Levy