European HRC prices stable amid negative sentiment
Market sentiment for September, when buyers and sellers traditionally return to trading, has been downward due to an uncertain demand outlook from end-users combined with need of domestic mills to fill orders books and significant volumes of import either awaiting custom clearance or on the way to the EU.
“Market is catastrophic in terms of the daily business,” a German service center source said. “But the main thing — the outlook is pessimistic for the second half of the year. The mills say they have allocations for some volumes of coil for a week, but then they give more volumes. So, their order books are far from being full.”
“No change in prices,” a Northwest European service center source said. “Everyone is enjoying holidays before September and then — no positive expectations. There is clear oversupply and no hope for demand recovery. Prices most likely would go down.”
Platts assessed domestic prices for hot-rolled coil in Northwest Europe unchanged on day at Eur635/mt ex-works Ruhr Aug. 15.
Market participants estimated tradable values at Eur630-640/mt ex-works Ruhr and reported offers at the equivalent of Eur635-640/mt ex-works Ruhr.
Import offers in Northwest Europe have been heard at Eur620-630/mt CIF Antwerp for the material from Asia. Buyers have been showing no interest in the material due to both uncompetitive prices and lead times — currently Asian mills have been offering December delivery material. Some market sources said they believed that buyers will show higher interest in imported coil when January delivery becomes available.
Author Maria Tanatar
Salzgitter partners with freight carrier HGK to develop inland shipping for steelmaking needs
HGK Shipping and German steelmaker Salzgitter AG plan to enhance their cooperation and jointly promote and develop sustainable logistics concepts for inland waterways, Salzgitter said Aug. 15.
With Salzgitter’s reliance on inland waterways set to increase as the transition to low-carbon steelmaking progresses, the German steel company will enhance its partnership with HGK Shipping, Europe’s leading inland waterway shipping company, to ramp up its inland cargo shipping volumes to above 1 million mt/year.
HGK Shipping, like Salzgitter native to Lower Saxony, has a fleet of 350 company and chartered vessels and transports 43 million mt/year of freight.
Two subsidiaries of Salzgitter — steel coil manufacturer Salzgitter Flachstahl and distribution company DEUMU-Deutsche Erz- und Metall-Union — have signed memorandums of understanding with HGK Shipping outlining their commitment to developing and establishing low-emission logistics chains as a norm.
Both subsidiaries are aiming to make much greater use of inland waterway shipping in particular, and their co-operation with HGK will focus on setting up paired transport operations.
The aim is to prevent empty runs through generating return loads and optimizing the use of available shipping space by combining transport operations, for instance.
Salzgitter Flachstahl specializes in making flat steel products for vehicle and pipe manufacturers and construction, and DEUMU recycles scrap steel, metals and alloys and acts as a trader for them.
The two are connected to the inland waterway system at numerous sites, with the result being over 1 million mt/year of the Salzgitter group’s steel is transported via European waterways. The steel company believes in it can grow these shipping operations further if the right conditions are in place.
In May, Salzgitter contracted a consortium comprising Tenova, Danieli and DSD Steel Group to build a 2 million mt/year direct reduction plant at Flachstahl, which takes it a step closer to low-CO2 steelmaking.
The first stage of the Salzgitter Low CO2 Steel, or SALCOS, project will go into operation in late 2025 and consist of the direct reduction plant, an electric arc furnace and a 100-MW electrolysis plant for hydrogen production.
With the EAF up and running, the currently blast furnace-based Flachstahl will convert into a mill smelting direct reduced iron, but also steel scrap, hence why it is looking to develop logistics for shipping in significant scrap volumes.
“One key element [of SALCOS as a circular economy project] will involve using scrap to obtain crude steel [and] … having sustainable logistics operations for this very important secondary raw material,” DEUMU Managing Director Sandrina Sieverdingbeck said in a statement Aug. 15.
Author Katya Bouckley
High production weighs on Chinese steel market; market eyeing steel output cuts
China’s crude steel production remained high in July and is likely to inch higher in August, weighing on the steel market amid lackluster steel demand. However, some market sources say they believe China will gradually carry out steel production cuts over the next few months for annual steel output controls, thus limiting further room for downside movement in steel prices.
High production
China’s crude steel output in July was 11.5% higher year on year at 90.8 million mt, although daily output retreated 3.6% from June to 2.929 million mt, National Bureau of Statistics data showed Aug. 15.
China’s pig iron output in July rose 10.2% year on year to 77.6 million mt, while daily output fell 2.4% month on month to 2.503 million mt.
Over January-July, China’s crude steel and pig iron output increased by 2.5% and 3.5% year on year, respectively, to 626.51 million mt and 528.92 million mt.
Moreover, after steel output controls to reduce air pollution at Tangshan city, China’s biggest steelmaking hub, were lifted at the start of August, China’s pig iron and steel production this month is likely to increase again from July levels, some market sources said.
China Iron & Steel Association on Aug. 14 estimated China’s daily crude steel and pig iron output for Aug. 1-10 at 2.953 million mt and 2.533 million mt, respectively, up 0.8% and 1.1% from July’s average, and 9.1% and 10% higher year on year.
Finished steel inventories at mills and spot markets monitored by the China Steel Industry Association reached 25.69 million mt as of Aug. 10, up 7.5% from the end of July, but still 6% lower year on year.
In tandem with rebounding steel output and rising inventories, Chinese domestic rebar prices fell by Yuan 165/mt ($22.6/mt) from Aug. 1 to Yuan 3,691/mt on Aug. 14, S&P Global Commodity Insights data showed.
Steel output cuts
It remains unclear when Chinese mills will implement output cuts in order to keep the country’s annual crude steel within 2022 levels, which is partly the reason behind currently weak market.
But some mill sources in northern and eastern China told S&P Global that some major mills in these two regions have been or will be ordered verbally to cut their production later this year.
According to market sources, as of mid-August, China’s biggest steelmaker Baowu Group, as well as some major mills in Shandong province, have received verbal orders to keep their 2023 crude steel output within 2022 levels.
Meanwhile, market chatter suggested that Hebei and Jiangsu provinces, China’s leading and second-largest steelmaking hubs, respectively, will soon verbally inform major local mills to cut output.
Some sources said mills will only receive verbal orders to cut output directly from the local government, instead of formal announcements, and therefore it is difficult to foresee how much crude steel output in China will be reduced in the next few months.
“I think China’s steel production will slow down over September-December, which will almost certainly support the steel market by then …but sluggish steel demand may limit the upside room for steel prices,” one mill source said.
Bleak steel demand
The floor space of China’s new home construction starts, the most crucial steel demand driver, in July fell 30.2% month on month and 26.5% year on year, according to NBS data.
Over the first seven months of 2023, new home starts fell 24.5% year on year, and 52.1% from the same period of 2021.
The floor space of new home sales, a major channel to fund new projects, in July fell 46.1% month on month and 23.9% year on year. New home sales over January-July were down 6.5% year on year and 34.5% lower than in the same period of 2021.
As property sales still show no signs of bottoming out, some steel market sources predicted that new home starts and property-related steel demand would continue to decline in the foreseeable future.
China’s infrastructure investment in Jujly increased by 4.6% year on year, slowing from a 6.4% year-on-year increase in June. Infrastructure investment over January-July rose 6.8% year on year.
Some market sources said they expect China to step up policy support to the infrastructure sector for the remainder of 2023, but this is still unlikely to fully offset the falling steel demand in property-related sectors.
Stahlwerk Thüringen to connect Unterwellenborn steel mill to German hydrogen network
German steel producer Stahlwerk Thüringen plans to connect the Unterwellenborn steel plant to the country’s expanding hydrogen network, it said Aug. 15.
Under the terms of a memorandum of understanding signed with pipeline system operator Ferngas, Stahlwerk aims to connect its Unterwellenborn plant in Thuringia to the hydrogen network from 2027.
Stahlwerk has been decarbonizing its steel mill operations, with the plant already utilizing 100% renewable energy for green steel production.
The decision to purchase green hydrogen via the grid infrastructure in the future is an important step toward largely decarbonized steel production, the company said.
“We want to take the next step toward the sustainable development of the steel industry and underline our leading role in the application of more environmentally friendly technologies,” said Alexander Stolze, head of purchasing, Stahlwerk. “The connection to the hydrogen network will maintain our competitiveness and strengthen the Thuringian steel mill as a center of low-emission steel production.”
The companies will need to acquire associated permits proving hydrogen operability at the plant and secure approval from the local legislature to operate the hydrogen lines.
Platts, part of S&P Global Commodity Insights, assessed Northwest European hot-rolled coil carbon-accounted steel at Eur735/mt ($803/mt) ex-works Ruhr on Aug. 14, down from a peak of Eur885/mt at the start of July. The Platts European carbon-accounted assessment is for HRC with a maximum 2.1 mt of carbon emissions through steel production and from the supply and processing of feedstocks, covering Scopes 1, 2 and 3.
Biden administration unveils its final Buy America guidance
US President Joe Biden’s administration has published its final “Build America Buy America” guidance in order to help federal and state agencies fully take advantage of funding being granted through the Bipartisan Infrastructure Law.
Kallanish understands that the Office of Management and Budget (OMB) has issued a revision to Title II of the code of federal regulations (2 CFR). This revision includes the addition of a new amendment to the code, section 184, intending to define key terms that pertain to iron/steel products.
In 2 CFR section 184, OMB explains that materials incorporated in infrastructure projects must meet the Buy America preferences for only a single category in which the materials are classified. This means that, in the case of iron and steel products, there is no restriction on the place of manufacturing for components or subcomponents that do not consist of iron or steel.
“The final guidance will support implementation of the Bipartisan Infrastructure Law’s (BIL) statutory requirements that manufactured products, construction materials, and iron and steel used in federally funded infrastructure projects are made in America,” explains Livia Shmavonian, the Biden administration’s Made in America director.
Zach Johnson USA
Ukraine issues AD duties on China-origin coated steel
Ukraine has imposed final anti-dumping measures on imported rolled carbon steel with coatings originating from China. The duties are set to take effect on 12 August, Kallanish notes.
The decision followed an investigation initiated by the Ukraine’s Interdepartmental Commission on International Trade in response to a complaint from local producer Modul-Ukraine.
The measures are aimed at addressing the issue of dumped imports from China, protecting Modul-Ukraine and Heavy Metal. The two producers collectively account for over 50% of the nation’s overall production of similar goods.
A definitive anti-dumping duty imposed on China-origin flat rolled products of carbon steel, clad with galvanic or other coating, classified in product subheadings 7210 70, 7210 90 and 7212 40. The duty has been applied for a period of five years.
The final anti-dumping rates were assigned: Zhejiang Huada New Materials Co, 42.53%; Shandong Hwafone New Materials Co, 30.76%; Shandong Iron & Steel Group Jiangsu Trading Co (for export of goods from Shandong Hwafone New Materials Co), 30.76%; Shandong Huijing Color Steel Co, 48.14%; Ebic Supply Chain Management Co (for export of goods from Shandong Huijing Color Steel Co), 48.14%; Welfull Group Co, 40.53%; Shandong Lantian New Material Technology Co, 41.36%; Shandong Castle International Trade Co (for export of goods from Shandong Lantian New Material Technology Co), 41.36%; Fareast Steel International Limited, 38.70%; Qingdao Honesteel Metal Co, 38.70%; Qingdao Jobofone International Trade Co, 38.70%; Shandong Boxing Huaye Industry and Trade Co, 38.70%. Other producers and exporters of goods originating from China will receive a rate of 48.14%.
Elina Virchenko UAE
Semiconductor shortages ease, bottlenecks to remain: Audi
The supply of semiconductors for the automotive industry, including in Germany, will continue to relax in 2023. This will be both in terms of the number of critical semiconductor types and the available quantity, according to German carmaker Audi, part of Volkswagen Group.
“We can see that our operational and strategic measures are having an effect and we assume that the supply situation with semiconductors will continue to ease this year,” a spokesperson of the company tells Kallanish. “However, we still have to assume that there will be significant bottlenecks in automotive-specific semiconductor technologies and in high-voltage semiconductors. The right semiconductors in the right quantities will be the key to future development.”
According to the Audi representative, the entire automotive industry is affected, not just the brands of the Volkswagen Group. “There is currently a structural undersupply of semiconductors across all sectors. This problem will not be solved in the short term, as building semiconductor manufacturing capacity takes several years and costs billions,” she added.
Last week, Taiwan Semiconductor Manufacturing Co (TSMC) announced it will spend €3.5 billion ($3.8 billion) to build a chip factory in Germany – its first in Europe.
TSMC said it will invest in a subsidiary called European Semiconductor Manufacturing Company (ESMC), of which it will own 70%. Germany’s Bosch, Infineon, and the Netherlands’ NXP will each have 10% stakes in the plant, which will make up to 40,000 chips per month. They will be used in cars, for industrial purposes and in products for the home. The plant is expected to open in 2027.
Germany will invest up to €5 billion in the factory in Dresden, capital of the eastern state of Saxony, authorities have announced. “There will be a real semiconductor manufacturing ecosystem in Germany,” said German Economy Minister Robert Habeck.
The European Union (EU) already passed the European Chips Act, a €43 billion subsidy plan aimed at doubling semiconductor manufacturing capacity by 2030.
TSMC has delayed the start of production at its plant in the US state of Arizona due to a shortage of skilled workers. Output of advanced microprocessors at the Arizona plant will begin in 2025, instead of next year.
Svetoslav Abrossimov Bulgaria
EUROFER welcomes anti-circumvention investigations on imports of stainless CRC
The Commission initiated on 14 August two anti-circumvention investigations regarding possible circumvention via Taiwan, Turkey and Vietnam of the anti-dumping and anti-subsidy measures imposed in 2021 and 2022 against imports of stainless steel cold rolled flat products from Indonesia. EUROFER welcomes the openings and the immediate registration of the imports from those countries towards a possible retroactive application of the existing duties.
“Since the imposition of both anti-subsidy and anti-dumping measures, the direct imports of Indonesian stainless steel cold rolled flat products (SSCR) virtually disappeared”, said Axel Eggert, Director General of the European Steel Association (EUROFER). “However, the unfair practices and in particular the massive support granted to local producers by the Indonesian and Chinese governments through raw material manipulation and financing under the Belt and Road initiative are now exported from Indonesia to third countries as stainless slabs or stainless hot rolled coils that are then re-exported as finished stainless steel, including SSCR, into the EU27 market”.
A massive amount of EU imports of SSCR from the targeted third countries are in fact indirect imports from Indonesia, with Indonesian slabs or hot rolled coils undergoing only limited processing before being re-exported to the Union. These flows of indirect imports constitute a significant share of the exports of SSCR from these countries to the EU, starting to pick up over the course of the investigations in 2021 and skyrocketing after the imposition of the measures in 2022.
“Those indirect imports show clear evidence of circumvention, similar to the practices already recognized and addressed by the Commission in the previous circumvention investigation on imports of stainless hot rolled sheets and coils from Turkey. The immediate registration of the imports from Taiwan, Turkey and Vietnam is therefore crucial to ensure the effectiveness of the existing measures”, concluded Mr. Eggert.
Esmark submits offer to acquire US Steel
Esmark, a privately held company with operations in the industrial and commodity sectors, announced Aug. 14 a voluntary public cash and exchange offer for all the outstanding shares in US Steel at a value of $35/share.
The offer from Esmark comes a day after US Steel said it would initiate a formal review process to “evaluate strategic alternatives for the company,” including the sale of the full company or some of its assets as it had received multiple unsolicited bids for all or portions of the company.
Following US Steel’s announcement, rival steelmaker, Cleveland-Cliffs said it submitted an offer in late July to acquire all of US Steel in a cash and stock deal, however, the offer was rejected by US Steel’s board on Aug. 13.
Esmark, based in the Pittsburgh area, said its initial offer period runs from Aug. 14 through Nov. 30 and may be extended. Completion of the offer is expected in the fourth quarter of 2023, subject to regulatory and antitrust clearances, it said.
Prior to founding the current Esmark, CEO James Bouchard previously worked for US Steel, formerly serving as vice president, commercial, for US Steel Europe. Bouchard led the company’s European commercial operations following the acquisition of its Kosice, Slovakia, mill.
Esmark Steel Group, a subsidiary of Esmark Inc, is a processor and distributor of value-added flat-rolled steel and is the third-largest US producer of tin plate steel. In addition to steel services, it has operations in oil and gas exploration, aviation, real estate, professional services and technology.
Author Justine Coyne
Germany’s Saarland steel sector to use 200,000 mt/year green hydrogen
Green steel production in Germany’s Saarland state could require up to 200,000 mt/year of renewable hydrogen, the head of Saarland’s hydrogen agency Bettina Hübschen told S&P Global Commodity Insights in a recent interview.
The steel industry in Saarland could account for 150,000-200,000 mt/year of hydrogen, while a further 100,000 mt/year of demand could come from other industry, Hübschen said.
“A lot of companies are now considering switching their production from gas-based heating or from gas-based other processes to either electrification or hydrogen,” Hübschen said. Depending on technological constraints, the switch to hydrogen “is a much smaller investment, because they just need to exchange the burner technology and not the whole furnace.”
Saarland offers a case study of how the steel sector is moving to decarbonize operations, integrating with renewables, gas networks and other potential hydrogen users.
The state is home to Saarstahl and Dillinger steel plants, both owned by holding company Stahl-Holding-Saar (SHS).
SHS is Germany’s fourth-largest steel producer by volume, with annual output of 5 million mt, according to a company presentation.
SHS is planning a 2.5 million mt/year direct-reduced iron plant at Dillinger, which would use large volumes of hydrogen, Hübschen said.
SHS’s production is based on traditional blast furnace technology, although the company has said that by 2030 it wants to produce 3.5 million mt — around 70% of its total output — with lower emissions.
The Saarland Hydrogen Agency was established in May as a state subsidiary, and Hübschen is building a team to develop and implement the state’s hydrogen strategy, starting with a local demand analysis.
The focus is to develop hydrogen projects along the value chain, with infrastructure to connect supply and demand nationally and across borders, and steel plants will be the major offtaker for renewable hydrogen in the region, Hübschen said.
“They have their targets they need to fulfill, and they need to be climate neutral by 2045, and they need to have a certain reduction by 2030 already,” she said. “They can only do it by either cutting production or by switching to hydrogen.”
Coal history
The region in the southwest of Germany, bordering France, is home to a number of coal-fired power plants, and shares existing gas pipeline infrastructure across the border.
Hübschen said the former coal plants made good sites to develop for clean hydrogen production, with high-capacity power grid connections, designation as industrial sites and access to water.
Several gas transmission operators are working on a planned 100-km hydrogen pipeline network, comprising around 70 km of repurposed gas pipes and 30 km of new hydrogen pipelines, to connect the Saar region with France’s Grand Est and Luxembourg.
The MosaHYc (Moselle Saar Hydrogen Conversion) pipeline will transport up to 20,000 cu m/hour (60 MW) of pure hydrogen, connecting regional clean hydrogen production with industrial offtakers in the area, converting pipelines to link the German towns of Perl and Voelklingen with Carling and Bouzonville in France.
Several hydrogen projects in Saarland have applied for state aid under the EU’s Important Projects of Common European Interest scheme, including SHS’s H2SYNgas project, STEAG’s HydroHub Fenne electrolyzers and the TraficHdeux transport infrastructure project.
Hydrogen supplies
Meanwhile, French green hydrogen production company Lhyfe is to develop a 70-MW renewable hydrogen plant in Perl, producing up to 30 mt/d to be delivered into MosaHYc.
However, Hübschen acknowledged that the region would have to import substantial volumes of hydrogen to decarbonize industry while electrolytic hydrogen production ramped up in the coming years.
Local hydrogen supplies from 10-50-MW electrolyzers backed by solar and onshore wind power would play a “niche” but important role, as it would take time to build large-scale supply infrastructure, she added.
Hydrogen supplies are expected to come online around 2027-30, with the price paid highly dependent on the structure of contracts to be negotiated, she added.
Steel decarbonization
Hydrogen is used to convert iron oxide into metallic iron, replacing natural gas in the DRI process. Blast furnaces, by contrast, use mainly met coke and other coal-based fuels to convert iron ore. Metallic iron products are then processed into steel.
SHS plans to decarbonize progressively by 2045, commissioning its Dillingen DRI plant by 2030 and using two electric arc furnaces in Voelklingen and Dillingen with around 3.5 million mt/year crude steel capacity, and closing one blast furnace, with CO2 emissions reductions of around 55%. Hydrogen demand in this phase could be 55,000 mt/year.
The company plans to commission a third EAF by 2045 at the latest, with capacity of around 1.2 million mt/year of crude steel.
Hübschen said the upfront investment costs for steel plants to switch to DRI and EAF processes were high, in the region of Eur1 billion ($1.1 billion) for a DRI plant, plus there was a large cost arising from hydrogen purchases.
“They need to invest billions of euros to be hydrogen ready and then to pay a high price for the hydrogen,” she said.
Platts, part of S&P Global Commodity Insights, assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur5.91/kg ($6.46/kg) Aug. 14 (Netherlands, including capex), based on month-ahead power prices. Proton exchange membrane electrolysis production was assessed at Eur6.96/kg, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur2.95/kg.
Hübschen noted blue hydrogen could be an option for Germany, and while French nuclear-powered hydrogen production would not be acceptable to German steel producers, nuclear electricity generation could power German EAFs.
Platts assessed Northwest European hot-rolled coil carbon-accounted steel at Eur735/mt ($803/mt) ex-works Ruhr, down from a peak of Eur885/mt at the start of July. The Platts European carbon-accounted assessment is for HRC with a maximum of 2.1 mt of carbon emissions through steel production and from the supply and processing of feedstocks, covering Scopes 1, 2 and 3.
Author James Burgess
