Category: Latest Updates

The Manxa Group is the leading steel trader in southeastern Spain and a specialist in steel beams, profiles and sheet metal. By using the “Steelsuite” industry platform from Kaltenbach.Solutions GmbH, the company is now planning a sustainable increase in performance in its central warehouse.

In July, Kaltenbach.Solutions launched a digitalization project at the Spanish Manxa Group near Barcelona. Together, they want to introduce data-based performance management in the central warehouse of manxa FERROS. First, an initial workshop was held with the managers to clarify their expectations and determine the customization needs of the digital solution. Topics such as the scope of the existing machinery, the optimal fit of machine selection, work area and batch size to the order structure, the intralogistics on the store floor and the actual activity profiles of the workers were discussed.

Afterwards, six “BoosterBOXes” were put into operation to measure the performance of the machines and systems. The recorded data is clearly visualized on the digital industry platform “Steelsuite” from Kaltenbach.Solutions. This gives employees access to all relevant information via handheld at any time. Based on the AI-supported analysis, fact-based decisions can be derived in the next step, which should lead to an optimization of processes and workplace-related procedures. In the medium term, the Manxa Group is aiming for a sustainable increase in performance in the warehouse.

The lingering impact of several downside factors severely affecting apparent steel consumption in 2022 – high energy prices, war-related disruptions, sluggish demand prospects – continues to feed uncertainty and pressure the steel market outlook for 2023, resulting in a deeper-than-expected recession (-3%). This would mark the fourth negative performance in the past five years. A stronger recovery is projected in 2024 (+6.2%), contingent on more favourable conditions in the overall industrial outlook. Despite persisting overall weak demand, imports still maintain historically high demand market shares (22%).

“The European steel industry has been navigating through numerous challenges for a long time now, from the pandemic to the energy crisis and other ongoing disruptive factors. At the same time, the EU is at a critical juncture to achieve its decarbonisation, circularity and strategic autonomy targets, for which steel is a key enabler. Supporting European green steel becomes therefore crucial to drive the uptake of renewables, hydrogen and the cleantech economy in the EU”, said Axel Eggert, Director General of the European Steel Association (EUROFER).

EU steel market overview

In the first quarter of 2023, apparent steel consumption continued a downward trend (-11.7%), with a volume of 34.5 million tonnes. While this represents an improvement compared to the last quarter of 2022 (-19.3%), the latest data still show underperformance compared to 2021-2022. As a result, apparent steel consumption for the whole of 2023 has been further cut (-3% from -1%). However, a more pronounced rebound is expected in 2024 (+6.2% from +5.4%) if positive conditions for steel demand materialise. Improvements in apparent steel consumption are not expected before the third quarter of 2023.

Domestic deliveries followed the same downward path, declining as well (-6.2%) in the first quarter of 2023 for the fourth consecutive time, although at a slower pace than the preceding quarter (-15.1%). In line with demand deterioration, imports also experienced another steep slump (-28%, after the previous -33%). However, the market share of imports out of apparent consumption remained considerably high in historical terms once again (22%).

EU steel-using sectors

Despite persisting challenging conditions, steel-using sectors kept growing also in the first quarter of 2023 (+3.7%) primarily driven by the outperforming automotive, mechanical engineering and transport sectors, which compensated for the subdued output of domestic appliances, tubes and metalware. Construction, so far one of the main components of the steel-using sectors’ resilience, experienced a slowdown for the first time after 2020 and recorded nearly flat growth (+0.1%). The sector is anticipated to enter a recession in 2023 owing to a contraction in the residential construction sub-sector, due to the rise in interest rates impacting demand.

This should result in an overall moderate growth for steel-using sectors in 2023 (+1.3%) compared to 2022 (+3.1). This forecast is more upbeat than the previous estimated (+0.3%). In 2024, growth is projected to slow down again (+0.4%), mainly due to a likely downturn in the automotive sector.

The near critical level of the “other countries” EU import quota for hot-rolled coils (HRC) could generate additional and unexpected demand for EU material, but most EU mills are unlikely to be able to capitalise on this owing to their lead times.

The quota as of 25 July had a 12pc balance, with a further 10pc worth of HRC awaiting allocation, meaning that after that material is fully allocated a mere 2pc will be left over. When the quota has under 10pc balance left, authorities request a bank guarantee from the importer to secure that the 25pc safeguard duty can be paid — this had already probably deterred some buyers from trying to custom clear their tonnages as the quota was drawing down.

Several buyers are reported to still expect vessels to arrive in the EU in August-September, containing HRC, which was to be cleared under the non-country specific allocation. They will now have to wait until 1 October for their material to be in use.

But delays in customs are expected in October, as not only will there be leftover HRC from the current quota to be cleared, on top of the already probable high arrivals for the October-December period, but every importer will have to provide proof of no Russian substrate used in manufacturing. Market participants said that there has been no clarification from EU authorities about what documents will be admissible as evidence.

“Buyers will probably stop buying from imports and, on the other side, in the fourth quarter probably we will have some shortage,” a buyer said. “A part of my material, for example, is coming from Japan or Taiwan so probably we will have to custom clear it on 1 October, but I am not sure that there will be space for everybody, so I expect in September we will have a shortage,” they added.

Some buyers said that, after seeing the rate of imports over the first two weeks of July, they decided to change the destination of vessels to less busy or closer EU ports than the original point of custom clearance to make sure their purchases were cleared. Others said that they have directed more tonnages to EU mills than usual for September, and have increased their contract requirements for that month.

Those buyers that will not be able to use their material now and wait for the October quota, if not willing to run their stocks dry, will be likely to have to purchase more material either from EU mills, or from countries with specific own quota allocations such as Turkey and India.

There are only a handful of EU mills that have September deliveries available — most mills offer for October onwards. That said, several market participants expect that the quota exhaustion for July-September and the expected exhaustion for October-December will incentivise EU producers to attempt to raise prices even if they do not necessarily have the availability.

Not everyone is of the same view — some buyers said that the quotas exhaustion indicates oversupply in the EU market, with over 1mn t imported already in July alone.

“EU mills will try to increase prices owing to material stuck at ports, but what about the million tonnes already cleared? All this material will need to be digested in a bad market scenario,” a market participant said.

“This will not have a huge impact on demand for mills, it might impact on the ability to supply to end-users. Supply will be sufficient, but we will see lower stock levels. The material that was bought in the third quarter will be missing, but the EU mills will not be able to step in due to lead times,” another market participant added.

By Lora Stoyanova

Mills have closed for summer holidays until mid-August and sources expect demand to be flat for the next six weeks.

Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe was calculated at €655.83 ($729.59) per tonne on July 24, down by €0.42 per tonne from €656.25 per tonne on July 21.

The latest calculation of the Northern European index was down by €14.17 per tonne week on week and by €17.47 per tonne month on month.

Buyer estimates for Northern European HRC were reported at €650-660 per tonne EXW on Monday.

“The market is deadly quiet with the summer holidays having fully started,” a trader source in the region said. “I don’t expect any price movements till September.”

Fastmarkets calculated the corresponding daily steel HRC index domestic, exw Italy at €645.00 per tonne on July 24, up by €6.67 per tonne from €638.33 per tonne on July 21.

The Italian index was down by €11.25 per tonne week on week and by €8.75 per tonne month on month.

In Italy, buyers reported achievable HRC prices for delivery at the end of September and beginning of October at €640-660 per tonne EXW.

The Italian market was quiet because of seasonality and weak demand.

HRC offers from Asian mills were reported at $580 per tonne CFR to Italy for September-October shipment.

Published by: India-Inés Levy

GFG Alliance has appointed three new executives it says will support major transformation projects, including the expansion of the group’s high-quality magnetite iron ore reserves, and converting remaining blast furnaces to electric arc furnaces, Kallanish notes.

Stefan Håkansson of energy group E.ON has been appointed as global head of sustainable energy projects. Paul Altschwager of international energy and convenience retailer EG Group has been named chief capital officer. Francisco Irazusta of Tubos Reunidos has become chief executive and executive director of InfraBuild.

Håkansson, who will join after summer, will help drive GFG’s CN30 ambition and renewable energy development, as it invests in solar, wind and green hydrogen installations to decarbonise its iron and steel operations, GFG says.

Altschwager, starting from 1 August, will enable the group to build on progress following agreements with Greensill’s administrators on debt restructuring, the AUD 405m ($273.1m) debt facility repayment at Liberty Primary Metals Australia, the refinancing of the group’s US steel businesses, and the $350m ABCF raised by InfraBuild from Blackrock and Silver Point, the group observes.

Irazusta, who starts from 1 October, will ensure InfraBuild continues its strong financial performance in the 2023 fiscal year, and follows its recent success in the debt markets.

“The huge experience Stefan, Paul and Francisco all bring will help ensure our star businesses continue to perform and we provide a powerful platform to drive investments to capitalise on our advantages in magnetite iron ore and sustainable energy solutions which are so key to green steel production and the future of our group,” says GFG executive chairman Sanjeev Gupta.

Adam Smith Poland

The European Commission wants to reach a steel trade deal with the US to avoid the return of Section 232 and EU retaliatory tariffs, but will not sign an agreement that breaches global trade standards, says EU trade commissioner Valdis Dombrovskis.

Experts have argued that elements of Washington’s proposed solution could unfairly discriminate against imports from some countries and breach WTO rules.

In a working paper published earlier this month, David Kleimann, visiting Fellow at Bruegel, said US proposals are “exclusive and coercive club setting, devoid of defined obligations for domestic restrictions”, and mean the EU would have to shelve its Carbon Border Adjustment (CBAM) regulation and accept WTO-inconsistent policy solutions (see Kallanish passim).

US proposals for embedded emission benchmarks restricting market access for imports would be expected to accommodate EAF performance standards and blast furnace transition from the outset. This would make for de-facto discrimination, for international trade legal purposes, against imports from non-member countries, Kleimann noted.

“As the EU, we’re committed to multilateralism, to the rules-based global order,” Dombrovskis told The Financial Times. “We would like to avoid engaging in agreements which manifestly violate World Trade Organisation rules.”

The sides have struggled to find an agreement on the Global Arrangement on Sustainable Steel and Aluminium (GSA) ahead of a deadline in October. Without a deal, the US and consequently EU tariffs would return in December.

“We respect the EU’s concerns but we continue to wait for a proposal from their side that meets our high level of ambition and addresses our shared concerns on climate change and overcapacity,” Sam Michel, a spokesperson for the US trade representative’s office, is quoted as saying.

Dombrovskis declined to speculate on whether he and US trade representative Katherine Tai could prolong the truce if there were no agreement by October. “We’re committed to reaching a deal by this autumn,” he posted on Twitter after a meeting with Tai last week.

Adam Smith Poland

Bureaucratic delays registered in Italian infrastructure projects funded by the post-pandemic national recovery plan, PNRR, may result in incomplete projects and the country missing out on a strong opportunity for economic development, warns Italian trade association Assofermet.

Such significant allocations of resources risk remaining unfinished in the absence of a simpler bureaucracy that allows for effective grounding of the planned works.

The PNRR scheme will bring great benefits to the Italian and international economy as well as the steel sector. Members of the association will take part in tenders, and both scrap suppliers and distributors will act as key suppliers.

“Italy should speed up the process to start the projects … The government will have to be more prepared and organised both for obtaining the fourth instalment and for managing the huge resources made available,” Assofermet says in a note sent to Kallanish. It highlights the long delays seen in Italy in agreeing on the reception of the third instalment of PNRR funds.

Thanks to the simplification of paperwork, some railway and port infrastructure has received funding and is being implemented. The improvement of the entire Italian economy, in which infrastructure is highly strategic, depends on the successful achievement of the PNRR.

Assofermet sees the development of all green hydrogen projects as the right direction to implement the energy transition. Italy has vowed to develop several hydrogen valleys that will help promote the decarbonisation of the industry. “If Italy succeeds in having a decarbonised metallurgy and steel industry before other countries, Italian products will be more competitive both on EU markets and outside the [European] Union territory,” the association concludes.

Germany’s Marxist-Leninist MLPD party has criticised German mills’ attempts to obtain public financial support for their technological/energy transitions.

The party’s North Rhine Westphalia chapter says the €2 billion ($2.2 billion) support thyssenkrupp requested from the German government would come from tax funds, while the profits would remain with the private company.

“This is an additional push for the distribution of financial funds from the bottom to the top,” Kallanish reads in a press release by the party. The state would retrieve the money via tax increases and cutbacks in social spending, and inflation will be aggravated. “Effectively, steel workers and the general public will be paying twice,” MLPD notes.

It attacked thyssenkrupp Steel chief executive Bernhard Osburg for his unvarnished statement that “we are not an NGO nor a welfare organisation, but a commercial company that needs to generate profit”. For the same reason, 1,000 jobs at tk Steel and 7,000 across the larger group were axed over the last three years, the party points out.

“Only if society is freed from the pressure of maximum profit, are investments possible for the benefit of the masses and the environment,” MLPD states.

Christian Koehl Germany

EU imports of finished and semi-finished steel fell significantly during the first six months of the year, with the exception of hot rolled coil and semis, according to the latest numbers put together by Eurometal.

Overall imports dropped 18.34% year-on-year to 18.8 million tonnes. Italy was the largest importing country, with almost 4mt, followed by Belgium and Spain, at 2.4mt and 2mt respectively.

Intake declined of most long and flat products. Tubular products saw only a minor reduction, of 1.9% y-o-y, while semis intake recovered over 36% y-o-y to over 60,000t.

Despite the overall negative trend, it is worth noting that the largest sub-group was among the few to register a recovery. In the six months, the EU imported over 4.2mt of HRC, up 1.3% y-o-y. HRC import activity has accelerated since May, and has continued strongly in July, Kallanish notes.

Emanuele Norsa Italy