Category: Latest Updates

Ruukki Construction, part of Nordic and US-based steel company SSAB, is streamlining operations and reducing costs in the light of persistently weak demand in the construction sector, SSAB said June 27.

Ruukki has presence in 10 European countries and the market situation in all of them has been weak for some time with no signs of improvement in the short term, yet the division aims to improve the operating efficiency by adjusting its cost structure and streamlining the organization, the company said in a statement.

Specifically, Ruukki Construction is targeting annual cost savings of Eur15 million ($16 million) by the end of 2023 that could lead to a reduction of 200 positions among its 1,500 strong personnel in the Nordics, Baltics and Central Eastern Europe, according to the statement.

“Demand for building products is weak in all of our operating countries. To ensure our competitiveness in this difficult situation, we have to adjust our cost structure in all countries,” Ruukki Construction President Sami Eronen said in the statement.

Ruukki Construction, that offers steel-based building products and services, shipped 1.33 million mt of products in January-March, seeing a more pronounced-than-normal downturn versus the fourth quarter, and SSAB did not expect the construction industry in Europe to bump back even in H2 2023 as its recovery is now hampered by high interest rates, S&P Global Commodity Insights reported.

Author Ekaterina Bouckley

Following disruptions to production and deliveries at key producers, supplies of steel hot-rolled coil in Europe are likely to become tighter, supporting price stabilization in the coming weeks, sources told Fastmarkets on Tuesday June 27.On Monday June 26, authorities ordered the shutdown of steelmaking operations at ArcelorMittal’s Fos-sur-Mer site in southern France, on environmental and worker-safety considerations.

On the same day, German steelmaker Salzgitter declared force majeure on steel deliveries because of disruptions resulting from heavy rain in Germany.

Market sources did not expect there to be any immediate consequences for the HRC market from these developments, but they did suggest that — in the longer run — the disruptions might help to stabilize prices by balancing supply and demand.

“Supply limitations might help the [HRC] market to stabilize. We need to prevent prices falling closer to €600 [$654 per tonne ex-works], and we might now end up at €680 [per tonne ex-works],” a trading source in Germany said.

Trading activity in the Northern European HRC market has been limited recently, even though market sources agreed that prices were close to rock-bottom.

Buyers’ estimates of tradeable values were still being reported in the range of €660-680 ($720-742) per tonne ex-works, while firm offers were rare.

One market source reported the range of offers from the mills in the region to be €680-700 per tonne ex-works, but pointed out that all recent sales have been done at prices lower than €700 per tonne ex-works.

As a result, Fastmarkets’ daily steel HRC index, domestic, exw Northern Europe was calculated at €672 ($732.88) per tonne on June 27, down by just €0.50 per tonne from €672.50 per tonne on June 26.

The latest calculation of the Northern European index was down by €7.75 per tonne week on week and by €78.83 per tonne month on month.

Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy at €645.99 per tonne on Tuesday, down by just €0.26 per tonne from €646.25 per tonne on June 26.

The Italian index was down by €6.01 per tonne week on week and by €42.76 per tonne month on month.

Offers from integrated producers and rerollers in the region were still being heard in the range of €650-670 per tonne ex-works for August-September delivery HRC.

One integrated producer in the south of Italy was reported to be ready to accept a price as low as €620-630 per tonne CPT. But one market source said that such low prices would only be available under pre-payment conditions and for large tonnages.

Trading was also slow in the Italian market, with market sources expecting to see some limited restocking during July, before the seasonal summer closures at mills.

“If the buyers think rock-bottom has been reached, during July we could see some restocking,” a distributor told Fastmarkets.

HRC offers from Asian mills to Italy had been heard around €610-620 per tonne CFR on Monday, mainly for August shipments from Vietnam and Taiwan.

South Korea was reported to be out of the market, and Indian mills had withdrawn their offers, according to market sources.

“After [achieving an] agreement on Section 232 [trade regulations] with the US… Indian mills would be more interested in selling HRC to the US market than to Europe,” a trading source said.

Published by: Julia Bolotova

Salzgitter declared force majeure on steel deliveries on Monday June 26 due to disruption caused by heavy rains in Germany, sources told Fastmarkets on Tuesday.Heavy rains in the Lower Saxony, Hesse and North Rhine-Westphalia and across other regions on June 22 and 23, directly affected a  number of Salzgitter facilities, Fastmarkets understands, with widespread flooding disrupting rail and road movements across Germany.

“The [flooding] damage to many railway tracks throughout Germany resulted in stranded trains and a large number of local roads closures,” Salzgitter told customers in a letter seen by Fastmarkets.

“Due to flooding… production had to be temporarily stopped at some parts of our plant in Salzgitter,” the company said in the letter.

Supplies of raw materials to the Salzgitter mill have also been disrupted and some finished steel stocks have been damaged by flooding, sources told Fastmarkets.

The Salzgitter letter to customers added that “the effect [of the flooding] on production and deliveries [at Salzgitter]  are currently been examined but cannot yet be definitely determined… However, it is certain that temporary production restrictions and delays to deliveries will follow.”

The company said that as soon as the impact of the flooding on production and deliveries had been fully checked, it would contact customers. 

Salzgitter Flachstahl, located in the city of Salzgitter is the major company’s steelmaking asset in Germany, with three blast furnaces with a combined capacity of more than 4 million tonnes per year of pig iron. The Flachstahl facility produces about 3.7 million tpy of hot-rolled coil, 1.8 million tpy of cold-rolled coil and 1.4 million tpy of coated flat steel.

At Peine in Lower Saxony, Salzgitter has an electric-arc furnace (EAF) with a capacity of 2 million tpy along with a sections mill, but also produces slab for “green” flat steel production, Fastmarkets understands.

At Mülheim an der Ruhr in North Rhine-Westphalia Salzgitter has a 900,000-tpy steel plate rolling will and an SAW tube welding facility.

The company also  has a plate mill in Ilsenburg, in Saxony-Anhalt, although that area was less affected by flooding, sources said.
Delivery disruptions from Salzgitter, however, might lend support deteriorating flat steel prices in Northern Europe.

“Supply limitations might help the [HRC] market to stabilize. We need avoid prices moving more to the €600 [per tonne EXW] level, so perhaps, we might now end up at €680 [per tonne EXW],” a trading source in Germany said.

Fastmarkets’ daily steel HRC index, domestic, exw Northern Europe was calculated at €672.50 ($733.42) per tonne on June 26, down by €0.80 per tonne from €673.30 per tonne on June 23.

The latest calculation of the Northern European index was down by €12.25 per tonne week on week, and by €78.33 per tonne month on month.

Published by: Julia Bolotova

The EU’s Carbon Border Adjustment Mechanism (CBAM) compliance requirements could pull down the profits of Indian steel exporters, says credit rating agency ICRA.

CBAM compliance requirements are expected to slash Indian steel exporters’ margins by around $60-165/tonne from 2026 to 2034, Kallanish notes.

During CBAM’s transitional phase from 1 October 2023 to 31 December 2025, the focus will be on carbon reporting, but without any financial adjustment for EU importers.

From 1 January 2026 onwards, EU importers will have to buy CBAM certificates corresponding to the embedded emissions above the EU Emissions Trading System (ETS) benchmark levels.

Apart from India, some of the other large steel exporters to the EU are Turkey, South Korea, Taiwan, Vietnam, China and Japan. However, the carbon footprint of Indian steel mills is significantly higher than that of key competitors, ICRA says.

“The prospect of the incidence of a large carbon tax from the March quarter of the fiscal year ending 31 March 2026 (FY26) can incentivise EU importers to shift towards steel producers with a low carbon footprint, much ahead of the outer deadline,” ICRA says.

“Therefore, unless Indian mills can materially bring down their carbon footprint during the transition period, it can potentially lead to lower profits and a loss of market share in Europe,” the rating agency concludes.

Sayed Aameer India

Swedish industrial start-up H2 Green Steel (H2GS) is partnering with compatriot Gotland Company to explore the feasibility of supplying the shipping company’s fleet with green hydrogen, Kallanish reports. 

This would represent a new direction for the prospective steelmaker who until now was thought to be aiming to consume its entire hydrogen output captively for ironmaking. It also suggests there is surplus hydrogen available in Sweden.

H2GS is currently constructing a 700-megawatt (MW) electrolyser in Boden, northern Sweden. Using the experience from its preparatory work, which has been focused mainly on steelmaking, the firm says it is now taking a step into a new field – green fuels for shipping.

“Our purpose is to accelerate the decarbonisation of hard-to-abate industries, and green hydrogen holds the key to true industrial transformation. Collaborating with Gotland Company signifies expanding our competence in large-scale hydrogen production beyond iron and steel,” explains Kajsa Ryttberg-Wallgren, head of hydrogen business at H2GS.

Under the planned study, the companies will identify locations for hydrogen production, as well as infrastructure for transporting it to harbours. H2GS estimates the facility will require 300MW of electrolysis capacity.

Gotland, which develops, charters and operates passenger ferries, has two new ships in development. Capable of operating on hydrogen gas, at least one of the ships is expected to be operational by the end of this decade. The new Horizon series ships will run on gas turbines powered by “multi-fuel”, meaning, different types of fossil-free fuels.

However, Gotland’s goal is to eventually run the ships on 100% hydrogen. For this, it will require 20,000 tonnes/year of hydrogen to operate between Gotland Island and the mainland. For such large amounts of hydrogen gas, “development of both production and infrastructure is essential”, says Gotland Company chief executive Håkan Johansson.

Reethu Ravi UK

A new candidate has emerged from the mist of rumours surrounding the potential acquisition of thyssenkrupp’s Steel division as it spins off from its parent group.

Czech billionaire Daniel Kretinsky is rumoured to be interested in acquiring a stake in the steelmaker, Der Spiegel reported. Previously, Abu Dhabi-based steelmaker Emirates Steel Arkan (ESA) was reported as a potential buyer, with a formal bid expected in months (see Kallanish 27 April).

Other parties that have expressed interest in the unit are reported to include Brazil’s CSN and financial investor CVC.

Thyssenkrupp continues to decline commenting on talks or bids in this process.

Christian Koehl Germany

ArcelorMittal’s plant in Fos-sur-Mer, southern France will be idled due to excessive emission levels. The stoppage has been ordered by the labour inspection authority and no date for a restart has yet been decided, Kallanish learns from the company.

“Faced with a disproportionate decision, we are working to avoid a plant shutdown, while reinforcing our commitment to health and safety in the workplace, and ensuring the delivery of products to our customers. On Friday, we were notified by the labour inspectorate of a decision to temporarily shut down part of the Fos site: the steel shop department. The shutdown of this department gradually implies the shutdown of all other units on the site,” a company spokesperson says.

The company is implementing an action plan to reduce employee exposure and is in talks with the labour inspectorate and unions. The management believes the decision to suspend the steel mill’s operations “and consequently those of the entire site is totally unfounded and disproportionate. In conjunction with the relevant administrative authorities, we are taking all legal steps to suspend this decision as quickly as possible,” the firm comments.

The shutdown has started and will take several weeks. Should ArcelorMittal’s appeal fail, the supply chain and sales teams are already taking advantage of the period of preparation for the shutdown to plan appropriate solutions for each of the customers concerned.

Natalia Capra France

Central European construction steel market participants note prices of rebar and wire rod have reached rock bottom. Some small increases could be announced, but the market remains challenging.

“This is generating some timid requests for re-stocking and if mesh prices do not fall any further – which appears impossible given the low values reached – then the wire rod market could also gradually resume some volumes of purchases in the coming weeks,” a mill source tells Kallanish.

The price decline stopping is also due to the application of new safeguard restrictions on wire rod imports from third countries, particularly Malaysia and Egypt. “The most probable scenario is therefore that of a July where we could witness some awakening of apparent demand for long products and some restocking, but producers will only be able to obtain relatively moderate increases, between €10-20/tonne [$11-22] at most, with a €10/t hike seeming more reasonable at the moment,” the source continues.

Another mill source says the market is gearing up for a €30/t hike for commodity-grade long products. Steelmakers are reducing or stopping rebar and mesh-quality rod production because current market values are not profitable enough, he adds.

Some steelmakers are announcing upward adjustments for rebar prices but wire rod is still seeing “deathly silence and prices firming at the bottom of the barrel … However, it is difficult to say with how much conviction producers are implementing rebar price increases given the very high inventories for all steelmakers and the current supply and demand imbalance”, he adds.

Buyers, especially those in Slovakia, Hungary, Germany, Poland and Czech Republic, are still seriously concerned about the level of real downstream demand, especially from the construction activity. The combination of higher credit costs and the skyrocketing cost of construction is now freezing the residential building sector.

This is particularly so in Germany; the number of new building permits in Bavaria has declined by over 50% compared to the same period in 2022. The situation appears to be only slightly better in northern Germany. Public works, for which start-up and construction times remain long, are only partially compensating for the drop in activity in the private sector. A large part of steelmakers in Germany are thus working at reduced utilisation to meet lower consumption.

“Italy, with its various incentives and some induced optimism, is perhaps performing better than all the other European countries at this stage … but a radical rise in energy costs will happen. This adds to uncertainties over tax credit which have allowed steelmakers to sustain acceptable energy costs in Italy. Mills expect July to see prices in the Italian market at least €30-40/t higher than June,” the source adds.

Scrap prices have bottomed in Italy and sources see extended August stoppages at all longs producers in the country. “We hope this will have a temporary supply and demand re-balancing effect. It’s difficult to say if the second part of the year will bring concrete signals of higher real consumption … The combination of the high cost of money and high construction cost could in fact require a long time for Europe to reposition itself to an acceptable level for the downstream market,” he continues.

“Moreover, the preliminary announcements for the next step of interest rate hikes by the European Central Bank are only having the effect to increase panic and uncertainty,” he adds. The market may have to wait until spring 2024 to see a real stable trend reversal that does not only reflect a momentary restocking, he concludes.

Natalia Capra France , Emanuele Norsa Italy

Central and Eastern Europe (CEE) is becoming a steel processing hub for Western European countries and a centre for steel exports to Ukraine, Metals Consulting International chief executive Alexander Siryk said at EUROMETAL’s Central Europe regional meeting in Krakow last week. Asian-origin steel is meanwhile gaining CEE market share, especially in the flat and stainless steel segments.

The volume of CEE steel production almost equals the volume of exports, Siryk pointed out at the event attended by Kallanish. On flat products, 865,000 tonnes/month are being exported from CEE in 2023 versus 1.13 million t/m in 2022, with Austria accounting for 40%, Slovakia 24% and Poland 12% this year. Ukraine has accounted for 3% of 2023 flats exports versus 1% in previous years, Siryk showed. Overall exports have however slowed in 2023 due to stagnating European demand.

Around 1m t/m is of steel is meanwhile traded between CEE countries, of which 60% are flats, with Czech Republic and Poland the largest destinations.

CEE imports of steel for processing have grown some 30% since 2010, peaking at 2.1m t/m of imports from non-CEE origins in 2021, with the figure at 1.7m t/m in 2023. Other EU countries account for around 70% of supply, with flats representing over half of supply.

As for imports from Asia, this origin has upped its import share to 10% for flats and 12% for stainless steel in 2023 versus 6% each in 2010. Poland imported 40% of the 875,000 t/m of flats intake in 2023.

CEE crude steel production has been inching down since 2010 amid serious industry restructuring and optimisation, Siryk observed. Liberty has become a major player in the region after acquiring plants from ArcelorMittal, followed by further takeovers. The insolvency of Dunaferr meanwhile poses a question over its future ownership, with Liberty currently managing the steelworks.

The green transition will revolutionise the region’s steel industry, which is 79% based on the blast furnace route, forcing local supply chains to adapt, Siryk concluded.

Adam Smith Poland

Steel traders should be preparing for the transition to the EU’s Carbon Border Adjustment Mechanism (CBAM) with just three months to go until the reporting of embedded CO2 emissions on imported goods gets underway.

The three months from October 1 to December 31 mark the first trading period that will be subject to emissions reporting under the new regulations, and the European Commission is now finalising its plans for CBAM’s implementation.

An initial, transitional CBAM period extends to the end of 2025 and only covers the collection and reporting of importers’ carbon data. The payment of tariffs and potential fines does not apply until CBAM’s formal replacement of the existing EU Emissions Trading System (EU ETS) gets underway in 2026.

Right now, steel sector participants have been invited to share feedback on the proposed CBAM implementation process via a consultation. Opened on June 13, this will end on July 11.

Publication of the Commission’s draft Implementing Regulation document, which accompanied the consultation’s launch, has also provided an opportunity to gain an initial oversight of the proposed CBAM reporting process.

The document details the process of reporting, the proposed methodology used to calculate an imported product’s embedded CO2 emissions and the potential fines levied for non-compliance.

An outline of information to be submitted in CBAM reports can also be found in the publication’s accompanying annexes.

Proposed CBAM processes

The Commission’s documentation indicated that a CBAM Transitional Registry platform will be used for the filing and management of CBAM reports. This should be compatible with existing customs systems, it said.

It said there would be choice of three reporting methods during the first year of the transition to CBAM. They are: (a) full reporting according to a new EU methodology detailed in the document; (b) reporting based on equivalent third country national systems; and (c) reporting based on reference values. As of January 1, 2025, only the EU method will be accepted, however.

Three categories of reporting declarants can submit CBAM reports. They are:

• An importer who lodges a customs declaration. This refers to the importer who submits a customs declaration for the release of goods in its own name and on its own behalf.
• An importer who declares the importation of goods. This category includes importers who hold an authorisation to lodge a customs declaration and declare the importation of goods.
• An indirect customs representative. When the importer is established outside the European Union or when the indirect customs representative agrees to fulfil the reporting obligations, the indirect customs representative may lodge a customs declaration and carry out the reporting obligations.

Reporting declarants will be required to submit a CBAM report within one month after the end of each quarter during the transitional period, with the first due by January 31, 2024.

The Commission’s draft Implementing Regulation document revealed that submitted CBAM reports can be modified or corrected within two months of a reporting quarter, under certain circumstances, however.

An initial derogation period will allow the first two CBAM reports to be modified until the submission deadline for the third report on July 31, 2024.

Additionally, if a CBAM report is incorrect or incomplete, the reporting declarant can request permission to make modifications or corrections within one month of the request’s approval by the competent authority or the Commission.

Potential penalties

Although the formal process of CBAM reporting has yet to be determined, an indication was given of potential fines for non-compliance.

The Commission said penalties should be based on the amount of undeclared embedded emissions. It said: “The amount of the penalty, for each tonne of unreported embedded emissions shall be between EUR 10 and EUR 50.”

In the initial transitional period, when the CBAM’s scope is limited to the reporting of data with no financial obligation, the amount of penalty should be based on “the gravity and duration of the failure to report”, it added.

Earlier this month MEPS reported on suggestions that financial support and energy sector reform must accompany CBAM for Europe’s steel mills to meet their emissions-cutting targets.

Later this week MEPS will publish a Q&A document detailing the background to CBAM and answering many of the steel sector’s most frequently asked questions on the subject.

Source: mepsinternational.com