Category: Latest Updates

Future supply of steel scrap for the needs of European steelmakers is not at risk, unless export trade restrictions impact the activity of European recyclers, according to a recent report published by EURIC, a European organisation representing European recycling industries.

The association calculated that since 2005 the percentage of domestic ferrous scrap used by the European steel industry has remained stable at 56-57%. Crude steel production in 2005 reached its peak in Europe at over 180 million tonnes, with consumption of scrap surpassing 100mt. In 2021, crude steel production was 152.6mt and scrap consumption 87.9mt.

While local demand has remained proportionately stable, exports have increased as the European recycling sector has boosted activities. “The European steel recycling industry, despite two landmark economic crises (in 2008-2009 and in 2020-2021), has steadily increased without benefiting from any subsidies. The industrialisation of metal recycling combined with the multiplication of recycling facilities across the EU enables metal recyclers to cope with a foreseeable increased demand for steel scrap within the EU or outside the EU,” EURIC explains in the report seen by Kallanish.

As a result, the association believes there is no risk of shortage of European scrap for European steelmakers. “The steel recycling industry recycles more steel than past, present and expected future demand, provided the right policy framework is maintained and further developed to reward CO2 savings and the use of circular materials,” EURIC adds.

The only risk could arise if export restrictions impact the European recycling sector as much as to limit scrap collection and processing in the continent.

“Curtailing access to international markets through regulation will simply distort well-functioning markets and artificially decrease the value of recycled materials. This will result in less collection and less recycling as empirically observed in all regions across the globe where such measures have been put in place,” EURIC explains. “In addition, lower or no profit margin will deprive European recycling companies, the majority of them being SMEs, from having the ability to invest into capacity and innovation needed to meet the needs of steelmakers and end-producers.”

The association also points out that putting further burden on recyclers in Europe could unlevel the playing field with suppliers of extracted raw materials, such as iron ore, imported from non-EU countries. These are not included in CBAM despite their intrinsically high carbon content.

“From a strict environmental and human health standpoint, stricter regulations to ensure that extracted raw materials are mined in conditions equivalent to the ones set in the EU shall be a priority, also to incentivise sustainable mining in Europe,” EURIC concludes.

Emanuele Norsa Italy

Slow activity continues in the European stainless flat steel market. Both upstream demand for coil and downstream demand for tube and sheet remains subdued, with sources in northern and southern Europe not foreseeing any particular change in the coming months.

Attempts at increasing cold and hot rolled coil prices by European mills have mostly failed, as most countries are showing stable values compared to January. Lead times are extending for imported Asian-origin material, making import purchases less attractive. European mills are quoting March and April lead times, Kallanish notes.

While mills are sustaining high costs of production and say they are in need of increasing their prices, service centres in northern and southern Europe are reporting an average level of demand for their products. Some see the return of normal consumption following the post-pandemic rush. “The market is not booming any more, it is just going back to the normal levels of 2018 and 2019. We must forget about 2021 and 2022 – they were exceptional years,” a service centre comments. Another says that keeping prices stable is a substantial achievement and the flats market can no longer absorb any hikes.

Northern European stainless CRC values are now hovering at €3,050-3,100/tonne ($3,263-3,317) on average and at approximately €2,800-2,900/t delivered for HRC. Italian prices are at some €50/t lower, sources suggest.

Natalia Capra France

Liberty Steel has secured a deal with the Hungarian state allowing it to draw a credit line in state-owned EXIM Hungary in connection to Hungarian integrated flat steel producer Dunaferr, a source close to the matter told S&P Global Commodity Insights Feb. 16.

UK-registered Liberty Steel declined to comment on the state guarantee for the credit line, but its spokesperson confirmed that in the Dunaferr liquidation process, Liberty has proposed a series of steps to ensure business continuity at the steelworks.

The Dunaferr team has started to stabilize the company’s operations, which includes restarting blast furnace No. 2, running the coke ovens and ensuring a sustainable supply of raw materials, the spokesperson said.

“Further measures will be needed to ensure a sustainable future of the Dunaferr business in the long term,” he said, adding that Liberty was committed to using its experience to help Dunaferr take these steps.

Liberty Steel began to pay for raw materials and transportation fees, and has already supplied 40,000 mt of coal, all of which should ensure Dunaferr’s operations for several months, according to the source.

The capacity of the restarted furnace is 55,000 mt/month of pig iron. The other blast furnace at the mill that was stopped in August cannot be restarted at a reasonable cost, the source said.

Liberty Steel’s first request to Dunaferr was to produce 10,000 tons of hot-rolled coil for Liberty’s coil coating Liege and Dudelange operations in Belgium and Luxembourg, respectively; this way Liberty would like to restart the Liege and Dudelange mills, he said, adding that the mills have not been operating for some months, leading to discussions about their possible nationalization.

Since September 2022, Liberty Steel had been in negotiations with the administration of the Walloon region, where Liege mill is situated, for the region’s investment arm Sogepa to take a 49% stake in the plant and put up a loan for it to continue operations, as S&P Global reported previously.

— Maria Tanatar, Ekaterina Bouckley

German steel producer Salzgitter has acquired recycling company Must-Metalle-Container-Recycling as part of its strategy to secure supply for its low CO2 steelmaking transformation, it said Feb. 16.

The acquisition of the scrap trading company, based in Goslar in northwest Germany, closed on Feb. 15 for an undislcosed price and was made through Salzgitter’s subsidiary Deutsche Erz- und Metall-Union.

Must-Metalle-Container-Recycling manages a regional container provision and waste point business and relies for its supply predominantly on companies in the metalworking industry. Its downstream operations comprise sorting and processing for the targeted provision of quality scrap grades.

Salzgitter said the acquisition contributes to its 2030 strategy aimed at “circularity” and achieving low CO2 steelmaking under its SALCOS (Salzgitter Low CO2 Steelmaking Transformation) project.

For SALCOS, Salzgitter needs to significantly expand its scrap recycling capabilities and captive supply of high-quality secondary raw materials for its future steel production. With Must-Metalle-Container-Recycling in the portfolio Salzgitter will have ample scrap collection in the immediate vicinity of its flagship Flachstahl steelworks.

The SALCOS program will see the construction of two direct reduction plants and three electric arc furnaces (EAFs) at the mill in Lower Saxony to incrementally replace its blast furnaces and converters. The first of the three EAFs, with a crude steel capacity of 1.9 million mt/year, is scheduled to go live by the end of 2025, with full completion by 2033.

Must-Metalle-Container-Recycling will continue to operate as an independent company within Salzgitter under the name Harzer Schrott und Recycling.

Another European industry major, ArcelorMittal, has bought four scrap metal recycling companies over the last year boosting its captive scrap recycling in Europe by around 1.5 million mt/year as it develops its capability to deliver low-carbon emissions steel.

Platts, part of S&P Global, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $418/mt CFR Feb. 15, unchanged on day. The assessment gained $16/mt or 4% from this year-start but was $88 or 17.5% lower year on year.

— Ekaterina Bouckley

Trading activity remained limited in the European hot-rolled coil market Feb. 16 as mills insisted on higher prices and buyers resisted the increases because of an uncertain market outlook.

Platts assessed domestic hot-rolled coil prices in Northwest Europe stable day on day at Eur785/mt ex-works Ruhr.

Offers have been reported at the equivalent of Eur780-800/mt ex-works Ruhr and Northwest Europe. Market participants estimated tradable values at Eur780-800/mt ex-works Ruhr. Bids have been heard at Eur750/mt ex-works Ruhr. One source also reported unconfirmed deals at Eur750-755/mt ex-works Northwest Europe.

European steelmakers have been offering late April-May rolling HRC. The full order books have been the key driver behind the mills’ bullish approach.

Some buyers, however, questioned the producers’ claims and believed that they would be able to get earlier production in case of firm bid.

Lack of competitive import offers and high production costs have also contributed to the domestic coil price rise.

“Mills say that they have enough volumes sold, and you can either accept the offer price or leave it,” a service center source said.

Distributors have been struggling to transfer price rises for new production coil to their customers.

“End-users are not ready to accept higher prices,” a European distributor said. “The mills face high energy and other costs, and the price rise is justifiable, but end-users set the mood in the market. If they do not accept higher prices, a price increase is unlikely.”

In addition, buyers have been concerned that the end-user demand has not been strong enough to support higher prices.

As a result, buyers have been making deals only for smaller lots of coil to fill gaps in their stocks.

Also, some market participants were expecting prices to decline in the second half of the year.

Platts assessed domestic hot-rolled coil prices in South Europe at Eur770/mt ex-works Italy Feb. 16, stable day on day.

A deal was heard at Eur770/mt ex-works Italy. Tradable values have been reported at Eur770-780/mt ex-works Italy. An integrated mill from the north of Italy has been offering HRC to Northwest Europe at Eur850/mt delivered, making it the equivalent of Eur790-800/mt ex-works Italy.

Volumes available from Italian mills have been limited, as a producer from the south of the country had no volumes to offer, a mill in the north has been focused on sales of downstream coil, and rerollers had reduced availability.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar

The Northern European wire rod market was quiet in the week to Wednesday February 15 after most buyers chose to restock in January, Fastmarkets heard.
Sources said there’s no logic in prices continuing to fall because input costs for iron ore and scrap have been rising and underlying consumption from the construction industry has been relatively stable.

Market participants forecast a future downtrend reversal across long products in Northern Europe.

Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe was €710-725 ($762-779) per tonne on Wednesday, narrowing upward by €30 per tonne from €680-725 per tonne week on week.

Mills are likely to resist any further downtrend in the Northern European wire rod market, sources said.

Despite cut and benders offering unworkably low prices to end-users and attempting to restock at similar price levels, mills will not offer further discounts, sources said.

Consumption levels from public and industrial projects remain robust and fears regarding a worsening recession have been overstated, sources said.

“Domestic prices will go up,” a producer source said. “At the moment, we are not working with a realistic or workable price. Iron ore and scrap prices are going up so there is no reason why prices are so depressed.”

“Demand, aside from in the private housing sector, is stable in Northern Europe,” a buyer source from Germany said. “For whatever reason, be it negative sentiment or overcapacity among cut and benders, prices are unworkably low.”

The impact of a recession on the construction industry has been overstated, sources said, with bearish sentiment unreflective of the current market situation. This opinion was similarly stated in the the International Rebar Producers & Exporters Association’s (IREPAS) short-term outlook.

“It seems that customers heard too much talk of recession last year and were convinced that all construction would stop in 2023,” the IREPAS outlook said.

“Actually it looks like Europe managed to avoid recession in 2022 and even in January, Germany showed economic growth. Core inflation is going down and the situation looks much better than expected in Europe and the US,” the outlook added.

Sources remained uncertain regarding the impact of the earthquake in Turkey on the market.

“Attention is focused on Turkish steel mills. Logistical problems in terms of getting raw materials into mills have made production more difficult, in turn potentially limiting production capacity,” a second producer source said.

A reduction of Turkish imports into Europe could increase demand for domestic stock, sources said.

International scrap prices, which have been rising since December 2022, affect the price of all long steel products.

Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was $410.79 per tonne on February 15, down from $418.62 per tonne last week.

Published by: India-Inés Levy

Current price levels in the Northern European rebar market are not considered workable by producers, Fastmarkets heard.
Rising input costs and stable consumption levels have resulted in depressed prices no longer reflecting market realities, sources said.

Aside from the private housing sector, demand from public and industrial construction projects was reported as stable.

Negative sentiment regarding a recession and overcapacity among cut and benders has put pressure on prices, but the bearish outlook has not been reflective of underlying consumption levels which are relatively robust, sources said.

Mills are unlikely to accept further price drops, because it would bring prices below the cost line, sources said.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe was €710-730 ($762-784) per tonne on Wednesday February 15, up by €20 per tonne from €690-710 per tonne week on week.

Market activity remained quiet in the Northern European rebar market in the week to February 15, because buyers restocked in January.

Despite weak demand, underlying consumption from public and industrial projects remained robust, sources said.

“The market is very quiet at the moment. Such a quiet market is unusual for this time of year, especially as the weather is good,” one buyer source from Germany said.

The buyer source, however, maintained that demand was stable.

“Demand, aside from in the private housing sector, is stable in Northern Europe,” the source said. “For whatever reason, be it negative sentiment or overcapacity among cut and benders, prices are unworkably low. Cut and benders are speculating on further reductions, which are not going to happen. Mills cannot drop prices further but also have minimal leverage.”

Future price rises are expected, Fastmarkets heard.

“Domestic prices will go up,” a producer source said. “At the moment, we are not working with a realistic or workable price. Iron ore and scrap prices are going up so there is no reason why prices are so depressed.”

The impact of a recession on the construction industry has been overstated, sources said, with bearish sentiment remains unreflective of current market situation. This opinion was similarly stated in the International Rebar Producers & Exporters Association’s (IREPAS) short-term outlook.

“It seems that customers heard too much talk of recession last year and were convinced that all construction would stop in 2023,” IREPAS said in the outlook.

“Actually it looks like Europe managed to avoid recession in 2022 and even in January, Germany showed economic growth. Core inflation is going down and the situation looks much better than expected in Europe and the US,” the outlook added.

Sources remained uncertain what the impact the earthquake in Turkey will have on the market.

“Attention is focused on Turkish steel mills. Logistical problems in terms of getting raw materials into mills has been affected, in turn potentially limiting production capacity,” a second producer source said.

“We are waiting to get a better understanding of how this could impact the market, but it will likely reduce Turkish imports of long products into Europe,” the source added.

International scrap prices, which have been rising since December 2022, affect the price of all long steel products. Prices have fallen in the week to February 15.

Fastmarkets’ daily calculation of the index for steel scrap HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was $410.79 per tonne on February 15, from $418.62 per tonne last week.

Published by: India-Inés Levy

European steelmakers are insisting on higher prices for hot-rolled coil despite buyer hesitation on positive trend sustainability and limited trading activity, sources told S&P Global Commodity Insights Feb. 15.

Earlier this week, ArcelorMittal and other European steelmakers increased offers to Eur820/mt delivered across Europe. The new offers were the equivalent of about Eur790-805/mt ex-works Ruhr and of Eur780-800/mt EXW Italy, according to estimations of market participants.

Buyers have been reluctant to accept the price increase, and trading activity remained limited.

The resistance of the distributors to accept the higher prices has been mainly driven by a combination of uncertain outlooks and the fact that they struggled to transfer the price increases to end-consumers.

“The distributors argue that they are squeezed between the resistance of end-users, such as [original equipment manufacturers], to accept higher prices despite good prices for finished goods and rising steel prices from the mills,” a German service center said. “Buyers book only absolutely required volumes as concerns remain high that prices would drop in the second half of the year.”

“It is not easy to push price rises for the material ex-distributor to end-users, so price rises for new material have also slowed down,” an Italian trader said.

Some buyers have also suggested that the mills would give discounts if they received firm bids. Such statements, however, have not been supported by information about any new transactions.

The supportive mood of the steelmakers has been driven by good order books, a lack of competitive import offers, and stable demand.

The European mills have limited volumes for April rolling HRC and a majority have already been trading May production material.

Platts assessed domestic prices for HRC in Northwest Europe at Eur785/mt EXW Ruhr Feb. 15, up Eur15 on the day, based on tradable values reported at Eur760-800/mt EXW Ruhr and offers heard at Eur820/mt delivered Ruhr.

The assessment for the import HRC prices in the region rose by Eur10 to Eur750/mt CIF Antwerp Feb. 15. Import offers for Asian material have been heard at Eur740-770/mt CIF Antwerp.

Platts assessed domestic prices for HRC in South Europe at Eur770/mt EXW Italy, up by Eur10.

Market sources reported tradable values at Eur750-780/mt EXW Italy. One source reported deals at Eur760-770/mt EXW Italy. Italian mills have been offering HRC at Eur820/mt delivered.

Import offers, in the meantime, have been reported at Eur740-770/mt CIF for HRC from Asia.

Platts assessed prices for imported hot-rolled coil in South Europe at Eur750/mt CIF Italy Feb. 15, up by Eur10.

Import prices need to be about Eur70-100/mt below the domestic coil prices to spur buyer interest, according to market sources.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar

Dunaferr has restarted one of its two idled blast furnaces after months of completely suspended production. Coking coal feedstock for the troubled Hungarian steelmaker’s coking plant, the shortage of which was a major factor behind the production stoppage, has been supplied by Liberty Steel, informed sources tell Kallanish.

Iron ore feedstock has been sourced from stock, according to one source, and is sufficient to ramp up production, but significant fresh supplies must follow to ensure its continuation, especially considering logistical problems and the Ukraine war.

Liberty Steel is said by various sources to be managing Dunaferr’s restart, having signed a short-term contract to run the steelmaker. This is, however, yet to be confirmed by Liberty, which also owns and operates the Galati, Ostrava and Czestochowa mills in Romania, Czech Republic and Poland respectively.

“In this configuration, Dunaferr should generate significant losses,” says a source of the latest development. “But the [Hungarian] government ensured six months of salary as well as free electricity and natural gas, so it’s pretty much a warm bath for Liberty, who may later take over assets against cash they spent for coal.”

Hungarian Prime Minister Viktor Orbán said earlier this month that besides paying the salaries, the government will also work to find a reliable new owner for the troubled steelmaker. Ukraine’s Metinvest recently expressed its interest in acquiring the insolvent mill.

Some sources also suggest Dunaferr plans to restart its hot strip mill in March and supplement captive slab feedstock with slab sourced from Liberty Galati. Dunaferr’s BF1 will remain out of operation, possibly permanently if it has sustained irreparable damage as a result of its prolonged shutdown.

Liberty Steel declined to comment.

Now is an opportune time for Dunaferr to come back onto the hot rolled coil market, with European producers increasing prices consecutively since December. Market leader ArcelorMittal raised its HRC quote this week to €820/tonne ($878) delivered across Europe. Coated coil is also reported to be in strong demand.

Regional sentiment has improved following the peak of destocking, coupled with reduced supply in the fourth quarter last year. Contrary to fears, Europe also managed to avoid recession in Q4, while inflation has eased and energy prices fallen.

Adam Smith Poland

French and domestic scrap prices are more or less stable compared to January, with some €5/tonne ($5.3) increase. However, before the Turkish earthquake, mills in Luxembourg and Belgium agreed to hikes of €20-25/t month-on-month, in line with the European market trend before the event.

Shredded and chiselled E40 and E1 remain in short supply, while E8 new arisings is abundant. Demand is patchy this month – rather strong in Luxembourg but more moderate in France where producers are witnessing a continued downturn in sales of finished long products, sources tell Kallanish.

So far, French domestic shredded E40 grade is pegged at €375-380/t delivered on average. The mixed E8 grade remains flat at €350/t on average. Demolition E1 and E3 are on average at €330/t and €350/t delivered respectively this month, sources suggest.

Meanwhile, scrap prices in the Benelux have fallen gradually since the earthquake hit Turkey. Business activity remains quite weak as Benelux exporters are avoiding buying scrap until there is more clarity over the Turkish market situation. Benelux exporters’ dock prices, which were on an upward trend and at around €350-360/t delivered a week previously, were mostly at €315-320/t in Belgium and €320-325/t delivered in the Netherlands on Monday (see Kallanish 14 February).

Natalia Capra France