Category: Latest Updates

Italian coil demand has gone quiet after the strong sales of recent weeks. Hot rolled coil contract prices are now increasing by €20/tonne ($21) compared to last week, but service centres are beginning to adopt a wait-and-see attitude, Kallanish hears.

Local steelmakers are increasing their HRC offers to €800-820/t base ex-works or delivered, from last week’s €780/t. ArcelorMittal is also pushing coil offers in Europe up further. They are now at €820/t delivered across Europe for HRC (see Kallanish 14 February).

Buyers believe European producers now have a strong advantage as traditional exporters to Italy – Japan, Korea, Taiwan, and India – have smaller allocations to Europe. Their quotes are uncompetitive and have very long lead times. Domestic HRC increases will be successfully passed on downstream, not least because all indexed contracts are also increasing in line with higher asking prices.

This week, Italian contracts are hovering at €770-800/t base delivered, with lead times extending to end-April and May.

While re-rollers are struggling to increase welded tube prices because of slow demand, service centres are reporting sustained sales volumes and shipping in January and February. New orders, however, are said to be slowing down due to increasing prices.

Natalia Capra France

Polish scrap exports to the Indian subcontinent surged 76% on-year in January-November 2022 to 517,682 tonnes, according to data from Poland’s Central Statistical Office (GUS) monitored by Kallanish.

Shipments to India saw especially large growth, reaching 236,225t versus 56,364t in January-November 2021, while exports to Bangladesh surged 158% to 144,326t.

Shipments to Pakistan nevertheless dropped 25% to 137,132t.

Scrap exports to traditionally largest market Turkey slumped by two thirds to 176,742t.

Overall Polish scrap exports nevertheless dropped 22% in January-November 2022 to 2.09 million tonnes.

Polish coking coal exports meanwhile slumped 39% in January-November 2022 to 1.67mt, due to halved shipments to Ukraine and almost 500,000t less dispatched to Czech Republic.

According to worldsteel data, Polish crude steel production dropped 8% on-year in the 11 months to 7.16mt.

Adam Smith Poland

The French rebar market is seeing a prolonged deadlock. After reporting weak sales in January, sellers and buyers say uncertainty remains and sales volumes are low. Since the last quarter of 2022, the country has been witnessing significantly lower consumption both on the domestic and export market, Kallanish hears.

Distributors say the local construction sector has orders in hand, but contractors are refusing to commit to volumes given the current uncertainty. Stock levels are not high at rebar buyers’ yards, who prefer to continue buying back-to-back or are adopting a wait-and-see attitude. Other producers in European countries such as Italy and Spain are dealing with the same stagnating market while trying to keep their prices from falling.

Domestic rebar prices have lost some €40/tonne ($42) on average compared to January and are hovering at €670-710/t delivered, depending on quantity, sources suggest.

Sentiment among French construction companies deteriorated in January. According to the latest l’Institut National de la Statistique et des Études Économiques (Insee) report, the construction firms surveyed were less optimistic than in December regarding their expected and past activity (see Kallanish 31 January).

Natalia Capra France

Steel mills in Europe are still hoping to achieve higher prices for second-quarter-rolling hot-rolled coil, despite buyers making no purchases at all on Tuesday February 14, Fastmarkets understands.
On Monday, leading European steelmaker ArcelorMittal raised its offer prices for May-delivery HRC by €20 per tonne, to €820 ($877) per tonne delivered, but the market participants put the workable price at between €750 and €770 ($802-823) per tonne ex-works.

“Mills have good order books, they are not hungry for orders and there is no pressure from their side,” a trading source in Germany said. “And we see stock levels at steel service centers are getting lower and there are gaps in some dimensions and grades [of HRC].”

Producers in Northern Europe have mostly sold out of April-delivery coil, sources told Fastmarkets.

“The lead time [for HRC] is about seven or eight weeks now,” a second trader in Germany said.

Market participants said they expect European buyers to come back to the market to restock with May-delivery volumes in about two weeks’ time.

“There is a chance that higher offers will be accepted in deals, even though the demand from the automotive and construction sectors is not booming,” a distributor in the Benelux area said. “But mills are in a better position than buyers right now and, of course, there are practically no competitive import offers.”

Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €765.63 ($818.57) per tonne on Tuesday, down by €2.15 per tonne from €767.78 per tonne on Monday.

But the latest calculation of the index was up by €10.63 per tonne week on week and by €54.92 per tonne month on month.

Fastmarkets’ calculation of its corresponding daily steel HRC index, domestic, exw Italy, was €756.25 per tonne on Tuesday, down by €0.42 per tonne from €756.67 per tonne on Monday.

The latest calculation of the index was, however, up by €6.67 per tonne week on week and by €59.62 per tonne month on month.

Offers of April-May delivery coil from integrated mills were heard at €780-800 per tonne delivered – equivalent to €760-780 per tonne ex-works.

But market participants said that one integrated producer in the south of Italy was overbooked and was, therefore, delaying orders.

Buyer estimates of achievable prices were heard at €770-780 per tonne delivered (€750-760 per tonne ex-works).

Import offers were rare in the market on Tuesday, however, although one trading source in Italy reported an offer from an Indian supplier at €720 per tonne CFR to Italy, albeit for a limited tonnage.

April-shipment HRC from South Korea was on offer to Italy at $810 per tonne CFR.

And an offer of April-shipment HRC from a Japanese mill was heard at €775 per tonne CFR, but this was not considered workable by buyers.

Buyers indicated their idea of a workable price for imports in Southern Europe was no higher than €740-750 per tonne CFR.

Turkish suppliers, who can usually offer short lead times compared with the Asian mills, remained out of the market because of the disruption caused by last week’s earthquakes.

Published by: Julia Bolotova

ArcelorMittal Poland resumed operations at blast furnace No. 3 in January to substitute production from furnace No. 2 at the Dabrowa Gornicza plant, the company’s spokesperson told S&P Global Commodity Insights Feb. 14.

The steelmaker currently is preparing BF No. 2 to be stopped in the first quarter for an extended overhaul.

“In order to maintain production and guarantee undisturbed supplies to our customers, we restarted, in early January, BF No. 3 that had been stopped since October,” the spokesperson said. BF No. 3 had been idled in response to declining demand for steel and surging production costs in Europe.

ArcelorMittal’s European operations produced 31.9 million mt of crude steel last year, down 13.3% from 2021.

— Maria Tanatar

Turkish steel mills in the regions of the Feb. 6 earthquakes may remain closed for around a month until workforce, logistics and power cut problems are resolved, Turkish Steel Producers’ Association (TCUD) General Secretary told S&P Global Commodity Insights Feb. 14.

No notable damage was reported at production facilities, Veysel Yayan also said.

“Producers in the region have focused on rescue efforts and life support services in recent days, as many workers and their families have been affected by the earthquakes,” Yayan said.

Iskenderun Demir ve Celik (Isdemir), the country’s largest integrated long and flat steelmaker with a liquid capacity of 5.8 million mt, said Feb. 13 it had suspended production until due diligence studies were completed.

At least four other steelmakers in the region issued a joint force majeure notice Feb. 12, citing the president’s decree introducing a three-month state of emergency in the impacted regions.

Large steelmakers in the region produce more than 30% of Turkey’s steel, Yayan said, adding that steelmakers in other regions would be able to meet demand in the interim.

Turkey has enough production capacity to meet the expected rise in steel demand in coming months as reconstruction begins, with producers set to prioritize domestic demand over exports, Yayan said.

“This move will also prevent a sharp rise in steel prices in the country,” Yayan said, adding that increases seen in domestic flat steel prices in recent days were in line with global prices.

Some trade sources have reported increases of around $40-$50/mt in coated flat steel offer prices in recent days, although long steel prices have remained largely stable amid subdued trade.

Platts, part of S&P Global, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $427.50/mt CFR on Feb. 13, and Turkish exported rebar at $700/mt FOB, both unchanged day on day.

— Cenk Can

ArcelorMittal has increased its offer prices for steel coil in Europe by about Eur20/mt ($22/mt) and some other mills have also increased theirs, supported by a combination of full order books and lack of competitive import offers, market sources said Feb. 14.

New offers from ArcelorMittal were said to be at Eur820/mt delivered for hot-rolled coil and Eur940/mt delivered for hot-dipped galvanized coil in Germany.

“Import offers are limited in numbers, and prices we get are for long lead times,” a European service center said. “Even if someone decides to buy with additional transportation costs by land the price would be similar to those available from European mills. So, more people turn to domestic mills, and it helps the price rise.”

May-June rolling material has been available in Germany and second quarter production in the rest of Europe, sources said.

Platts assessed domestic prices for hot-rolled coil in Northwest Europe at Eur765/mt ex-works Ruhr on Feb. 13.

Prices in Central Europe have been at similar levels on delivery basis, sources said.

An Italian source said offers from ArcelorMittal have moved up to Eur800/mt delivered Italy for HRC.

Some other European steelmakers have also increased offers to the similar rates, according to market sources. An Italian producer said they have already been offering HDG at about Eur940/mt delivered over the past couple of weeks.

Demand

Demand has remained stable and was expected to continue little changed in the near term, according to market sources.

As a result, the price increase is likely to be gradually accepted by the European buyers.

“I think this approach of the mills when they increase prices by about Eur20/mt over the latest deals is smart,” an Italian service center said. “The increase is reasonable. It is both unavoidable in the current market, but it is also manageable.”

— Maria Tanatar

Debunking myths & setting a clear pathway to decarbonise steel through recycling

Europe champions steel recycling, both in terms of quantity and quality delivered to steel mills every year. Since 2007, the quality of recycled steel materials is defined in an EU-27 specifications which are based themselves on earlier specifications (1995 EUROFER – EFR specifications).

These specifications standardize the qualities (grades) of recycled steel scrap that are delivered by the recycling industry to steel mills. It ensues from these specifications that steel recycling facilities use as inputs waste and scrap containing ferrous metals which are reprocessed into recycled steel scrap meeting these specifications (e.g. as E1, E2…E40 quality grades).

These recycled materials are used by steel mills in Europe and globally as a substitute or as a complement to iron ore, thus enabling major carbon savings and circular economy gains.

The European steel recycling industry currently recycles on average 100 million tons of ferrous waste for about €40 billion turnover and employs several thousand non-outsourceable workers across Europe. On average 80% of that amount is used domestically by European steel mills and 20% are exported.

With a supply of recycled steel scrap that structurally exceeds the demand in Europe, there is no risk, presently or in a foreseeable future, of supply shortages that could justify trade restrictions. In a similar fashion, while recycled steel scrap plays an essential role to decarbonize steelmaking in the EU and globally, recycled steel scrap cannot be labelled as being a critical raw material since it is everything but scarce, at least in the EU.

Most market participants expect long steel prices in Europe to rise in the near term amid availability concerns after the recent major earthquakes in Southeastern Turkey and Syria, sources told S&P Global Commodity Insights.

“Unfortunately, we are expecting long steel prices to move up in a few weeks’ time,” one European mill source told S&P Global, in the aftermath of the earthquakes in Turkey and Syria Feb. 6. “The flow of imports will definitely come down in the coming weeks, which will mean an improvement in prices.”

Turkish mills have been major exporters to European countries for long steel products like rebar and wire rod evident by the quick exhaustion of Turkish-imported long steel European safeguard quotas in the past.

Little demand for January-March quota period

For Turkish-origin rebar imports into Europe, the October-December 2022 quota of 90,857 mt was exhausted Oct. 1, 2022, while about 30% of 114,236 mt of October-December 2022 quota of Turkish-imported wire rods was transferred to the January-March safeguard quota period.

However, Turkish mills saw little demand for the January-March quota period from Europe. For the current quota period that started Jan. 1, 52,252 mt, or 58.8%, of a total of 88,881 mt of Turkish-origin rebar imports was still awaiting allocation at 6:30 pm London time Feb. 10.

Elsewhere, 138,982 mt, or about 95.6% of a total Turkish-origin wire rod quota of 145,329 mt, still remained as of 6:30 pm London time Feb. 10 for the January-March quota period.

A second European mill source indicated that quota was not fully booked from Turkey for the January-March quota period as weather conditions and high inventory levels over the past quarter impacted demand. The source also noted that competitive prices from Egypt and Algeria also affected demand for Turkish long steel products.

Platts, part of S&P Global Commodity Insights, assessed Turkish exported rebar at $670/mt FOB on Dec. 31, 2022, down from an intrayear high of $970/mt FOB reached March 24, 2022. Platts current assessment of Turkish exported rebar stood around $700/mt FOB on Feb. 10, as the market was mainly on hold amid the ongoing crisis.

Amid the recent earthquakes and ongoing crisis in the Southeastern part of Turkey, the European mill source noted that customers in the Mediterranean Sea region were inquiring about rebar amid concerns that some cargoes might not be able to be delivered from Turkey.

“Customers are more concerned if we have availability in case the material cannot come,” the source said.

“Prices in the European domestic market are currently stable for rebar,” the source said. “We were planning to increase prices after last week but since the situation in Turkey we are in a wait and see mode. One point of view is that scrap prices will be going down, but the other point of view is that there might be a lack of rebar in Europe,” he said, implying that limited availability of rebar might support higher prices.

Platts’ assessment of Northwest Europe Rebar decreased Eur5/mt to Eur710/mt ex-works week on week to Feb. 8, according to S&P Global data.

Domestic scrap prices expected to soften

“Prices might increase for finished steel products [in Europe], but we can see the full effects of it in a few weeks,” another European mill source said. “It is too early to tell, and there are other factors too, like other importers and scrap prices.”

“Because of the crisis … [the importers’] capacity to receive scrap in Turkey is going to be lower, which will mean more supply in Europe, which can lead to lower prices for scrap,” the source said. “So, we can have a better idea about the situation in a few weeks.”

Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $427.50/mt CFR Feb. 10, unchanged from Feb. 9.

Amid uncertainties regarding near-term scrap demand from Turkey, domestic ferrous scrap prices in Northern Europe softened in February, as mills resisted seller attempts for further hikes. In Northern Europe, Platts’ assessment for domestic shredded scrap was at Eur382.50/mt delivered to the mill Feb. 10, down Eur5/mt month on month. Platts’ assessment for Southern European shredded scrap was at Eur390/mt delivered to the mill Feb. 10, unchanged month on month.

One distributor source in the Benelux region said it was too early to deduce “what the real impact might be on imports or domestic prices in the region after the earthquake in Turkey.”

Meanwhile, Turkish steel mills in the impacted regions of the Feb. 6 earthquakes were aiming to restart production as soon as possible, as no serious damage was reported at most of them, the mills said Feb. 10.

— Rabia Arif

The European Commission confirmed last week the opening of an expiry review for anti-dumping duties against certain corrosion-resistant coils originating from China, Kallanish notes.

The original measures were first imposed in late 2017. Currently, duties range from 17.2-27.9% depending on the mill. The measures currently do not include automotive grade hot-dip galvanized coil and were last reviewed in 2020.

The expiry review has been requested by Eurofer, which argues the termination of the measures in place will result in a recurrence of dumping and injury to the European industry.

“[Eurofer] alleges the likelihood of recurrence of injury from China. In this respect, the applicant has provided evidence that, should measures be allowed to lapse, the current import level of the product under review from China to the Union is likely to increase due to the existence of unused capacity in China,” the note by the European Commission explains.

“In addition, the surplus of supply due to low steel demand in China due to post Covid-19 developments, the measures imposed from other third countries against imports of certain corrosion resistant steels from China, as well as the significant and continuous decrease of the freight costs from China to the Union is likely to lead to the redirection of the imports of the product concerned to the Union market, if measures expire,” it adds.

Eurofer also provided evidence that Chinese exporters are selling their products in other markets at prices much lower than the one seen in the EU market, confirming therefore that the latter remains an attractive market for Chinese exporters.

According to Eurofer data, Chinese-origin imports of HDG in Europe fell significantly from the peak of 1.9 million tonnes in 2016, following the imposition of duties. Last year, nevertheless, these surpassed 700,000t, up from 550,000t in 2021.

The expiry review will be concluded by the second quarter of 2024. In the meantime, the existing measures will remain in place.

Emanuele Norsa Italy