Category: Latest Updates

Sentiment in the Italian scrap market is overall positive in February, despite the continued uncertainty regarding local mills’ production volumes for this month, Italian trade association Assofermet says in its market note monitored by Kallanish.

“The hope is that orders for the finished product will be numerous, coupled with strong downstream end-user consumption,” the report says.

January was a stable month in terms of activity, with prices increasing by €15-20/tonne ($16-21) month-on-month thanks to sustained demand from steelmakers. However, concern persists related to railway and high truck transport costs.

The association registered in January price increases for pig iron from Russian but also Ukrainian producers. January contracts were mainly implemented by traders and for material that was mostly sold to foundries. Pig iron from the CIS region has been less attractive for mills that bought lower quantities due to the high prices.

The first few Italian scrap contracts and negotiations for February delivery indicate stability and some increases of €10/t ($10.9) for demanded grades such as chiselled E1 and demolition E3. Demand is considered to be at good levels despite the uncertainty hovering over finished long products, sales of which are slow.

In other countries, such as France and Germany, there are expectations of stable prices for February, with some increases for the popular grades (see Kallanish 3 February).

Natalia Capra France

Turkish ferrous trade paused on Monday as the country took stock of the 7.8 magnitude earthquake that struck at 04:17 local time near the city of Gaziantep, one of the largest earthquakes ever recorded in Turkey.

The thoughts of everyone in the industry were with those affected by the tremor, which also impacted neighbouring Syria and resulted in a second earthquake further north later on Monday. The combined death toll at the time of writing had reached 2,700 people and was expected to increase further. Turkish President Recep Erdogan declared seven days of national mourning until 12 February.

With the incident being so fresh, it was impossible to clearly assess its impact on the steel market. Various sources attempted to piece together what might follow.

Sources in Turkey said mills in Iskenderun, an area hit by the tremor, escaped serious damage, but companies were trying to locate some employees who were unaccounted for. Iskenderun’s port, meanwhile, was reported to have shut down operations after sustaining damage.

The Turkish agent of one European scrap supplier told Kallanish there were no negotiations taking place or contracts signed on Monday.

Although mills are seemingly undamaged, the availability of trucks will be an issue in the weeks following the earthquake, meaning prices of everything will go up, especially scrap, some sources indicated. An international trader meanwhile said there are expectations of long disruptions to exports from Turkey.

The situation was also being followed by buyers in other major scrap importing regions. Indian participants were aiming to start bookings for April arrivals, but the earthquake in Turkey has stopped them in their tracks. With shipments to Pakistan and Bangladesh already disrupted by financing issues, sellers will try to drop scrap offers to secure bookings in India, sources in the subcontinent opined.

The coming days should bring more clarity, but, for now, the industry’s thoughts are with those affected.

Adam Smith Poland

Benteler Group will not pursue the previously announced sale of its Shreveport, Louisiana, seamless steel tube plant to Tenaris, the company said Feb. 6, citing a renewed strengthening of demand in the oil and gas markets that the facility supplies.

“Following the successful ramp-up of the Benteler steel tube plant in Shreveport, the site is now one of the most modern and efficient steel tube plants in North America and can exploit its full potential, especially in view of the strong oil and gas market in the US, which has developed very positively over the past months,” Benteler said in a statement. “The future market perspective by far exceeds previous expectations.”

The Louisiana plant, Benteler Steel & Tube Manufacturing, produces seamless pipe with a rolling capacity of up to 400,000 mt/year. Benteler and Tenaris first announced the potential transaction in July at an initial sale price of $460 million.

The Germany-based Benteler said it now assesses the Shreveport plant “significantly higher than the purchase price agreed with Tenaris in July 2022,” due to stronger market conditions and subsequently chose to “exercise its contractual right to terminate the sale following the expiration of the long stop date, as originally agreed with Tenaris.”

“Together with the employees, the plant management, and the sales organization in Houston, Benteler will further strengthen its position in an excellent market environment by increasing the productivity of the plant and developing the product portfolio in close cooperation with its customers,” the conglomerate added.

Tenaris confirmed the termination of the sale in a separate statement but did not provide further details. The Luxembourg-based global steel pipe and tube producer operates 16 manufacturing and coating facilities in the US, as well as several additional commercial offices and service centers. It produced 2.8 million mt of tubes in 2021, up 17% year on year, according to its annual results.

In 2022, steelmakers with tube manufacturing facilities in the US, including Tenaris and US Steel, consistently pointed to positive outlooks for demand in the key energy markets that they serve.

Platts assessed the monthly US OCTG price for February at $2,700-$3,000/st ex-works, down from $3,000-$3,300/st in January, according to S&P Global Commodity Insights data. The price range has risen, however, since it was assessed at a midpoint of $2,150/st in February 2021.

— Nick Lazzaro

Steel coil rolling mill Salzgitter Flachstahl, part of German steel group Salzgitter, has signed a memorandum of understanding with Canada’s Baffinland Iron Mines Corporation to investigate the use of direct shipping ore mined in Nunavut, the northernmost territory of Canada, in low carbon steel production, Salzgitter said Feb. 6.

Baffinland’s operation is different to many others in that its high-grade iron ore is crushed and screened on site, and then shipped directly to markets — no concentrating or processing is needed, and as a result no tailings are produced, Salzgitter said, explaining why it had chosen the supplier for its future green steel production.

In 2025, the German company will begin incrementally switching its steel production to hydrogen-based processes under Salcos, or Salzgitter Low CO2 Steelmaking transformation, with the aim to achieve carbon-free production by 2033.

Under the MOU, Baffinland and Salzgitter Flachstahl will consider which iron ore supply strategies are best suited to hydrogen-based steel production in a direct reduction plant. The companies will also work together to optimize the Scope 3 emissions of their shared value chains.

Platts, part of S&P Global Commodity Insights, assessed the 62% Fe Iron Ore Index at $124.05/dry mt CFR North China on Feb. 6, up $6.4/dmt from the beginning of the year, but down $22.55/dmt or 15% from the $146.6/dmt level on the same date in 2022.

— Ekaterina Bouckley

German steel traders and producers expected prices to trend lower over February, according to data from S&P Global Commodity Insights’ monthly steel sentiment survey.

The February index for traders’ sentiment stood around 50 points compared to almost 78.50 points in January. The index for producers’ sentiment was around 58 points, compared to a January index of 68.75 points. The overall index for prices was at approximately 54 points down from 74 points for January.

“Currently mills are being pressured to achieve higher prices, but the market doesn’t seem ready for it,” one European flat mill source said. “The current transactional level is stable, but buyers aren’t going to be receptive to repeated increases, especially if capacities do continue to come back online across Europe.”

A flat steel distributor source said: “If prices come up too fast, not only will we lose the market share to imports, but buyers will retreat again, especially if production comes back. Sentiments are not hugely positive for the second half of the year.”

Platts assessed TSI North European hot-rolled coil up Eur5/mt on the day Feb. 3, at Eur755/mt ex-works Ruhr. Platts is part of S&P Global.

One long steel producer said prices for long steel are almost at the bottom, and he expects them to stay stable during the month. The source also expects demand to start picking up adding that the month of February might see a slight increase while the month of March may show real improvement

“A lot of projects are on hold, so demand has to come back,” he said. “Everyone is waiting for demand.”

A long steel distributor source noted that prices were in a downtrend due to limited end-user demand.

“End-users are holding back,” he said, adding that amid high energy costs and weak demand market was seeing low prices.

Platts assessed TSI Northwest Europe rebar down Eur20/mt to Eur715/mt ex-works on Feb. 1. Platts assessed European medium sections (category 1, S235 JR) down Eur10/mt on Feb. 1 to Eur970/mt delivered.

The overall index for German inventory sentiment was almost stable on month, with an index of approximately 43 points compared to 43.75 points in January. The index for steel producers for February was around 42 points, compared to 37.50 points in January. The index for traders’ sentiment stood at 43.75 points for February compared to 50 points in January.

Production levels expected to increase

The index for production outlook stood at around 58 points for February, compared with 27 points for January. Producers anticipated a stronger rise in production levels with an index of around 54 points for the month, compared to 12.50 points in January.

Traders and stockholders also expected production levels to strengthen according to the survey, with a current index of around 62.50 points, compared with approximately 43 points in January.

One long steel producer noted that mills were operating at lower capacities to manage high energy costs and he expects mills to continue operating at reduced capacities.

However, amid restocking activity seen in December and January on the flat steel side, some mills are perceiving increased demand and are considering or in the process of bringing capacities back online. However, some buyers fear that this uptick in demand is illusory — driven by traditional restocking cycles rather than supportive end-consumption.

— Rabia Arif, Benjamin Steven

The launch of the 5G network for industrial uses in France is helping ArcelorMittal carry out digitisation and robotisation at its French production sites.

The company started its 5G Steel project in 2021 in France in partnership with Orange Business Services and Ericsson, and supported by the French government. 5G Steel has now become fully operational at the Dunkirk and Mardyck sites, northern France, and it is scheduled to be extended to Florange this year.

The presence of a wide coverage and high throughput network, which now extends to the entire industrial complexes, both indoors and outdoors, is making the workload more agile in all departments from recycling to production, the producer says. It is also enhancing the mobility of workers. Production processes are better monitored and simplified; a reduced latency is also improving rolling lines remote pilot control.

“Steel arriving on site for recycling is weighed and scanned to assess its density and composition. This data is then automatically transmitted by the operators in charge of quality control from the field via 5G Steel. Machinery operators (crane and stackers) directly receive information from the production programme and can inform about the actions carried out through 5G Steel,” the steelmaker explains. Other operations are also made easier, such as the hot rolling mill processes, data recording, and inspections during maintenance and safety audits, it adds.

The project is one of the first steps in ArcelorMittal’s roadmap to boost automation and digitisation. The company envisages driverless trains and vehicles in Florange and Dunkirk together with mobile maintenance, virtual reality and safety devices.

5G Steel will be extended to the port of Dunkirk, ArcelorMittal’s digital labs in Dunkirk and the site of Florange, Kallanish notes.

Natalia Capra France

EU steel imports dropped 17% on-year in the third quarter of 2022, led by a 15% slump in flat product intake, although longs imports inched up 1%, steelmakers’ association Eurofer points out. Finished steel exports fell 9%, driven by a 15% decline in longs shipments, Kallanish notes.

In the 11 months through November 2022, finished products imports dropped 5% on-year, with flats down 9% and despite longs rising 10%. Reflecting weaker demand from Q1 2022, imports have constantly been declining in volumes throughout 2022, Eurofer says.

Turkey (381,000 tonnes), South Korea (255,000t) and India (238,000t) were the main 11-month finished steel suppliers, while Russia and Ukraine dropped out of the picture due to war. Although imports from India and Turkey dropped notably, intake increased markedly from China, South Korea and Taiwan.

Besides tin mill products (+43%), organic coated sheet (+22%) and cold rolled sheet (+2%), all flats imports declined in the 11 months. All longs imports meanwhile rose, with rebar seeing the highest growth of 22%.

11-month finished steel exports fell 12%, with flats and longs down 8% and 21% respectively. The UK (221,000t), Turkey (207,000t) and the US (202,000t) were the main destinations. Shipments to Brazil and the US rose notably, and to China and the UK declined markedly.

All flats shipments declined, except for hot rolled wide strip (+6%) and quarto plate (+3%).

The EU’s total steel trade deficit thus widened to 1.8 million tonnes in the 11 months versus 1.5mt a year earlier.

Adam Smith Poland

Russia’s military invasion of Ukraine has triggered a lot of issues globally and, particularly, effected the energy balances in several regions, given that Russia had been one of the world’s major hydrocarbon exporters. Particularly, in 2022 the energy crisis hit EU countries and their steel sectors, and affected the costs, production rates, competitiveness and margins in business. By the end of the year and in early 2023, the situation eased somewhat due to government policies in the EU to reduce dependency on Russian energy and also owing to favorable weather conditions, which enabled household energy consumption to remain at acceptable levels.

The high energy prices which the EU countries had to implement in 2022 rewrote the structure of the European steel industry. Gas supply issues resulted in energy prices spiking, so steel producers were forced to increase steel prices while facing higher costs or to cut their output. The situation resulted in some production cuts since some European mills chose to suspend operations at some of their facilities or to reduce utilization rates significantly starting from August and during the autumn months of 2022.

List of main European mill with idled or reduced capacity in H2 2022

Integrated coil producers, mainly in Italy, started purchasing imported slabs from China, India, Indonesia, South Korea, Vietnam and Brazil in order to replace the missing semis volumes from Ukraine and Russia. In fact, while Ukraine has hardly been present in the slab market since the war started, some Russian mills have still had the chance to sell to the EU based on EU regulations. Along with the target to substitute the regular missing imported tonnages, some mills were buying slabs, aiming to get better margins from slab rolling compared to own slab production.

During 2022, European electricity and natural gas prices for industry increased by two- or three-fold. The highest average monthly wholesale electricity price in the EU was recorded in August 2022 at €543/MWh. It was caused by a rise in gas prices, which prompted European politicians to consider intervening in the energy market to protect consumers and businesses.

Before the electricity and natural gas prices increased in 2022, the share of energy in steel production costs was 10-18 percent for BOF steel and 9-16 percent for EAF steel, SteelOrbis estimates. In the third quarter of 2022, the share of energy costs in the European steel sector’s cost increased to 25-40 percent against the backdrop of natural gas and electricity prices rising…

The UK Trade Remedies Authority (TRA) has initiated a transition review into anti-dumping duties on certain corrosion resistant – coated flat – steels originating in China, Kallanish notes.

Products affected come under HS codes 72 10 41 00 20, 72 10 41 00 30, 72 10 49 00 20, 72 10 49 00 30, 72 10 61 00 20, 72 10 61 00 30, 72 10 69 00 20, 72 10 69 00 30, 72 10 90 80 92, 72 12 30 00 20, 72 12 30 00 30, 72 12 50 61 20, 72 12 50 61 30, 72 12 50 69 20, 72 12 50 69 30, 72 12 50 90 14, 72 12 50 90 92, 72 25 92 00 20, 72 25 92 00 30, 72 25 99 00 22, 72 25 99 00 23, 72 25 99 00 41, 72 25 99 00 92, 72 25 99 00 93, 72 26 99 30 10, 72 26 99 30 30, 72 26 99 70 13, 72 26 99 70 93 and 72 26 99 70 94.

The period of investigation is 1 January 2022 to 31 December 2022. In order to assess injury, TRA will examine the period from 1 January 2019 to 31 December 2022.

The purpose of the transition review is to determine whether, following Brexit, the UK should continue to apply duties it inherited from its time as an EU member.

Separately, TRA has recommended extending the 65.1-73.7% ad valorem anti-dumping duties on China-origin heavy plate imports for another five years from 1 March 2022 (see separate story).

Adam Smith Poland

The UK Trade Remedies Authority (TRA) has recommended extending the 65.1-73.7% ad valorem anti-dumping duties on China-origin heavy plate imports for another five years from 1 March 2022.

This follows the conclusion of TRA’s review initiated in January 2022, which used full-year 2021 as the period of investigation (see Kallanish passim).

The products affected come under HS codes 72 08 51 20 10, 72 08 51 91 10, 72 08 51 98 10, 72 08 52 91 10, 72 08 90 20 10, 72 08 90 80 20, 72 25 40 40 00, 72 25 40 60 10 and 72 25 99 00 45.

The TRA found it likely that dumping of heavy plate and injury to UK industry would recur if the anti-dumping amount were no longer applied. If the measure was revoked, Chinese suppliers would gain market share from UK producers and third countries, TRA says in its statement of essential facts.

The two UK heavy plate producers, Spartan UK Ltd and Liberty Steel Dalzell Ltd, took part in the investigation. British Steel was also involved, in its role as representative of 100% of the domestic upstream business in the heavy plate supply chain, and slab supplier to both plate producers. Construction and machinery account for over 70% of plate consumption in the UK.

The producers’ performance is subject to the uncertainty of the UK construction sector and the future trends of the slab market internationally. “If current trends continue, the financial position of the UK producers could worsen even with the measure in place,” TRA observes.

In reaction to TRA’s recommendation, UK Steel director general Gareth Stace say the move is “hugely significant for the UK industry to ensure it is shielded from unfair competition and is warmly welcome”.

“China accounts for more than 80% of global plate production and just a tiny fraction of that could meet the entirety of the UK’s demand requirements. Left unchecked and at a time when China’s domestic construction demand is weakening, this would inevitably lead to dumping by Chinese exporters, very quickly overwhelming the UK market and seriously damaging UK producers already battling with exorbitant energy and carbon costs and a challenging demand environment at home,” Stace concludes.

Adam Smith Poland