Category: Latest Updates

Swiss trading firm Trasteel has acquired Italian re-roller Profilmec, Kallanish learns from Trasteel.

The merger reflects the trader’s ambition to verticalise and boost and diversify its re-rolling capacity. The company intends to increase sales and re-rolled volumes output to 1.5 million tonnes/year, it says in a note.

The acquisition was backed by a pool of banks including Crédit Agricole Italy, UniCredit, BNL-B-NP Paribas and MPS Capital Services as warrant lead arranger. Crédit Agricole acted as loan agent.

Turin-based Profilmec has seven production facilities in the north of Italy and an annual production capacity of 350,000t of re-rolled tubular products.

In line with its verticalisation strategy, in 2020 Trasteel completed the acquisition of Officine Tecnosider, an Italian plate rolling mill, located in the northeast of the country. Trasteel holds majority control over the plant. The mill has a capacity of almost 400,000 t/y of plate, rolled from slab (see Kallanish 24 April 2020).

Natalia Capra France

For more than half of Germany’s sheet forming processor companies, electricity contracts with their current suppliers may not continue into 2023.

According to a recent survey by the Sheet Metal Forming Industry Association (IBU), new contracts for 2023 are not in sight for over 50 of some 100 companies that took part in the poll.

The problem was recently brought up by IBU’s umbrella organisation, steel fabricators federation WSM, and its managing director Christian Vietmeyer. “Many of our member companies are not receiving any offers at all, not even regular customers of the utilities, and not even at sky-high prices,” Kallanish heard him say at the MBI Stahl Tag in Frankfurt last month. Utilities have some obligation to supply private households, but not to companies, Vietmeyer explained.

Two thirds of the companies surveyed by IBU see their existence being at risk due to prices for energy and other cost increases. IBU’s publication of the survey is therefore also a call to policymakers to realise the urgency of the situation.

“We need a secure energy supply at acceptable prices, and policymakers must now get specific with that very quickly,” says IBU managing director Bernhard Jacobs. Record prices and insecurity could drive more and more companies to less expensive foreign countries, and accelerate a deindustrialisation in Germany, Jacobs warns.

Christian Koehl Germany

French rebar activity remains weak French rebar demand continues to be weak in October. Distributors tell Kallanish that September was also a weak month, but sales have become particularly low in October and buyers say they cannot see light at the end of the tunnel.

Expectations are for some restocking to happen in November for end-year fiscal reasons. Uncertainty, however, looms over end users due to declining activity in the domestic construction sector. Construction companies are facing a slow private residential construction market, particularly in the Paris area.

Domestic steelmakers continue to implement stoppages but this does not seem enough to balance demand and supply. French rebar contracts are falling on September by some €50-60/tonne ($49-58). Contracts, including size extras, are at an average of €890-910/t ex-works, including size extras. The low and high points of the range depend on client and tonnage, sources suggest.

Some lower-priced sales are being reported, particularly in southern France, coming from Spanish producers, Kallanish notes.

Natalia Capra France

European steelmakers are on track to receive free CO2 allowances as part of the Emissions Trading System (ETS) beyond 2030, Kallanish learns from sources.

In May, the European Parliament’s committee voted in favour of accelerating the phasing out of ETS free allocations, cutting them for European steelmakers from 2030. In a recent meeting, though, the parties reached an understanding to continue them until at least 2032.

Peter Liese, lawyer and negotiator involved in reforming the ETS system, confirms in a statement that a first agreement was reached.

“The Commission proposal wanted to get rid of the respective calculation methodology which would have created an enormous challenge for the steel industries, much bigger than for other industries, after the implementation of the amended ETS,” Liese says. “We now concluded that the rules for the steel industry will remain the same. Of course, the steel industry will be challenged by the higher target and the respective changes in the linear reduction factor like all other industries.”

Eurofer has welcomed this development, but notes that free allocations will nevertheless be reduced as part of the plan to phase out allowances, and that costs are yet to be calculated for the sector.

Emanuele Norsa Italy

Liberty Steel UK has successfully completed ecoke trials at its Rotherham site as part of the company’s processes to identify opportunities to reduce CO2 emissions, the steelmaker said Oct. 18.

Ecoke is a manufactured fuel containing a minimum of 30% renewable biomass that can replace anthracite – the main source of carbon in electric steelmaking – and cut the carbon footprint of steel by as much as 30%, Liberty said.

Ecoke briquettes are delivered to site in similar packaging to anthracite and then charged into the electric arc furnace in the same way via the scrap basket, the company said.

“The success of Liberty’s ecoke trials is a major step forward for our Greensteel strategy,” Liberty Speciality Steel Plant Manager at Aldwarke Cast Products Scott Jackson said. “The major reductions in CO2 emissions ecoke enables, without any downside to the production process, can help to further decarbonize our production and the wider steel industry.”

Not only would the use of ecoke cut emissions, but it could also save costs due to a reduction in carbon credits, the company said.

After considering all available options, Liberty’s Rotherham team identified UK-based solid fuel producer CPL Industries as its local ecoke supplier.

CPL Industries has also delivered ecoke in August to Spanish special long products steelmaker Sidenor for an industrial-scale trial, S&P Global Commodity Insights reported earlier.

“Ecoke provides an immediate path to decarbonization, and we are committed to a program of product development and investment to deliver further advances in biofuels in order to exceed industry expectations for the coming years,” CPL Industries Solid Fuels CEO Jason Sutton said.

Liberty Steel UK is the third-largest steel manufacturer in the country, with nine sites across England, Scotland, and Wales, and steel rolling capacity approaching 3 million mt/year.

Its Rotherham works have primary and secondary EAF steelmaking facilities, with production at its Rotherham generating just 10% of the direct emissions compared with a traditional blast furnace.

Platts, part of S&P Global Commodity Insights, assessed the weekly UK hot-rolled coil price at GBP700/mt ($790.34/mt) DDP West Midlands Oct. 17, down 15.7% from the start of 2022.

— Annalisa Villa

European new passenger car registrations rose 9.6% year on year and 21.2% on the month in September to a three-month high of 787,870 units, the second consecutive month of on-year gains after 13 months of declines, data from the European Automobile Manufacturers Association, or ACEA, showed Oct. 18.

The year-on-year jump was largely driven by the low base of comparison from September 2021, when the semiconductor shortage hampered vehicle production, ACEA said.

In September, all four of Europe’s largest markets reported growth led by Germany and Spain, which saw double-digit gains of 14.1% and 12.7% year on year respectively.

Germany’s passenger car sales of 224,816 units were also up 12.9% month on month to the highest level since March, while Spain’s 67,240 vehicles were up 29.5% from August to a two-month high.

Sales in Italy rose 5.4% on the year and 55.9% on the month to a three-month high of 110,976 units, while sales in France climbed 5.5% year on year and rose 54.4% from August to 141,137 units, also a three-month high.

Platts, part of S&P Global Commodity Insights, assessed hot-rolled coil in Northwest Europe Eur30/mt lower in September, falling from Eur760/mt ex-works Ruhr to Eur730/mt ex-works Ruhr.

Over the first three quarters of 2022, the EU passenger car market decreased 9.9% on the year to 6.8 million units, despite the positive results recorded in the last two months.

This was reflected in most countries’ performance, with all the region’s four major markets also registering a contraction in the nine-month period, the ACEA data showed.

Of the top four markets, Italy saw the largest fall at 16.3% to 976,055 units, followed by sales dropping 11.8% in France to 1.1 million vehicles, sales in Germany declining 7.4% to 1.9 million units and Spain’s down 7.4% to 600,281 vehicles.

— Annalisa Villa, Jacqueline Holman

EU scrap recyclers have continued to voice concerns over the consequences of potential curbs to EU ferrous scrap exports proposed in the current revision process to the EU Waste Shipment Regulation (WSR).

“My understanding today is that it will be very difficult to get the [EU] off the track that they are following now — I think we will see restrictions on [scrap] exports but to what extent remains to be seen,” Denis Reuter, chief operations officer at German recycler TSR Recycling, said at the International Bureau of Recycling, or BIR, convention in Dubai on Oct. 17.

“For heavy melting scrap [HMS] grades, I don’t see any opportunity to get around those restrictions, but for shredded scrap – if it’s a clean quality – I could imagine there would be possibilities for export in the future, and, of course, products like bushelling scrap, it should not be a problem but for HMS qualities, I have no hope,” Reuter added.

The European Parliament’s Environment Committee is expected to vote on the on the proposed WSR on Nov. 30 or Dec. 1, with the plenary European Parliament vote expected to take place in January 2023, a source close to the Committee told S&P Global Commodity Insights Oct. 17. However, the official timeline for the voting process has not yet been confirmed.

“I expect that the revised Waste Shipment Regulation will affect [scrap exports to] both OECD and non-OECD members,” the source added. The initial WSR proposal was mostly expected to affect scrap exports to non-OECD countries only.

In attempting to ensure availability of high-grade scrap within the EU as a part of the bloc’s decarbonization goals, the revised WSR aims to ban exports of EU-origin scrap to countries which don’t have EU waste treatment standards and would be obliged to conduct independent audits of their processing facilities. Cross-border shipment of waste between EU nations would be facilitated for reuse, recycling or disposal.

“The expectation is that the regulation could come into force from 2026,” Jens Björkman, head of ferrous trade at Sweden’s Stena Recycling, said at the Irepas conference in Monaco on Oct. 11.

“There has been strong lobbying from Eurofer [the European steel producers’ association] that the EU needs to control this strategically important raw material but the reality is that the total volume of ferrous scrap [produced in the EU] is too large to be wholly processed within the EU,” Björkman said.

“Around 20-22 million mt of ferrous scrap is currently exported each year from the EU, and perhaps a few million metric tons more will remain within the EU, as some steel production shifts from the blast furnace [BF] route to the electric arc furnace [EAF] route, but the rest will still need to find another home.”

“You can’t favor one strategically important industry [steelmakers] against another [scrap recyclers],” F.D. Baysal, President at US steel distributor Seba International, said at the Irepas conference.

The Federal Association of German Steel and Recycling Companies (BDSV) has also called on the EU to differentiate between steel raw materials recovered from recycling and untreated waste in the WSR, adding that they “expressly welcome stricter export restrictions for problematic waste streams.”

“The proposed export restrictions risk significant job losses in an industry whose competitiveness depends largely on its ability to commercialize recycled feedstock to recover the costs of proper waste management,” BDSV said on Oct. 6.

— Rabia Arif, Viral Shah

European hot-rolled coil buyers were in wait-and-see mode Oct. 18 as distributors struggled to deplete stock levels, restricting potential for new purchasing.

Platts assessed hot-rolled coil in Northwest Europe down Eur10 on the day, following indications heard at the assessed Eur650/mt ex-works level.

Market participants generally reported tradable value at around Eur650/mt ex-works Ruhr. One trader saw the market even lower at Eur630-650/mt ex-works Ruhr.

A mill source agreed the price level was workable for black coil, as per the Platts specification.

Poor demand continued to plague the market, motivated by insufficient end-user consumption and relevant sales from distributors.

“Demand is the biggest problem right now,” the mill source said. “More mills need to cut production to give any support to prices.”

A trader source agreed, offering twin reasons for demand destruction – concern for further downtrend and difficulties with destocking.

“Distributors cannot destock no matter how hard they try,” the trader said. “They are still receiving expensive material booked earlier and have to sell it on at a discount. Anyone who has any need to buy now prefers to wait as they expect prices to fall further.”

The trader expected some companies to see financial difficulties in the near-term, as booked volumes could not be sold on in their entirety, restricting already reduced cash flow.

Distributors’ effective inventories were not reducing as quickly as necessary despite efforts to deplete stocks, with most losing profitability on prior purchasing without any substantial reduction in stock levels.

In the Italian market, Platts assessed HRC up Eur5 to Eur685/mt ex-works, toward sales reported at Eur700-710/mt ex-works level. Most indications were still lower alongside firm downward sentiment, however, at around Eur680-690/mt ex-works Italy.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven, Maria Tanatar

Soaring energy prices and borrowing costs in Europe are quickly eroding metal scrap processors’ margins, with the Bureau of International Recycling (BIR) now focusing on quantifying the impact and negotiating solutions with national associations.
“For instance, we spoke to a scrap processor today, who is now paying €80,000 ($77,755) per month for their energy bill, and that will rise to €400,000 euros next year, but some other company will tell us different figures, like an increase of two to three times. There is much information to verify before we can address the issue on an industry level,” Tom Bird, the president of BIR, said at the industry body’s Dubai conference on Sunday October 16.

A major recycler source told Fastmarkets that although his energy supply was based on a long-term contract, internal discussions were ongoing about the value of shredding material versus shearing scrap and sending it to the consumer for further cleaning and processing. Two other major recyclers based in Europe told Fastmarkets that higher demand for shredded scrap in India had increased the volume of ferrous scrap they were selling in containers over recent months.

For energy-intensive aluminium, it is estimated that 50% of the European Union’s aluminium production has already been forced offline by soaring power costs following Russia’s invasion of Ukraine in February.

While there has already been a slash in primary smelter output, this trend is spilling over to aluminium scrap processors and secondary production, which are perceived to consume less energy.

It also posed a threat to downstream activity, including remelting of aluminium scrap, with recyclers such as Speira also curtailing production.

Shredder output has suffered in Europe and the United Kingdom over the last few months, sources said, amid a combination of high energy cost and a lack of available shredder feed. UK scrap processors are “fighting” over limited tonnages of shredder feed to consume amid a looming recessionary environment across the European landmass.

Fastmarkets’ weekly price assessment for steel scrap 5C, loose old light, domestic, delivered inter-merchant UK was £185-205 ($207-229) per tonne on Friday October 14, unchanged week on week.

“Even in normal times, energy costs already take up a bulk of shredders’ operating costs, and a four-to-five times increment would definitely make operation unfeasible,” Bird said.

He said that the BIR was currently collaborating with regional scrap bodies such as the British Metals Recycling Association (BMRA) to collect information from member companies.

Inflationary pressures hit consumers
Addressing cost increases across different regions in Europe at ‘The Challenge’ session of the BIR event on Monday October 17, panelists said that it was not only energy, but inflation that had also made operations and financing of the scrap industry more difficult.

“We have to perform due diligence all the time, constantly recalculating what you are doing,” Murat Bayram, director of EMR European Metal Recycling GmbH said, citing the difficulty of factoring in inflation costs into individual scrap business.

It is even harder in countries such as Turkey where industry participants said the real inflation could be even higher than the official number, Bayram said. The Turkish government said September inflation was at a 24-year high of more than 83%.

Turkey is the world’s biggest ferrous scrap importer. But Turkish mills’ interest in overseas scrap cargoes has been weak recently amid higher operational costs.

Market sources told Fastmarkets earlier this month that the break-even level for the spread on fob rebar to cfr heavy melting scrap 1&2 (80:20) for a typical Turkish steelmaker buying energy from the spot market was around $335-350 per tonne, effective from new energy hikes on September 1.

This is up from $300 per tonne previously. In 2019, the break-even level was typically understood to be around $160 per tonne.

Fastmarkets’ price assessment for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey was at $365 per tonne on October 14, down by 19% since the beginning of the year.

The depreciation of the Turkish lira has been more dramatic than other major steel scrap importers, and has therefore been a significant factor reducing Turkey’s buying power in the market.

On October 16, the lira had depreciated against the US dollar by 50.4% from a year earlier, according to Oanda. In contrast, the Indian rupee has lost 9% over the same period while the Bangladeshi taka is down by 16%.

Published by: Julian Luk, Lee Allen

We are pleased to inform you that STEELFORCE joined as member of EUROMETAL.

STEELFORCE is an independent global steel trader handling 2.5 million tons from 25 sourcing countries to 95 destination countries. With its foundations dating back to 1950, the name STEELFORCE was established in 2006 after the merger of 3 independent trading companies to create a global trading company.

Today, STEELFORCE has a strong presence across the global steel markets (Africa, Americas, Asia and Europe) as well as niche markets such as tinplate.

STEELFORCE’s role in the global steel trade is to always offer competitive and adequate solutions to both buyers and sellers taking into account the daily changing market trends all over the world, relying on an extensive historical network and on the in depth market know how of our staff. To enable the delivery of steel, we support our counterparts with financial solutions  and logistical services to ensure our customers get the material they need, when they need it and in the way they need it.

Website: steelforce.eu