Category: Latest Updates

Moody’s has lowered its price assumptions for the next 12 months for steel and coking coal to reflect weakening demand resulting from the global economic slowdown.

The credit rating agency says that following their peaking in March/April and subsequent decline, steel prices could soften further yet remain above historical levels longer term for two reasons. These are increased demand for scrap and metallics as steel producers focus on reducing carbon emissions; and less competitive steel sector dynamics from consolidation in some regions.

Prices have come down as post-Russia invasion panic buying recedes, supply-chain disruptions reduce global demand, Covid-related lockdowns and weaker residential construction reduce consumption in China, and inflationary cost pressures and higher interest rates weigh on sentiment and economic growth, Moody’s observes.

The 12-month price assumption for Chinese domestic hot rolled coil have come down to $600/tonne from $750/t previously, while Brazilian HRC is at $800/t versus $1,000/t, European HRC at $750/t versus $1,100/t and US HRC at $800/t versus $1,150/t.

US prices could remain above historical levels because of sector consolidation and increased metallics demand. “Long product prices have held up better with more favourable supply and demand dynamics but are likely to weaken further on lower raw material prices and softening demand,” Moody’s says in a report sent to Kallanish.

In China, the property market slowdown has weakened demand for steel. This slowdown stems from regulatory tightening and property developers’ financial struggles, which have weakened homebuyers’ confidence.

In Europe, steel prices will likely continue to slide. Economic weakness, falling euro area manufacturing PMI readings and continued sluggish buying activity of distributors weigh on demand. In addition, energy cost inflation, fears over future energy supply and rising interest rates will dampen consumer sentiment and investment activity across many steel-consuming sectors such as construction or general engineering.

“While some steel producers might curtail production to adjust output to the lower demand, the recent resurgence in steel imports into the European Union (+19.5% year on year in the first five months of 2022) will likely continue to weigh on prices in the region,” Moody’s observes.

Economic growth in G-20 economies will decelerate to 2.5% in 2022 and 2.1% in 2023, from 5.9% in 2021. In China, growth will be 3.5% in 2022 and 4.8% in 2023, down sharply from 8.1% in 2021.

Adam Smith Poland

The German Federal Ministry for Economic Affairs and Climate Action is funding two joint projects in which thyssenkrupp Rasselstein is participating.

The research projects are looking at how hydrogen fuel can reduce CO2 emissions in the steel industry, Kallanish learns from thyssenkrupp. Both projects deal with the use of hydrogen in the energy-intensive annealing processes of tinplate production. These processes are necessary to restore the crystalline structure of the material which is destroyed during cold rolling.

In the “FlexHeat2Anneal” research project, the focus is on the use of hydrogen in the continuous annealing line, in which the ultra-fine strip is unwound and recrystallised by running over rolls at a high temperature and in short cycle times.

Up to now, mostly natural gas has been used for annealing the strip. In the future, this fossil fuel is to be gradually replaced by adding green hydrogen. “The planned flexible use of hydrogen in the annealing process poses several issues. Hydrogen, for example, burns hotter than natural gas. That’s why the burners and radiant heating tubes have to be adjusted,” says Torsten Schmitt, electrical engineer responsible for strip line maintenance at thyssenkrupp Rasselstein.

The aim of the other project, named “H2-DisTherPro”, is to substitute fuel gases containing carbon with hydrogen in discontinuously operated thermos-processing plants.

Christian Koehl Germany

ArcelorMittal says it will temporarily halt blast furnace A at its Gijón mill in northern Spain at the end September under pressure from rising energy costs, Kallanish learns from the company.

The decision has been taken at a time of economic uncertainty and with weakening levels of confidence among steel consumers in Europe, ArcelorMittal explains.

“The extremely challenging situation of the European steel market, with high levels of imports from non-EU countries and weak demand, have led to the decision to implement this measure in order to protect the profitability and sustainability of our operations in Asturias,” the company says. ArcelorMittal did not disclose any expected production loss or personnel cutbacks.

Meanwhile, major workers’ union CCOO says the BF shutdown is set to last for the full fourth quarter. In a statement, the organisation qualifies the stoppage as “disproportionate and lacking in the slightest justification”. CCOO points out that the last stoppage was agreed at group level in Europe as a reaction to the high price of electricity in Spain, which today is much lower than in the rest of Europe.

Todor Kirkov Bulgaria

Some Italian mills are considering implementing an energy surcharge on top of their finished product prices. This is in line with other European steelmakers who are mulling similar surcharges due to the rising costs of gas and electricity, Kallanish learns from market sources.

Although details have yet to be decided, the surcharges should be between €200/tonne ($199) and €300/t, depending on mill and product, applicable from September and October. The application methods however are still unclear.

If the Italian government does not intervene to cap energy prices, many mills in Italy will be forced to stop production. This is the case for some long steel producers in other European countries such as France and Spain. Customers say they may not be able to pay the latest price increases on all products, plus an energy surcharge, unless size extras or base prices decrease.

Some long steelmakers in Italy are currently idling their plants while others are working at reduced capacity in order to save on their energy bills.

In Germany, meanwhile, ArcelorMittal will shut down one of two blast furnaces at its Bremen plant, as well the direct reduced iron unit at its Hamburg steelworks in the fourth quarter due to skyrocketing energy prices (see separate story).

Natalia Capra France

ArcelorMittal Germany is feeling the consequences of the exorbitant rise in energy prices, weak market demand and a negative economic outlook. The firm says the operation of all assets is no longer economically viable.

From the end of September, the group will shut down one of two blast furnaces at the Bremen flat steel site until further notice, Kallanish learns from a statement.

At the Hamburg long steel plant, which produces quality wire rod, the direct reduction plant will also be taken out of operation from the fourth quarter. The group already introduced short-time work at both plants, which will have to be extended as a result of the upcoming measures. Short-time work is also already being applied at the production sites in Duisburg and Eisenhüttenstadt due to the tense situation.

“The high costs for gas and electricity are putting a heavy strain on our competitiveness,” explains Reiner Blaschek, chief executive of ArcelorMittal Germany.

“With a tenfold increase in gas and electricity prices, which we had to accept within a few months, we are no longer competitive in a market that is 25% supplied by imports. On top of that, from October onwards, we will see the German government’s planned gas levy,” he adds.

In Hamburg, the company has already reduced the consumption of gas significantly. It has also purchased sponge iron externally from America, rather than using natural gas to produce its own. The plant has already reduced operations by about 80%. “The extreme price increase for gas and electricity forces the plant to import sponge iron completely with a higher carbon footprint in order to at least continue producing,” says Hamburg plant ceo Uwe Braun.

Christian Koehl Germany

Spanish rebar prices rose last week. The domestic market was quick to react to increased offers of long products, after most major mills declared they were producing at record energy costs, Kallanish notes. The increase has serious repercussions on construction sector activity, market participants observe.

The market has seen a price increase of around €180/tonne ($180) for 16mm diameter rebar in the last two weeks, one trader says. “The situation is unstable and most of the construction companies cannot take on such high prices of long steel to carry on their works,” one source comments.

Another Spanish market participant confirms the market could soon stall assuming a further increase in rebar prices.

“The situation is becoming unsustainable for medium and small supplies. The steel sector is pushed to adjust its production levels after returning from maintenance shutdowns due to the costlier energy amid a very high inflationary environment,” a stockist explains. “Demand remains weak. Nobody is buying. The entire chain is waiting to see where the market will go to make their purchases.”

Rebar is currently sold domestically in Spain at €700/t base. Including €262/t size extras, transaction values are at €962/t ex-works. Some offers have also been heard at €1,000/t delivered for 16mm rebar.

Todor Kirkov Bulgaria

European steelmakers are pushing for higher prices for cold-rolled and hot-dipped galvanized (HDG) coil to offset rising energy costs, but buyers are maintaining a wait-and-see attitude due to weak end-user demand, sources told Fastmarkets on Wednesday, August 31.
More flat steelmakers in Europe started to push for higher prices this week on account of surging costs of production, notably for electricity and gas, market sources said.

Europe’s largest producer, ArcelorMittal, started the trend on Friday August 26 by pushing its prices up by €50-100 ($50.10-100.30) per tonne and offering CRC at €900-950 per tonne exw and HDG at €930-980 per tonne exw.

But those offer prices were way above the level buyers would agree to pay in the current market conditions, sources told Fastmarkets and trading activity in both markets across Europe remained slow, with buyers preferring to hold back and assess the market trend.

“There is not enough demand to support the [price rises],” a trading source in Northern Europe told Fastmarkets. “It is always a hard situation when a [price] increase is only cost driven.”

Fastmarkets’ weekly price assessment for steel hot-dipped galvanized coil, domestic, exw Northern Europe, was €850-880 per tonne on August 31, widening up by €10 per tonne from €850-870 per tonne on August 24.

A regional distributor reported transactions at €850 per tonne exw in the week to Wednesday and several trading sources estimated the tradeable level at €850-880 per tonne exw.

Fastmarkets’ corresponding weekly price assessment for steel cold-rolled coil, domestic, exw Northern Europe was €840-850 per tonne on
Wednesday, narrowing up from €800-850 per tonne exw seven days earlier.

Producers in the region were pushing offer prices to €900-950 per tonne exw, while buyers were reluctant to pay above €850 per tonne exw, Fastmarkets understands.

Southern Europe
Fastmarkets’ weekly price assessment for steel hot-dipped galvanized coil, domestic, exw Southern Europe was €850-880 per tonne on August 31, widening up by €30 per tonne from €850 per tonne exw a week earlier.

Several sources reported that a transaction took place at €850-860 per tonne exw in the week to Wednesday.

At the same time, offers from local mills were reported at €880-900 per tonne exw.

Trading activity in Southern Europe was still slow because the market has not fully restarted after summer holidays, sources said.

Fastmarkets’ weekly price assessment for steel cold-rolled coil, domestic, exw Southern Europe was €830-850 per tonne on Wednesday, up by €20-30 per tonne from €800-830 per tonne.

The assessment reflected market participant estimates of achievable prices, with actual transactions rare in Italy, sources said.

Some CRC offers from South Korea were reported to Italy at €870 per tonne cfr during the week, but this level was considered too high by local buyers.

Published by: Julia Bolotova

The price range for steel hollow sections in Europe widened downward in the week to Wednesday August 31, despite producers in the region pushing for higher prices due to alarming increases in energy costs, market sources said.
Fastmarkets’ weekly price assessment for steel sections (medium), domestic, delivered Northern Europe, was €1,050-1,200 ($1,053-1,203) per tonne on Wednesday, widening downward by €90 per tonne from €1,140-1,200 per tonne a week earlier.

One trader in northwest Europe said that market prices for the products had moved downward because there was a lag between changes in the price of sections and the cost of hot-rolled coil feedstock.

Current sections prices were based on imported HRC from eastern and southeast Asia, or from Turkey, they said, which can take around three months to arrive in Europe after the order is placed.

Three months ago, in late May, the price of imported HRC, cfr main port Northern Europe, was €850-920 per tonne.

HRC prices in May and June fell significantly after an upward surge in March, when prices peaked at €1,200-1,250 per tonne, following Russia’s unprovoked invasion of Ukraine.

Imported prices for the feedstock have fallen further since then, with Fastmarkets’ weekly price assessment for steel hot-rolled coil, import, cfr main port Northern Europe, at €650-680 per tonne on Wednesday, unchanged week on week.

Fastmarkets’ daily calculation of its steel hot-rolled coil index, domestic, exw Northern Europe, was €763.33 per tonne on Wednesday, up by €43.33 per tonne from €720 per tonne a week earlier.

Market sources also told Fastmarkets that several European producers have announced that they will be increasing offer prices on steel products on the basis of drastically rising energy costs, by around €100-150 per tonne.

Fastmarkets’ weekly price assessment for steel sections (medium), domestic, delivered Southern Europe, was €1,050-1,200 per tonne on Wednesday, widening week on week from €1,140-1,180 per tonne.

Some traders believed that price increases based on energy costs could be workable, depending on demand, because energy is a real cost, but other traders were not sure if the push for price rises would be successful, Fastmarkets heard.

“I’m not really sure whether this will work out,” one trader from Germany said. “People are still quiet and are waiting.”

Market participants expected more trading activity next week, when more mills and traders re-enter the market with the end of the slow summer holiday period, but some sources were uncertain about market movements.

“There is nothing happening in the market for the moment,” a distributor in Northern Europe said, “because the mills are not delivering anything – they are out of the market. It is difficult to quote a price because no one is giving any prices just now.”

Some mills were also considering production cuts to help manage the effects of increasing input costs, sources said, with Italian long steel producer Ferriere Nord Pittini heard to have suspended work at its Osoppo plant until October.

Published by: Holly Chant

Europe’s leading steelmaker, ArcelorMittal, has postponed the restart of steelmaking operations at its plant in Sestao, Spain, in the face of poor market fundamentals, the company told Fastmarkets on Thursday September 1.
The producer stopped operations at the electric-arc-furnace (EAF) based steelmaking plant in the middle of August for scheduled maintenance. Production was expected to resume this week, but ArcelorMittal has decided to postpone the restart, a spokesperson told Fastmarkets.

The company could not say when operations at the mill would restart.

“Our Sestao plant did not resume production after its summer maintenance stoppage. We cannot foresee how long the stoppage will last. It will depend on market recovery, mainly,” the spokesperson said. “The market backdrop in Europe, with consumer confidence at very low levels and rising import levels, are the reasons behind this decision.”

ArcelorMittal Sestao has installed capacityfor about 2 million tpy of crude steel from its one EAF. The plant manufactures hot-rolled strip steel.

The European hot-rolled coil market has been in decline since April, with the price dropping non-stop amid overstocking and poor demand from end-users.

This week, however, European steelmakers have gradually started to increase the HRC price on account of a substantial increase in production costs, notably for electricity and gas.

Published by: Julia Bolotova

Global semiconductor shortages are showing signs of easing, spelling good news for the automotive industry, says consulting company Semiconductor Intelligence (SC-IQ).

“However, the chip problem will likely remain through at least the year 2023,” the consultancy claims. “Although a few automakers indicate they are back at full production, most report continuing shortages. This will prevent automakers from producing enough vehicles to meet demand in 2022 and 2023, resulting in continued high prices for most vehicles.”

Automakers and semiconductor suppliers are working to try to prevent such severe shortages from reoccurring in the future, Kallanish notes.

“Car producers are adjusting their just-in-time inventory models and are also working more closely with semiconductor suppliers to communicate their short-term and long-term needs,” SC-IQ observes. “Semiconductors will become even more crucial to automakers as trends toward electric vehicles and driver-assist technologies continue.”

Toyota announced that shortages will last at least through the third quarter of 2022, but Volkswagen and Hyundai say shortages are easing. However, General Motors expects the problem to impact into 2023 and Stellantis says the deficit will last through the second half of 2022. Honda’s outlook is uncertain due to chip problems. Nissan expects supply recovery in the next few months.

For Ford, the shortages are still an issue, while Mercedes-Benz and BMW say they have no significant supply issues and no production delays. Volvo is back at full supply, but Bosch also expects shortages to continue into 2023.

LMC Automotive’s July forecast for light vehicle production is for 81.7 million units in 2022, up 2% from 2021. The forecast sees production growth of 5% in 2023 and 7% in 2024.

Earlier, the EU announced a €43 billion ($43 billion) plan to become a major chip producer, to ease dependency on Asian manufacturers of the components.

Svetoslav Abrossimov Bulgaria