Category: Latest Updates

European hot-rolled coil prices slid further in the week to Friday August 19 after producers took an aggressive approach to filling gaps in their order books, Fastmarkets heard.

Despite discounts, provided by mills in Northern Europe, traded volumes have remained limited in quiet conditions.

Most buyers still had sufficient inventories and were in no rush to purchase any HRC. In fact, buyers would rather hold back and assess the post-holiday market trend, sources told Fastmarkets.

Market participants were generally sceptical about the traditional revival of buying activity in September, mainly because of the chronic overstocking and poor performance of the key consuming industries.

Producer sources, however, expected at least HRC prices to stabilize amid high production costs and the energy crisis in Europe.

Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe, at €750.00 ($752.95) per tonne on August 19, down by just €1.67 per tonne from €751.67 per tonne a day earlier.

The latest calculation of the index is down by €24.17 per tonne week on week and by €105.00 per tonne month on month.

Market sources estimated achievable prices to be between €740 and €770 per tonne exw on August 19.

Some HRC volumes traded at €750-770 per tonne exw during the week, sources said, but in general activity was slow.

Fastmarkets’ calculation of its corresponding daily steel HRC index, domestic, exw Italy, was €740.00 per tonne on August 19, unchanged from the preceding day.

The latest calculation of the Italian index is down by €30.00 per tonne week on week and by €36.67 per tonne month on month.

The calculation was based on buyers’ estimates of achievable prices reported at €720-750 per tonne exw.

The Italian market was in holiday mode during the week to August 19. Both mills and buyers in the nation were absent from the market but should return in late August or early September.

Imports
The market for imported coil was also quiet in the week to August 19.

Buyers from Northern Europe estimated the workable level for imported HRC to be €650-670 per tonne cfr Antwerp, with the most recent offers reported closer to €700 per tonne cfr Antwerp from Turkey and Asia.

Published by: Julia Bolotova

Germany’s crude steel output continued to drop in July in a year-on-year comparison, marking the fifth consecutive month of declines, the national steel association WV Stahl said on Friday August 19.
German domestic crude steel production amounted to 2.97 million tonnes in July 2022, down by 2% from 3.02 million tonnes in June 2021, WV Stahl said.

Steel output from Germany’s basic-oxygen furnaces – mainly used in the production of flat steel – rose marginally by 0.40% year on year to 2.13 million tonnes in July 2022, WV Stahl said.

Crude steel production in Germany is unlikely to increase this year due to the high cost of production, notably the unprecedentedly high energy prices, weak demand and declining prices for finished steel products generally, Fastmarkets understands.

Fastmarkets’ daily calculation of its steel hot-rolled coil index, domestic, exw Northern Europe averaged €851.17 ($854.52) per tonne in July 2022, sharply down from an average of €1,156.90 per tonne in July 2021.

Domestic coil prices have been declining across Europe since April 2022, due to pressure from chronic overstocking by buyers and weak demand from key end-user sectors, mainly automotive.

Meanwhile, Germany’s crude steel output from electric-arc furnaces (EAFs) decreased by 7.70% on an annual basis to 839,000 tonnes in July 2022, WV Stahl said. Steel produced via EAFs is mainly used in the production of long steel products.

Energy cost increases had a bigger impact on electric-arc furnace operators. Therefore, EAF-based mills were reluctant to cut prices despite slowing buying activity, stating that they would rather cut output than sell long steel products below costs.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe averaged €980 per tonne in July 2022, up from average of €903.13 per tonne in July 2021.

Published by: Julia Bolotova

Some Turkish long steel mills have begun considering stoppages after failing to secure higher prices in either the domestic or export markets, while energy and scrap costs have remained high, a major Turkish long steelmaker manager told S&P Global Commodity Insights Aug. 22.

“Without a recovery in demand, it wouldn’t be possible for Turkish producers to continue production,” the manager said, adding that as producers had been adding to stocks for a while due to low demand, they had begun considering stoppages.

“As our raw material stocks are enough to work till the end of October, we could continue to work with reduced capacity depending on market conditions,” the manager said, adding that his company had already reduced output to 12 hours/day.

“If the weak market sentiment persists and input costs remain high, we may stop production fully in the first week of November,” the manager said.

Although some Turkish long steel mills raised their lira-denominated domestic rebar list prices Aug. 19 to keep them stable on a dollar basis in the range of $650-$670/mt EXW, after the Turkish currency depreciated further, low demand continued to pressure quotes amid strong input costs, sources said.

Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $397.50/mt CFR Aug. 19, unchanged day on day, while Turkish exported rebar was assessed at $645/mt FOB, down $7.50/mt on the day, according to data from S&P Global.

Domestic scrap purchase prices

Although imported scrap prices remained relatively stable, some major Turkish steel mills reduced their domestic scrap purchase prices Aug. 20 amid a weak finished product market.

According to company price lists seen by S&P Global, Colakoglu cut its DKP grade scrap (autobundle) purchase price and its extra grade domestic scrap price by Lira 200 to Lira 7,480/mt ($412/mt) and Lira 6,955/mt, respectively.

Oyak Maden Metalurji Group’s Iskenderun mill, Isdemir, and its Eregli mill, Erdemir, both lowered purchase prices by Lira 100/mt to Lira 7,400/mt and Lira 7,480/mt for DKP grade domestic scrap, and Lira 7,395/mt and Lira 7,475/mt for extra-grade scrap, respectively.

Asil Celik’s DKP scrap buying price was set at Lira 7,530/mt while its extra grade domestic scrap buying price fell to Lira 6,800/mt.

— Cenk Can

China’s steel inventories at major trading hubs continued to remain low as of mid-August, despite a marginal improvement in the crude steel production in August after a decline for two straight months.

Relatively low steel production and falling steel market inventories were signs that both steel mills and traders were cautious about the steel demand in the upcoming months, market sources said.

Steel output cuts are expected to continue through the end of 2022 in a bid to maintain relatively stable steel prices and reasonable profits, some mill sources said.

Inventories deplete

As of Aug. 19, rebar inventories held by traders in eastern China’s Hangzhou city were down by around 31% from late June and 19% lower from the end of July, according to market sources.

Around the same period, long steel inventories — mainly rebar and wire rod — in southern China’s Guangzhou spot market were down 28% from late June and 9% lower from late July.

Steel inventories in Hangzhou and Guangzhou were also 37% and 23% lower year on year, respectively.

Meanwhile, hot rolled coil inventories in southern China’s Lecong market as of Aug. 17 dropped 12% from late July and posted a decline of 23% on year. On the same day, HRC inventories in eastern Shanghai dropped 5% from late July, although stocks were still around the same level as a year earlier.

Depleting inventories were mainly due to relatively low steel production and destocking by traders. “China’s overall end-user demand in construction and manufacturing sectors actually hasn’t shown much improvement in August, because of extremely hot weather and power shortages along Yangtze River,” a trader said.

Production pace

China’s daily crude steel output over Aug. 1-10 increased by 3.8% from the July average but was still 12.5% lower from May and 10% below than June level, according to latest data from the China Iron & Steel Association.

The Chinese steel profit margins shrank again in mid-August because of rising steel output, which would be able to limit further output growth during the rest of August, some market sources said.

One mill source based in eastern China said his company actually cut steel output by more than 15% in August due to sluggish local demand and a cautious outlook for the steel demand in September.

In general, major Chinese steel mills are at least not willing to increase the production significantly at the moment, because they know if steel production increases too much amid weak demand, profits will soon turn negative, another mill source in northern China said.

“The situation of low steel demand, low steel production and low steel inventories may continue in the coming months,” the source said.

— Staff

The American Metals Supply Chain Institute (AMSCI) is providing feedback to the US International Trade Commission regarding the impact of Section 232 on the domestic steel industry on behalf of suppliers, Kallanish reports.

At a hearing before the commission last month, AMSCI’s representative leaders for steel suppliers in the US argued that the stressful impact of the pandemic on the nation’s supply chain has increased the need for exclusions from both the nation’s Section 232 and 301 tariffs.

“As this Commission found in the recently completed sunset review concerning galvanized steel, the domestic steel industry has increased its capital expenditures over the past four years even as it has reaped windfall profits. These increased capital expenditures and new manufacturing facilities, combined with the shuttering of older, less efficient facilities … have left the domestic steel industry stronger and more competitive so that continued protection on the current scale is simply not necessary,” testifies AMSCI president Richard Chriss.

President Joe Biden has previously indicated that he plans to reverse several tariffs made by the nation’s previous leader, President Donald Trump.

“We have said from the beginning, some Trump tariffs were irresponsible, and did not advance our economic or national security and instead raise costs for families and businesses,” explains White House press secretary Karine Jean-Pierre.

Zach Johnson USA

Germany’s stockholding distributors sold 10.6 million tonnes of finished product in 2021, which was up 2.7% over the first Covid-19 year in 2020.

In particular, the second quarter saw significantly more volume than Q2 2020, which was throttled by lockdowns, says stockholders’ federation BDS. 2021 began with the relatively high nationwide inventory of 2.07mt, up 8.1% on the “extremely low level” one year earlier, says BDS head of research Jörg Feger. Throughout the first eight months of 2021, inventories were lower than in the corresponding 2020 months, and then peaked at the end of October at 2.18mt.

The increases occurred mostly for flat products, whereas the picture is mixed in the long products categories. Beams and sections saw a slight drop of 0.6% to 1.01mt, and thus remain at a level that is notably lower than in earlier years. Feger suggests German customers are buying increasingly from foreign sources with warehouses outside Germany, meaning those volumes do not enter the national statistics. Another assumption is that German stockholders process sections to finished components, which are also not included in the statistics, Kallanish understands.

Rebar saw a dip too, of 5.6% year-on-year, but still kept a decent overall level at 1.34mt.

Merchant bar and special bar qualities (SBQ) form one category, which gained 1%, totalling 933,000t. Within this category, the share of SBQ has grown quite considerably in the long term, from some 10% in the early 1990s to 40% nowadays, BDS notes.

Christian Koehl Germany

Lotter has completed the modernisation of its location in the port of Würzburg, on which it spent more than €10 million ($10m).

A large share of the investment was spent on two crane tracks of 120 metres length, with a load capacity of 12 tonnes each. The company also rebuilt the ware and storage house, which holds four stir-up bending machines, two straighteners, two cutting devices, and one welding machine.

The machinery currently processes around 2,000 tonnes/month of reinforcing products. According to site director Tom Klossek, it allows for a much higher capacity in the future. As a special feature, he emphasises the site has added sleeping rooms and utilities for workers, many of which come in from other countries.

The machinery is fully connected with the bending pool of the larger Lotter Group, so that the group can balance the utilisation of its various sites. The location forms a triangle with Lotter’s sites in Frankfurt and Schweinfurt, meaning the group has improved its services in the Rhine-Main region, it tells Kallanish.

In January, the group announced the construction of a new warehouse in Schweinfurt, in northern Bavaria. Like many of its kind, Lotter is also a provider of sanitary equipment and building materials.

Christian Koehl Germany

H2 Green Steel and BMW Group have finalized a contract to cement the terms of their carbon-reduction-focused partnership, Kallanish reports.

To help BMW Group meet its aggressive timeline for hitting upstream scope-three emissions reduction goals, H2 Green Steel will provide products that adhere to gross embodied carbon emissions intensity obligations per tonne of steel.

Both companies aligned on using 40% pre-consumer steel scrap of the volumes returned to H2 Green Steel’s electric arc furnaces for recycling.

“Working with progressive companies like BMW Group pushes us to be better, both in our own operations and our value chain. It also pushes us to be an even better partner to our customers and raises the bar for industry peers on the decarbonization journey,” says Henrik Henriksson, H2 Green Steel ceo.

H2 Green Steel aims to make its product with renewable electricity.

Kristen DiLandro USA

Polish steel rebar producers were pushing for higher prices in the week to Friday August 19 to account for rising costs, but buyers were reluctant to accept any increase amid poor end-user demand, market sources told Fastmarkets.
The rebar market in Poland has been relatively stable in the seven days to Friday, with the material trading at around 3,800-3,900 zloty ($816-838) per tonne exw.

In particular, one transaction was reported at 3,830 zloty per tonne exw.

But traded volumes during the assessment week were quite low and buyers were mainly interested in purchasing mixed lots of materials, rather than just rebar, market sources said.

At the same time, prefabricators and cut-and-benders mentioned that there had been no inquiries for large volumes of rebar from end users lately. This was due to a slowdown in the construction industry, notably in the private sector, because many new projects have been put on hold due to a lack of demand for new apartments and houses.

Despite the gloomy prospects for the construction sector, some local rebar producers in Poland attempted to push for higher prices this week, citing surging energy costs. Notably, an offer from Celsa Huta Ostrowiec was reported at 4,300 zloty per tonne delivered (about 4,250-4,270 zloty per tonne exw), however this was said to be substantially higher than the price buyers were willing to pay in the current market.

As a result, Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, exw Poland, was 3,800-3,900 zloty per tonne on Friday, widening downward by 50 zloty per tonne from 3,850-3,900 per tonne on August 12.

The assessment was based on deals, the lower end of offers and buyers’ estimates of achievable prices.

In the secondary market, stockholders were offering rebar at 3,960-3,980 zloty per tonne cpt, stable from the week before.

Market sources said domestic rebar prices in Poland would likely rollover until September, while further prospects were still unclear.

“On the one hand we have an energy crisis and cost inflation, and on the other we have a looming recession. So, [rebar] price direction is hard to predict,” a trading source in the local market said.

No new offers for imported rebar were reported during the week.

European producers were largely out of the market due to summer closures and were in no rush to make new offers for September.

Published by: Julia Bolotova

The North European plate market continued on a downtrend Aug. 19, with mills hungry for volumes on low demand toward the close of the holiday period.

In Northern Europe, Platts assessed heavy plate down Eur75/mt on week, at Eur1,125/mt ex-works Ruhr.

German mills have been heard as offering additional volumes into the spot market in recent weeks, given poor overall demand, with offers cited by sources at Eur1,150-1,200/mt ex-works and delivered Ruhr.

Distribution sources reported tradable value at Eur1,100-1,150/mt ex-works Ruhr, with indications generally falling by Eur50/mt on week.

Spot offers were reportedly limited to October delivery and for established customers, with sources speculating mills want to protect prices for later in Q4, anticipating a price increase. Customers were heard as happy with this arrangement, not wanting to expose themselves fully for the full fourth quarter on high stocks and uncertainty on price direction.

“I think distributors are pretty happy just to fill gaps in stocks on the current price trend,” said a distributor. “Of course, stockholders will quickly change their mind if they see prices start to go up again.”

A service-center source said ex-stock prices were being driven “into the ditch,” with sales from stockholders Eur600-800/mt below the purchase price.

In Italy, the market remains quiet through the holiday period, with little transactional activity reported. Prices in the region are stable at Eur950/mt ex-works, with the assessment unchanged on week.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar, Benjamin Steven