Category: Latest Updates

An alarming drop in water levels in Germany’s Rhine River and other key waterways in Europe has led to massively strained logistics in shipping commodities across Europe, driving up costs and exacerbating material supply, sources told Fastmarkets.
The Rhine is one of Europe’s largest rivers, stretching from Switzerland in the south up to the Netherlands in the north. It is a vital artery for the shipment of metal across western Europe.

Dramatic disruption to trade
Record-breaking heat in Europe and a stark lack of rainfall on the continent this summer has led to water in the Rhine sinking to a level that is impeding shipping activities.

A Rhine water-level marker west of Frankfurt was forecast to drop to 40cm early on August 12, according to the German Federal Waterways and Shipping Administration, as reported by Bloomberg on Wednesday August 10.

“River water levels are extremely low, so river transport is hampered and is slowing down [steel] deliveries. Some of this also affects raw materials deliveries, such as iron ore and coal transported by river barges,” a trading source in Germany said.

“We have to load barges less than 50% [capacity] to make it work. But I’m afraid in the upcoming day, the water levels [in the Rhine] will fall more, making river transport impossible,” a trading source in the Benelux region told Fastmarkets.

Steel scrap flows drop
Much like the Rhine’s water levels, inflows to some German scrapyards have been drying up of late due to greater difficulty in shipping, sources said.

“A shortage of scrap in Europe is becoming very real. Rivers have dried up and there is no barge movement – they could even close the [Rhine] river next week,” a major steel scrap exporter said on Thursday August 11.

“There is very little scrap inflow to German yards now, some yards are usually receiving material by barge. Scrap sellers are scared to offer material for shipment in the first half of September,” he added.

In Germany, barges are more commonly used for transporting scrap from the yard to the steel mill, a German scrap industry source said.

Because of the low water level, barges are only able to take around one third of their usual cargo, which means three barges are required for every one that would ordinarily be used, thus raising freight costs sharply, the source said.

If using the Rhine becomes impossible and freight must be transferred to the road, around 80 truckloads of scrap would be needed to replace a barge, they added.

A major Bangladeshi steelmaker source said on Thursday he was fearful of the short-term future of scrap availability from Europe.

“There is some shakiness in the scrap markets and low river levels in Europe and the UK mean that they are [potentially] not going to be able to supply scrap,” he said.

Furthermore, in an environment of increasingly tight transport availability, scrap suppliers have had to compete with coal suppliers to get space on barges in Germany, Fastmarkets heard.

Russia has recently reduced gas supply to Europe dramatically, so the German power industry has increased its reliance on coal.

“Since July, Russia supplied only 20% of normal gas supply through Nord Stream 1, so Germany has to reactivate mothballed coal-fired power plants,” a Germany-based distributor told Fastmarkets.

Prices for steel scrap to bellwether import market Turkey have already risen in the week-to-date amid higher local steel demand in that country, but scrap suppliers have also pointed to the transport problems in Europe as another reason for prices to keep rising.

Fastmarkets’ calculation for its daily index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey was $387.81 per tonne on Wednesday, up from $351.19 per tonne one week before.

Freight costs soar
Difficulty traversing the river has jacked up freight costs in Germany for alternative transport methods this week. Notably, the interruption to deliveries by river has resulted in increased competition for trucks and railway deliveries, leading to an increase in logistics costs.

River freight rates exploded over the last weeks, meaning it has become cheaper to deliver by truck now, Fastmarkets heard. Another problem is that there is a shortage of truck drivers in Germany with many workers on holidays, sources said.

Costs for shipping hot-rolled coil by truck were quoted at a minimum of €70 ($71) per tonne in Europe in the week to August 11, up from €20-30 per tonne earlier this year, according to the German steel trader.

A similar trend is also being reported for aluminium in Europe, now that demand for trucks has risen.

“It’s causing logistics headaches. A 5,000-tonne shipment that would go down the Rhine in a week or two now needs to be divided up into 25 tonnes per truck, and you can’t deliver and unload that many trucks in a day compared with a barge. For some of the larger plants, who take not just [aluminium] ingot but also slab, it’s definitely a concern, but the majority of those have sufficient material on ground to weather this,” said a third European trader.

“But costs are going up, and this is probably going to continue. These days it happens every year and starts in July. Come September, when metals need to start flowing again and plants want to start, it will cause headaches on the roads; it’s logistically a nightmare,” they added.

The plethora of logistical issues across European ports and trucking shortages have kept premiums supported since early 2022 despite increasingly bearish macro sentiment.

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $520-550 per tonne on August 9, down from its record high of $600-630 per tonne in May but up from $320-345 per tonne one year earlier.

Meanwhile Fastmarkets assessed the aluminium 6063 extrusion billet premium, ddp North Germany (Ruhr region) at $1,170-1,250 per tonne on August 5, down from the all-time high of $1,500-1,600 per tonne on April 29.

This compares with $900-950 per tonne on April 30, 2021.

In July, wildfires close to Trieste port in Italy blocked highways and passenger and freight trains in and out of the port, while strikes at a German port in June also caused further challenges.

Published by: Julia Bolotova, Lee Allen, Carrie Bone, Elina Virchenko

The EU and Turkey have agreed that 16 January 2023 is the deadline for the reasonable period of time for the EU to implement the recent WTO recommendation to adjust its steel safeguard measure.

In May, the WTO’s Dispute Settlement Body recommended the EU should bring its definitive safeguard measure into conformity with the Agreement on Safeguards and the General Agreement on Tariffs and Trade (GATT 1994). This followed the conclusion of an investigation carried out by a WTO panel set up in 2020 at the request of Turkey.

The panel found that the safeguard measure is inconsistent with Article XIX:1(a) of the GATT 1994 and inconsistent with Article 4.1(b) of the Agreement on Safeguards (see Kallanish passim). The day of adoption of the recommendations and rulings was 31 May.

Adam Smith Poland

Polish scrap prices are increasing by as much as €60-70/tonne ($61-72/t) in an on-month comparison, both for the domestic and export markets, market participants tell Kallanish.

Prices are being driven up by the latest Turkish hikes, but they are also being inflated by heavy transport disruptions. Prices for trucks, railway, and sea transports are increasing sharply. Shipping companies and forwarding agencies are now prioritising the transport of grains, coal, and weapons in and out of Ukraine, with the result that deliveries for all other non-sensitive commodities such as scrap are experiencing delays.

The war in Ukraine is congesting all transport routes in Poland and other countries like Romania. Polish mills are paying steep increases to make sure they will receive scrap on time. Port congestion is reported in Poland and Romania, causing delays to scrap export shipping. In Poland, two trading sources confirm that port gates are often closed due to heavy traffic. Sellers in the country are lamenting a lack of empty sea boxes for scrap as transport costs for containerised scrap continue to soar.

Costs for 400km of truck transport in Poland from or to the city of Poznan have doubled to about €1,000/t since the war in Ukraine started. Booking railway transport is similarly complicated and pricey, with delays certain. The holiday season is further slowing activity.

Traders who sell containerised scrap are particularly hard-hit by the transport disruption. One seller says he will strive to deliver all his current orders, but will stop quoting because the market has become too unpredictable.

This month, the popular grade E40 shredded in Poland has surpassed the level of €400/t delivered. Companies are asking as much as €390/t ex-works and about €50-60/t more for new arisings E8. E40 is at €340-360/t delivered in countries such as Italy, France, and Germany. This month, Italian and Spanish mills are having difficulties finding scrap in Eastern Europe.

Natalia Capra France

We are pleased to inform you that Ekinciler Demir ve Celik joined as associate member of EUROMETAL.

Ekinciler Iron and Steel Industries, Inc. is the main subsidiary company of Ekinciler Holding. Founded in Iskenderun Bay four decades ago, the company has an annual production capacity of 1.25 million tons. All types of construction steel are manufactured by a highly skilled workforce in the production plant, which is empowered with the state of the art technologies.

EKDEMİR exports products to more than 60 countries all over the world. In 2019, Company’s net sales were USD 326 million and was ranked 78th in 2018 and 114th in 2019 among the Top 500 industrial corporations in Turkey.

Ekinciler Iron and Steel has “ISO 9001 Quality Management Standard Certificate”. The company always puts environmental protection and maintaining a healthy and strong workforce in the forefront of all its production processes and achieved “ISO 14001 Environmental Management Certificate”, “Sustainability Certificate”, and “ISO 45001 Occupational Health and Safety Certificate”. At Ekinciler Iron and Steel Industries, Inc., using energy, water and raw material in the most effective way is an utmost principle. Concerning with the recycling and proper disposal of waste products, the company adopted an approach most beneficial to the national economy.

More information: ekinciler.com

A number of European steelmakers have decided to cut production by idling blast furnaces during the summer period, cutting production as steel demand remains weak.

Automotive manufacturers have consumed less steel because of lower car production rates caused by a shortage of components. Other end-users, including in the white goods segment, were also reported to show lower demand for steel.

A majority of European coil producers have been operating with reduced capacity in recent weeks and have planned longer summer maintenance works in an attempt to balance supply with reduced demand.

European distributors have sufficient inventories and, as a result, they have been avoiding restocking. A negative price trend in the EU flat steel market contributed to a wait-and-see approach among buyers.

Domestic prices for HRC have been declining in Europe since the second half of March because of weak demand. Platts daily assessments for HRC in Northern Europe declined to Eur780/mt ex-works Aug. 9, 15.4% lower than at the start of the year and down from the intra-year high of $1,460/mt reached March 18.

In the short run, output reduction should support price stability, with production to possibly increase if/when restocking starts.

Germany

ArcelorMittal’s Eisenhuettenstadt plant

• Operating at reduced capacity since Aug. 1 due to weak demand.
• ArcelorMittal applied for short-time work for August and September to lower production due to the tense economic situation from weak demand.
• ArcelorMittal has seen a sharp drop in demand for rolled products.
• The plant’s liquid lines are continuing to operate as normal, due to normal demand for slabs.
• The Eisenhuettenstadt plant produced 1.6 million mt of flat steel in 2021.
• ArcelorMittal previously shut blast furnace 5A at Eisenhuettenstadt on May 20 to replace internal cooling plates, among other maintenance, but started ramping it up July 7.

Salzgitter’s blast furnace C

• Delayed the restart of blast furnace C, idled in 2019, due to reduced demand and sufficient semi-finished supply from other sites.
• Blast furnace C has a capacity of 600,000 mt/year. Salzgitter’s total crude steel output exceeds 7 million mt/year.

Italy

Arvedi

• Stopped production at its plant, including its melt shop and rolling mills, for five weeks in August for summer maintenance work.
• Operates two EAFs in Cremona that feed 75% of the finishing operations there.
• EAF No. 1 has a capacity of 1.4 million mt/year of crude steel and furnace No. 2 has an expanded capacity of 2.6 million mt/year.

Acciaierie d’Italia

• Temporarily halted production at its 2 million mt/year blast furnace No. 2 since July 11 for about a month-and-a-half, according to trade union sources.
• Acciaierie d’Italia was also said to have temporarily idled a second blast furnace at the start of August, although it declined to comment.
• Market participants named high production costs (particularly for energy), limited demand and failed attempts to increase coil prices to the targeted level as the likely reasons for the move.

Marcegaglia

• Closed all production for four to five weeks over the regular two to three weeks to realign availability with currently minimal demand, according to market sources.
• The company’s 2022 steel production volume is likely be in line with the overall decrease in demand, with volumes down 3%-5% year o year.

France

ArcelorMittal’s Dunkirk steelworks

• A 1.5 million mt capacity blast furnace was idled July 12, following a run-down of operations.
• The furnace is being shut due to weak market conditions.
• The closure will leave hot metal capacity of 5.7 million mt/year operational at the site.
• The furnace’s expected restart date has not yet been announced.

NLMK Strasbourg

• Closed galvanizing line from early July for relining.
• The NLMK Strasbourg site has a production capacity of 400,000 mt/year of HDG

Czech Republic

Liberty Ostrava plant

• Temporarily idled its blast furnace No. 2 to carry out a Eur9.5 million ($9.7 million) repair and upgrade program.
• Maintenance to increase the stability and reliability of the furnace and reduce the inventory.
• Salamander tapping of the BF took place July 26.
• Maintenance work to include extensive repairs of the coolers and steel structures, as well as an upgrade to the furnace top, including the detection system.
• Plant’s blast furnace No. 3 and rolling mills are continuing to produce to serve customers.
• BF2 was previously idled in April 2020 for four months due to COVID-19, cutting production by 20%, meaning the current shutdown could continue for at least the same period of time, if not longer.

Serbia

HBIS Serbia

• Shut down one of its two blast furnaces by the end of July on unfavorable conditions, reduced demand in the global steel market.
• Blast furnace No. 1 has a maximum capacity of 900,000 mt/year.
• The furnace was previously restarted in August 2021 after HBIS Serbia shut it down in July 2020 because of unfavorable market conditions caused by the coronavirus pandemic.

Slovakia

US Steel Kosice

• Market sources said one of three blast furnaces idled in an attempt to balance supply with low demand and to keep prices from dropping further.
• Company denied this on June 27.

Ukraine

Metinvest

• Operations at Ingulets and Southern iron ore mining and processing plants suspended since July 1.
• Operations at Northern GOK will be suspended from mid-July.
• Shutdowns due to Russia’s invasion of Ukraine.
• Company will switch to using one blast furnace at its Kamet Steel plant in Kamianske.
• Central GOK to continue to operate at reduced capacity utilization levels.
• Central GOK has an iron ore beneficiation capacity of over 6 million mt/year, with 2 million mt/year of pellet capacity, while the group’s iron ore concentrate production hit 30.5 million mt in 2021.

— Maria Tanatar, Benjamin Steven, Jacqueline Holman, Staff

Northern European mills continued to offers discounts to secure volumes Aug. 10, struggling in the minimal demand market.

Market participants reported deals settled at Eur760-770/mt ex-works Ruhr, reinforcing lower workable prices.

The Eur760-770/mt ex-works price level was achievable on bids for larger volumes, with the smaller tonnage deals that have represented the bulk of recent trade sitting higher at around Eur800/mt ex-works.

Platts assessed hot-rolled coil in Northwest Europe down Eur10/mt Aug. 10, at Eur770/mt ex-works Ruhr.

Distribution sources again emphasized a need for certainty in the market on price direction and drivers for demand to recover substantially, though expectations for a September revival were heard as increasingly pessimistic on the day.

“The market just needs some certainty before things start moving again,” said a trader source. “Everyone’s banking on a September revival, but it’s looking increasingly likely that we’ll be in this mess for a while.”

Import offers were heard as stable in the Northern market, with another trader reporting tradable levels stable at Eur720/mt CIF Antwerp.

In Italy, the market was silent on capacity reductions and holiday sentiments, bringing stability to the market on muted trading.

HRC in South Europe was assessed stable day on day at Eur770/mt ex-works Italy.

This brings North and South European HRC price levels into parity for the first time since June 10, 2021, assessed at Eur1,145/mt ex-works Ruhr and Italy, respectively.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven, Maria Tanatar

The EU and Turkey have agreed that the EU will modify its safeguard measures on certain steel products until Jan. 16, 2023 to comply with the General Agreement on Tariffs and Trade, or GATT, the World Trade Organization announced Aug. 9.

The EU introduced safeguard measures in July 2018 in the form of tariff-rate quotas.

In March 2020, Turkey requested consultations with the EU concerning the provisional and definitive safeguard measures imposed on imports of certain steel products and the investigation that led to the imposition of those measures.

It then requested the establishment of a panel in mid-July 2020, which was deferred by the dispute settlement body on July 29.

In a general WTO panel report released April 29, 2022, the WTO called on the EU to bring its measure into conformity with the agreement on safeguards and the GATT.

The panel said at the time that it found the EU steel safeguard WTO-compatible on most of the points which Turkey had questioned, while it also found, on three points, that the EU safeguard measure lacked sufficient justification.

The EU is traditionally one of Turkey’s largest steel importers and one of its largest steel suppliers.

Turkish exports of hot-rolled coils fell 7% year on year to 1.02 million mt in the first half of 2022 due to lower EU demand, according to the latest Turkish Statistical Institute data.

Turkish exported HRC was assessed at $620/mt FOB Aug. 5, according to S&P Global Commodity Insights data, representing a $600/mt decline from mid-March.

— Cenk Can

Ukraine’s crude steel output fell 62.1% on the year to 4.82 million mt in January-July 2022, steelmaking industry association Ukrmetallurgprom reported Aug. 10.

Pig iron output dropped 61.9% on the year to 4.815 million mt and rolled steel production decreased 62.7% to 4.23 million mt, according to preliminary figures.

Output was hit by the Ukraine war, resulting in the destruction of many steelmaking facilities, as well as the disruption of logistic chains, with steel exports out of Black Sea ports barred.

In July, Ukraine produced 280,000 mt of crude steel, down from 1.87 million mt a year ago, while pig iron output was 285,000 mt, down from 1.88 million mt, and rolled steel production was 210,000 mt, down from 1.67 million mt.

Metinvest’s Azovstal and Illych steelworks in Mariupol were both destroyed and captured by the Russian forces, although its Zaporizhstal steelworks, which is running at 50% of its capacity since April, produced 1.01 million mt of steel in January-July, down 56.3% year on year.

Zaporizhstal’s pig iron output dropped 49.9% to 1.27 million mt and rolled metal production decreased 53.9% to 905,700 mt, Metinvest said.

In July, Zaporizhstal produced 137,400 mt of pig iron, down 60.7% on the year, with crude steel production down 72.5% to 89,600 mt and rolled steel output down 71.8% to 78,700 mt.

— Alexander Bor

Mining and steel company Evraz, with mines and mills in Russia, the US, Canada, the Czech Republic and Kazakhstan, said Aug. 10 it was launching soliciting of proposals for its North American subsidiaries acquisition.

A sale of the subsidiaries will allow to unlock the stand-alone value of the North America business, the company said, adding it did not intend to provide additional information on the process until it is finalized.

The solicitation process is being conducted under a certain general license issued by UK’s Office of Financial Sanctions Implementation, or OFSI. The transaction will be subject to regulatory and corporate approvals and applicable sanctions laws, and will require approval from relevant sanctions authorities, including OFSI, noted Evraz.

“The simplest answer” about why Evraz is seeking to sell its North American mills is “sanctions,” an analyst who wished to be unnamed told S&P Global Commodity Insights.

“The company is in a difficult position: its business remains registered in the UK (this was confirmed by Evraz), but most of it is in Russia,” said the analyst. “Reregistering in Russia seems to be impossible at this stage. At the same time, something needs to be done with [the company’s] assets around the world. One of the options is to simplify the structure by selling some of them retaining only what is in Russia.

“Additionally, the sale will help the company pay off part of its net debt, which stands at $3 billion [as of end-H1 2022], which would be very handy given its negative cash flow for the period,” the analyst said. “But whether Evraz will be allowed [by OFSI] to sell [its North American mills] is an open question.”

In 2021, Evraz made 1.88 million mt of crude steel and 1.66 million mt of steel products at its mills in North America. Its assets there focusing on the premium markets in the Western US and Canada offering plates, rails, large-diameter and OCTG pipes, comprise Canadian mills Regina, Camrose and Calgary and US mills Pueblo and Portland. The division has technology centers in Portland, Pueblo and Regina.

Evraz is constructing a high-efficiency long product mill at Pueblo, which will produce 100-meter rails using solar power. Last year, it made investments to upgrade equipment and expand production capacity also at Regina, Saskatchewan, and Red Deer, Alberta, the projects that could be completed this year.

Also, Evraz had considered launching this year digital transformation projects focusing on automation and optimization of its North American operations.

Since late February, as a result of Russia’s invasion of Ukraine, it has become one of the most heavily sanctioned metallurgical companies in Russia.

— Ekaterina Bouckley

Northwest Europe coil market observers believe mills are putting a break on output, in the legitimate interest of stabilising prices in a market of subdued demand and order activity.

The mills themselves are not very explicit about it. The market leader reduced working hours at the rolling mills of its two German works, but revealed the move only to regional media. Another German mill is refraining from restarting a blast furnace that was meant to be taken back into operation by mid-year. Temporary output interruptions are also being heard in Italy, France, Serbia, and Czech Republic.

“Producers are taking big efforts to seriously reduce output in order to bring back a balance of demand and supply to the market,” one Dutch source tells Kallanish. Looking back, he points out that “during and because of Covid, we had to cope with a back-and-forth of oversupply and shortage.” Russia’s attack on Ukraine then brought panic buying to the market, which “was absolutely unnecessary”, he observes. As it turned out, “the real demand was much lower than the mills foresaw in their budgets.”

A mill source points at high inventories at service centres and distributors. “Once they are in balance, we expect supply/demand to stabilise,” he says.

The working hours reduction at rolling mills could mainly benefit hot rolled coil derivatives. While HRC is seen at €800-850/tonne ($818-869), hot-dip galvanized coil has maintained values above €950. According to another mill source, HDG prices are supported by the increasing costs of natural gas, which is used in the production process. Cold rolled coil is still a good deal lower in price, starting at €910, but sources refrain from pinpointing the value more precisely.

Christian Koehl Germany