Category: Latest Updates

Deals in the European hot-rolled coil market were heard at lower levels June 21, although buyers continued to refrain from any substantial restocking.

Platts assessed hot-rolled coil in Northern Europe down Eur5 at Eur870/mt ex-works Ruhr June 21.

Deals were heard at Eur870/mt ex-works Ruhr and Eur880/mt ex-works Ruhr, while Central European material was available at Eur840-860/mt delivered Ruhr ex-Central Europe.

Several producers reported that a Benelux-based re-roller had been offering HRC at Eur820/mt ex-works Northern Europe, and one source indicated that realistic delivery costs could reach Eur80-85/mt, but other indications on delivery costs were heard much lower at Eur30-40/mt.

A source said that such deals were possible in the current market for some customers in special trades, but that they had not seen the offers. The source did not see the level as representative of the market price, with most offers sitting higher at Eur870-880/mt ex-works Northern Europe.

“We could offer at Eur820/mt against costs, but it doesn’t make sense to drag prices down,” the mill source said. “Current buyer sentiment is to wait and offers wouldn’t materialize as deals even if we did go that low.”

A trader in Benelux also denied the offers, agreeing with other buyer sources that current price levels should be in the Eur850-900/mt range, ex-works Ruhr.

Another mill source agreed that transactions would remain scarce.

“There’s no trade when the market is at these top or bottom levels, at peak prices buyers stay away, and mills won’t sell at the pricing floor,” the second mill source said.

Mills were heard able to offer July rolling, with near-empty orderbooks extending into August and September. Demand remained at minimal levels on poor end-user consumption and buyer risk aversion to restocking on pricing downtrends.

Producers were reported running at substantially reduced capacities, in line with ArcelorMittal’s recent announcement to idle their 1.5 million mt/year blast furnace in Dunkirk, France, as well as another furnace in Eisenhuttenstadt, Germany.

Market sources expected further closures were necessary in order to bring supply in line with currently reduced demand, as reduced capacities would not suffice to put an end to the recent pricing freefall.

In the Southern market, HRC was also down on the day, assessed at Eur810/mt ex-works Italy.

— Benjamin Steven, Maria Tanatar

Ukraine may produce 7.6 million mt of steel and 6.9 million mt of steel products in 2022, with 4.7 million mt to be exported, Kyiv-based industry analysts GMK Center said in a report released June 20.

The country’s steel production is likely to fall 64.5% from 21.4 million mt in 2021 due to the war with Russia.

Ukraine produced 4.24 million mt of steel in January-May, with the vast majority of this output coming before the war over January-February. In January-April, the country’s exports of iron ore and iron ore concentrates totaled 13 million mt, while those of ferroalloys stood at 220,000 mt, pig iron at 451,100 mt, and semi-finished steel products at 1.15 million mt, according to GMK.

Mining and steel company Metinvest said earlier that the military conflict, the forced stoppages of Mariupol-based Azovstal and Ilyich Steel and the loss of control over them reduced the presence of Metinvest on the world steel market to 2.5 million mt/year from over 11 million mt/year.

Ukraine’s largest standalone steelworks, ArcelorMittal Kryvyi Rih, which started to gradually resume production in April after a forced shutdown is now operating two coke batteries out of six, one blast furnace out of four, one out of six basic oxygen converters, one out of three continuous casting machines, three casting into ingots machines, and one rolling mill, the company’s spokesperson told S&P Global Commodity Insights.

Its mining department and coke plant are operating at reduced capacity too, but the steelmaker has preserved all jobs and maintained all salary payments.

ArcelorMittal Kryvyi Rih reported in May that it has had to put on hold several investment projects, including a pellet plant initially slated to open in late 2023, due to the Russian invasion.

The company remains on track though to construct a new tail dump, critically needed to continue mining, and to modernize its blast furnace No. 9, which provides two thirds of ArcelorMittal Kryvyi Rih’s total pig iron production. The investments in the two projects are estimated at $420 million.

Pipe production

In May, Ukraine made 45,100 mt of steel pipes, up 150% from April but down 23.5% on the year. Almost 95% of the total was made by pipe group Interpipe, according to Ukraine’s pipe industry association Ukrtruboprom.

Ukrainian pipe and tube production stood at 176,300 mt over January-May, down 27% on the year amid the war.

Interpipe’s spokesperson confirmed the company had recently succeeded in delivering its OCTG premium UPJ-M pipes to Turkey for the first time since the beginning of the war. Their shipping had stopped because traditional supply chains were disrupted by the war. Interpipe is rebuilding some of the chains and forming new ones, but it is difficult to restore pre-war production volumes.

The company is particularly focusing on the European pipe market as it is logistically the closest to Ukraine. It also sells pipe billet but the sales volume is smaller than that of pipe.

— Ekaterina Bouckley

Steelmaker ArcelorMittal will idle a 1.5 million mt/year blast furnace at its site in Dunkirk, France, from July 11, a spokesperson said June 21, leaving capacity of 5.7 million mt/year operational at the site.

The idling was due to “marginally weaker real demand, specifically in the automotive sector due to ongoing supply chain issues”, the spokesperson said.

Hot-rolled coil in Northern Europe was assessed by Platts at Eur875/mt ($921/mt) ex-works Ruhr on June 20, down from a peak at Eur1,460/mt on March 18, according to S&P Global Commodity Insights data.

Demand from end-users has been low, with the automotive industry’s steel consumption hit by a shortage of various components. Distributors have high stocks of coil due to panic buying earlier this year and subsequent limited demand from end-consumers that has weighed on prices for the past three months, sources said.

The stoppage of one furnace at Dunkirk would not be enough to solve the problem, one trading source in Italy said, adding that the mills needed to be more active about production cuts.

“Mills did the same during lockdown in 2020. They responded swiftly by announcing production cuts and stopping the furnaces,” a Northern European source said. “Now they seem to be reluctant to make a decision. Some expect a recovery in a couple of months, but I think that, in reality, they will have to stop furnaces.”

One mill source was, however, skeptical about furnaces stoppages due to high costs linked to capacity reductions and emission policies becoming stricter in the EU.

— Annalisa Villa, Maria Tanatar, Benjamin Steven

Germany’s stockholding distributors started 2022 somewhat slower than early 2021, but saw a boost in March, induced by the Russian attack on Ukraine, says distributors association BDS.

“After a year that was characterised by price explosions for materials and shortages brought about by the Covid-19 pandemic, most players expected a more predictable market, but they were proven wrong,” writes economist Jörg Feger.

In the first two months of this year, stockholders replenished their yards from a typically low year-end level, Kallanish learns from his analysis. Sales in January and February were somewhat lower than in the corresponding months of 2021, when the market was swinging up during the post-lockdown recovery.

Sales reached 858,000 tonnes in January and 899,000t in February, down 6% and 1% on the respective months in 2021. A surge came in March, with 1.05 million tonnes sold. The outbreak of war caused big insecurity regarding supplies from the east, and caused many buyers to order far beyond their actual needs, Feger notes.

Inventories at stockholders in the first two months were at around 75 days of sale. This was a normalisation from the low levels of 2021 – with an average of 69 days – after the typical replenishment at the beginning of the year, but also reflecting low sales in January/February. Then in March, with activity surging suddenly, inventories dropped to 63 days.

Christian Koehl Germany

Ukrainian seamless stainless pipe producer Centravis says it is using German and Polish ports to export its products amid the ongoing Russian invasion of Ukraine.

In a letter to customers and partners, the firm says: “We use the ports of Hamburg and Bremerhaven (Germany), Gdansk and Gdynia (Poland) to ship finished products.” Deliveries to parts of Europe are also carried out by trucks.

There are queues at the border due to the large cargo flows, but the company takes these into account and chooses the points with the highest capacity, it adds.

“With production everything is in normal mode, the cold and the hot shop are working to fulfil the plans and produce tubes on time,” the enterprise claims. “Production continues to receive billets in small batches. We are also accepting orders; there is an opportunity to place orders for August-November.”

This week, the pipemaker will participate at the Tube exhibition in Dusseldorf.

Earlier, Centravis said it expects stable production amid improving round billet feedstock supply (see Kallanish passim).

The company intends to increase supplies to the US and EU after the two markets suspended trade barriers on Ukrainian steel for one year.

In April, the pipemaker resumed single-shift production amid the ongoing Russian invasion of Ukraine, but faces logistics problems with its shipments.

Ukraine’s pipemakers decreased production in January-May to 176,300 tonnes, down by 16% on-year (see Kallanish passim). However, in May alone, pipe manufacturers increased production by 2.5 times compared to April to 45,000t.

Svetoslav Abrossimov Bulgaria

Lithuania has enforced a ban on Russia-origin steel transiting across its territory by rail to the exclave of Kaliningrad, drawing the ire of Russia which has threatened to retaliate.

Lithuania’s foreign ministry issued a notice on Monday clarifying that it is merely enforcing EU sanctions on Russian steel that were published in March, and that transit of passengers and non-sanctioned cargo continues unhindered. This follows reports that authorities in Kaliningrad claimed Lithuania had blocked all transit from Russia.

The Kaliningrad Oblast’s main steel firm is coil painter/coater BSK Steel, which sources merchant hot-dip galvanized coil feedstock. Severstal is among the Russian steelmakers known to supply Kaliningrad, while Russian carmaker Avtotor is based there. Earlier this year, Kaliningrad region governor Anton Alikhanov said that Avtotor has preliminary agreements on the assembly of cars at its facilities with manufacturers from countries that have not imposed sanctions against Russia (see Kallanish passim).

As an alternative to rail transport, steel could be shipped to Kaliningrad from Russia’s Baltic Sea ports at St Petersburg or Ust-Luga.

Adam Smith Poland

ArcelorMittal is understood to be preparing to idle one blast furnace – HF2 – at its Dunkirk mill, in northern France, effectively reducing output for the coming months.

Earlier this month, a local trade union confirmed in a document the furnace should be temporary idled as of 11 July. A scrap dealer in France confirmed the news.

ArcelorMittal did not reply to requests for comment prior to press deadline.

According to the plans issued by the trade union, HF2 should be restarted at the end of September when another furnace at the site, HF3, will be temporary idled. The site is expected, therefore, to operate mostly with two blast furnaces during the coming months, with occasional moments during which only one blast furnace will be in operation.

As a result, the steelmaking plant at Dunkirk should be working using two of the three converters at the site from the end of June, Kallanish understands.

Demand in the European market for flat products has been under pressure since the beginning of this year, exacerbated by the ongoing uncertainty created by inflation and the war in Ukraine.

Natalia Capra France , Emanuele Norsa Italy

Seaborne iron ore prices were rocked on Monday by a panic in China that sent steel and raw material prices over a precipice. The decision by a growing number of mills to cut production in response to weak demand is being seen as an admission that steel demand will not be back for some time.

The Kallanish KORE 62% Fe index slumped $7.92/t to $116.23/dry metric tonne cfr Qingdao, the lowest since December. The Kallanish KORE 65% Fe index dropped $8.73/t to $135.83/dmt cfr, and the KORE 58% Fe index fell $5.70/t to $118.26/dmt cfr. 80,000 tonnes of Mac fines sold at $105.1/t with a laycan in 21-30 July.

On the Dalian Commodity Exchange, September iron ore settled down CNY 92/t at CNY 773/t ($115.35/t), while on the Singapore Exchange July 62% Fe futures settled down $9.07/t at $110.94/t. The same contract for 65% Fe and 58% Fe futures settled down $9.86/t at $127.86/t, and down $3.23/t at $124.07/t respectively. The only support came late in the day from speculators closing out short positions.

Chinese scrap and billet prices have also jumped off a cliff. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta lost CNY 350/t to CNY 3,305/t, the lowest since November. Shagang led the way with cuts in recent days of around CNY 150/t but mills nationwide were slashing their buying prices over the weekend. Billet too has slumped, losing CNY 100/t over the weekend and another CNY 250/t on Monday to CNY 3,830/t, the lowest since January 2021.

China has already officially seen output fall sharply and implied end-user demand has slumped year-on-year. Official output figures may be overoptimistic however as provinces are under pressure to report that they have stabilised their local economies. Production cutbacks imply that markets remain heavily oversupplied.

Steel demand meanwhile remains week, with heavy rains and flooding in southern China, and extreme heat in northern China limiting construction activity. Confidence has hampered investment, and new Covid-19 restrictions in southern China mean neither investors nor consumers are making full use of available stimulus funds. China is still attempting to reboot the economy, but it is increasingly looking too late to effectively secure meaningful GDP growth this year.

Tomas Gutierrez UK

Finland based stainless steel producer Outokumpu has divested its plate service in Castelleone, Italy, selling it to one of its biggest domestic customers, Mariotti stainless steel group.

All plate services and operations at the site, as well as machines and stock, will be transferred to Mariotti, along with existing contracts and sales orders, with a few exceptions.

Outokumpu’s coil service center at the same site will operate as normal, and will continue to sell quarto plate to distributors and tube producers as before.

Mariotti’s purchase will add to its current stainless steel service centers in northern Italy, located in Pontevico (Brescia) and Gravellona Toce (Verbania).

Platts assessed carbon plate in Southern Europe at Eur1,300/mt ($1,367/mt) ex-works Ruhr June 17, down Eur50 on the week, according to S&P Global Commodity Insights data.

— Annalisa Villa

Domestic prices for hot-rolled coil remained stable in Northern Europe on June 20 due to limited trading activity, while prices in Italy softened on fresh deals.

Platts assessed HRC in Northern Europe at Eur875/mt ex-works Ruhr, unchanged day on day, according to data from S&P Global Commodity Insights.

Achievable prices for HRC in the region have been reported at Eur850-900/mt ex-works.

Bearish sentiment prevailed in the market due to weak demand from end consumers, high stocks across the supply chain, and a bearish trend that made buyers remain in wait-and-see mode. However, as several sources reported a possible blast furnace stoppage in France, the downfall in prices might come to an end as supply and demand could come closer to a balance.

“In the EU mills will continue to reduce productions, after announced cuts at Salzgitter and ArcelorMittal Dunkirk, market trend might change very fast,” an Italian trader said.

Hot-rolled coil in Southern Europe was assessed at Eur820/mt ex-works Italy June 17, down Eur15 day on day.

Deals have been reported at Eur820/mt ex-works, and tradable value was reported at Eur820-830/mt ex-works.

— Maria Tanatar, Benjamin Steven