Category: Latest Updates

Tata Steel aims to expand the capacity through organic growth at its existing facilities to grow its steel production capacity to 40-50 million tonnes/year through 2030, from the existing 20m t/y, it says. It doesn’t need to acquire new assets to reach its production goals, Kallanish notes.

“Most of our growth in the last few years has been through the inorganic route (acquisitions),” Tata Steel ceo and managing director TV Narendran informed local media. “Currently, we are in a position where all our growth ambitions can be met through organic growth in our existing sites.”

Recently acquired Neelachal Ispat Nigam (NINL) will see production capacity ramped up to 10m t/y from the existing 1m t/y, the ceo said. Whereas, the Kalinganagar plant will see an expansion to 8m t/y from 3m t/y, and later to 16m t/y.

Tata Steel announced it is cutting all business ties with Russia amid the Russian military invasion of Ukraine. “We typically buy close to 15 MT of coal annually, of which around 3 MT used to come from Russia… which can be easily be sourced from countries like Australia, Indonesia, and Canada,” Narendran concluded.

Tata Steel also aims to install electric arc furnaces in the north, south and west of India to achieve its target of doubling its existing steelmaking capacity to 40m t/y by 2030 (see Kallanish passim). The move will result in the steelmaker using significantly more scrap as feedstock and thus be good for the environment.

Tata Steel India’s crude steel production surged 13% on-year to an annual record 19.06mt in the fiscal year ended 31 March 2022 (FY22), against 16.92mt produced a year earlier. Deliveries picked up by 6% to 18.27mt, mainly on the back of strong domestic demand generated from the automotive, industrial and retail sectors.

Sayed Aameer India

Prices of EU coil mills keep giving in – but only slightly and slowly – not least because the influence of imports remains limited, despite considerable gaps.

“Even with the addition of the EU’s import levy, there was still a difference of approximately €150/tonne ($158/t) in April to the advantage of Asian prices,” a Dutch manger notes. The extremely high prices in Europe have local causes – extremely high energy and scrap prices for many months, aggravated by the war in the east. Hence, they have risen by their own rules, and detached from the international level, many observers say.

Still, the disappearance of relatively reliable source countries Ukraine and Russia has strengthened mainly the local central and western European mills – and Turkey. The country “is less influenced by Russia because it traditionally sources slab from China,” a trader tells Kallanish. This explains unusual moves reported by Turkish trade data like a delivery of 15,000 tonnes of hot-rolled coil to Switzerland, a rather unusual destination for Turkish steel.

Imports for cold-rolled and hot-dip galvanized coil are offered between €1,100-1,200/t cif Antwerp, with especially low prices from Vietnam, compared to the €1350-1,400/t from EU mills, according to the trader. But then, Vietnam is on the verge of losing its transitory special status and soon may face the same duties as others, he says. With the new year for safeguards commencing on 1 July, “it will be difficult finding a source country without a safeguard risk.”

Finally, the Dutch manager points out that there is still the risk that the dollar-to-euro ratio will gradually creep closer to 1 to 1, which will increase import prices and make imports less attractive.

Christian Koehl Germany

The softening of coil prices from extremely high levels in northwestern Europe is progressing at distributors, while mills keep claiming relative stability.

“With every call I make, I bring prices down by €10/t ($10.53/t),” a manager at a southern German distributor tells Kallanish. He notes that the sale price level is still very high and profitable, based on restocking made early this year. Hence, distributors are more prepared to make concessions, whereas mills are striving to keep prices up under the pressure of still-rising input and energy costs.

Ex-works price asked for hot-rolled coil is now at €1,300/t.

“I have not heard of anyone paying that,” a trader describes the upstream market lull. A Dutch source sees €1,250/t as the more likely price fetched locally now. Prices of cold-rolled coil and galv are seen at €100/t above HRC by many, though the Dutch source believes that they are weakening faster, with only €80/t premium over HRC.

One northern mill source claims that colour-coated coil and processed galv meant for colouring is actually high in demand for construction, and compensated losses on the automotive end.

The lack of demand from the automotive industry leaves especially the service centres with full shelves of CRC and galv, and an inclination to catch orders that otherwise would be made at mills. This again will force the mills to adjust their prices to keep their share in the market.

According to a Scandinavian source, the current mill prices are only paid for guaranteed back-to-back business, and not at all for restocking inventories.

“When the curve points downward, everyone buys only what he needs,” he says.

Christian Koehl Germany

Italian cold rolled and hot-dipped galvanised coil sales continue to be particularly slow with customers buying very little material and expecting prices to continue to decline this week, in line with international coil prices.

While demand for HDG is reported slightly livelier over the past days with some domestic sales for low tonnages, CRC demand is said to be flat with values that have gone below the level of €1,300/tonne base ex-works ($1,368/t). With hot rolled coil contracts going below the level of €1,200/t base ex-works in Italy, reaching €1,140-1,180/tonne base ex-works, CRC is being transacted at €1,250-1,300/t base ex-works, but demand is so weak that some sources believe the high point of the range will not be a workable price this week. HDG is still hovering at €1,300/t base ex-works, sources suggest. Some import offers for Asian CRC are reported at about €1,100/t cfr, but the appetite for imported material in Italy is also low, Kallanish hears.

Some sources believe that service centres in Italy will resume buying when HRC goes down to the level of €1,000/t. Others say that service centres will have to resume buying in May after a long destocking process.

HDG and CRC producers are currently offering material for Q3 delivery.

Natalia Capra France

Pressure on Benelux scrap prices is increasing each day due to the prolonged absence of Turkish mills.

Although market participants were expecting to see a recovery in Turkey’s scrap demand after the Eid holiday, this has yet to materialise. Turkey’s silence is causing Benelux exporters to slow their collection and decrease their dock prices.

On Monday, exporters’ dock prices for HMS 1&2 80:20 in Belgium stood mostly at around €405-410/t ($425-430.5/t) levels, while in the Netherlands prices were around €410-420/t delivered. Although there are also higher prices quoted in both countries, they come mostly from exporters who are late updating their quotes, with sources expecting them to come down imminently.

A Benelux supplier tells Kallanish: “Amid a frozen market, it is really hard to talk about a price level. I think exporters will want to restock at €400/t levels. But please keep in mind that flow is very weak even at €410/t.”

A Benelux exporter who does not foresee a recovery in prices says: “Flow is weak but on the other hand exporters’ buying appetite is lacking due to the silence in Turkey. No exporter wants to commit today without seeing the clear picture in Turkey. I am really unsure at what level Turkey will start, but a definite decrease seems inevitable due to the high number of exporters that are ready to book prompt shipment cargoes. Dock prices will most probably fall below €400/t this week.”

“Sentiment is getting worse each day. Today we have seen sharp falls in steel prices in Turkey. This means Turkey will exert stronger pressure on scrap prices,” says a Turkish mill who thinks European HM 1&2 80:20 prices should not be higher than $500/t cfr.

Although there was a scrap buying tender in Egypt, it is heard to have been cancelled. Although Egyptian mills received EU-origin HMS 1&2 80:20 offers at around $515-520/t cfr levels, they did not rush to buy. Some market participants think that Egyptian mills will halt scrap purchases until they see Turkey’s buying prices.

The situation is no different in India. While prices are free-falling and sentiment is quite bearish, mills’ buying interest is weak. UK-origin containerised shredded price fell to $570/t cfr on Friday from $590/t cfr the week before. UAE-origin HMS 1&2 80:20 is offered at around $540/t cfr levels.

Burcak Alpman Turkey

Steelmakers’ association Eurofer has drastically cut its forecast for EU steel demand growth due to soaring energy prices, ongoing global supply chain disruption and the Ukraine war shock.

Apparent steel demand is now seen contracting 1.9% year-on-year in 2022, after a 15.2% y-o-y jump in 2021. In its previous forecast issued in February, before the Russian invasion of Ukraine, Eurofer projected a 3.2% demand growth this year.

The biggest fall in demand should be seen in the second quarter, after which the market should stabilise and then start recovering going into 2023, Eurofer indicates.

If the outlook is confirmed, 2022 will be the third year of apparent steel consumption contraction registered during the four years between 2019 and 2022. “In the current context, amid a worsening energy crisis and shortages in raw materials, we cannot exclude a new recession or a stagflation scenario,” Eurofer director general Axel Eggert says in a note sent to Kallanish.

“Apparent consumption is set to recover in 2023 [by 5.1%], but the overall evolution of steel demand remains conditional on very high uncertainty which is likely to continue to undermine demand from steel-using sectors,” the association notes.

EU imports last year jumped back to the record levels seen in 2018. Over full-year 2021, imports of finished products jumped 35% y-o-y, after the drop of 15% seen in 2020.

“Throughout 2021, the EU’s total trade deficit amounted to 1.5 million tonnes,” Eurofer says. This figure includes semi-finished steel. The biggest trade deficit was recorded with Russia, at 593,000t. Now, trade with Russia is almost completely halted due to the European Commission’s ban on imports of Russian finished products and sanctions on most Russian steelmakers.

Emanuele Norsa Italy

Ryerson notes the price gains made in the first quarter of 2022 as critical to their successful figures, notes Kallanish.

Net income for the company in Q1 equalled $163.6 million. In 2021, the first quarter income came in at $25.3m.

Ryerson’s first-quarter revenue for the year is $1.75 billion, an increase of 14% from 2021’s Q1 revenue of $1.53b.

“Our record revenue of $1.75 billion in the first quarter was driven by average selling price gaining 2.3% to $3,312 quarter-over-quarter and volume growth of 11.4% to 528,000 [short] tons sold,” said ceo Eddie Lehner.

Ryerson is optimistic about the sustainability of its success. The company is outperforming Metal Service Center Institute projections for North America, it says.

Kristen DiLandro USA

Mills in some European countries are having issues with carrying out repair and maintenance on production lines due to a shortage of required spare parts.

“The availability of our production units is impaired because we have problems receiving the spare parts we need. They were pledged to be delivered, in early April, but now will come only sometime in May,” Kallanish learns from a mill manager. This means that at least one production line at the electric arc furnace-based mill is confined to run at 80% of scheduled output, he adds.

This development adds to the existing shortage of input materials – particularly of Russian and Ukrainian origin – and of truck drivers for haulage.

“We do not understand the cause for it, but the technical suppliers are not as fast as they used to be,” the manager says. Of course, the parts need to be tailor-made and manufacturing them takes time, but that does not explain the over-proportionate delays, he says.

He even links the situation with the Covid-19 lockdown in Shanghai, where the port is crammed with vessels that cannot be charged, and the problem filters through to the railway line from China to Europe. “Even for a washing machine you have to wait for months at the moment,” he observes.

The problem was addressed already last year by German machine tool builders’ association VDW. It observed that new machines can only be delivered with delays due to missing parts, especially electronic components, thereby affecting supply of machines to steel companies, mainly processors.

Christian Koehl Germany

Eurofer has halved its forecast for EU steel-using sectors’ output to 2% on-year growth in 2022. This is the result of the rapid deterioration of the global industrial and economic outlook due to the war in Ukraine, coupled with ongoing and worsening supply chain issues. Output growth will rebound to only 2.3% the following year due to very high uncertainty, likely continuing over the next year.

Domestic appliances will be the biggest drag on growth this year, with output expected to fall 3.3%.

Construction sector output should increase 2.3% in 2022, following its 5.9% rebound in 2021. Rapid growth, supported by post-Covid-19-lockdown recovery and governmental support schemes, lost momentum in the fourth quarter last year due to global supply chain problems and increasing scarcity of construction materials.

Civil engineering is expected to provide the strongest contribution to the construction sector’s performance this year. This segment will also be supported by EU-wide public policies, such as NextGenerationEU.

However, “the impact of these publicly-funded construction schemes is becoming increasingly uncertain due to multiple downside factors that are casting shadows on the overall economic outlook,” Eurofer says in a report seen by Kallanish. “In particular, the shortage of construction materials is becoming a source of concern.”

Automotive industry output should meanwhile grow 4.9% in 2022 after 3.8% growth in 2021. Q4 2021 saw a consecutive quarter of output decline, however. The continued supply chain issues experienced over the summer of 2021 increasingly resulted in shortages of components and semiconductors, rise in energy prices and production costs, and slowdown in global trade, Eurofer observes. The outbreak of war in Ukraine has exacerbated the already depressed outlook.

Growth in 2022 is expected to be largely due to the rebound in output of some major economies, mainly Germany, after consecutive slumps from 2019 to 2021.

“Uncertainties around the implementation of EV and delays in the launch of new models – many hybrid or fully electric – and lack of facilities (recharging points, etc.) have proven unsupportive factors of consumer demand and have also delayed investment decisions by carmakers,” Eurofer says.

“Full recovery in global trade and external demand from major markets such as the US, China and Turkey will remain a key factor for EU car exporters, but this is not likely to materialise as long as the uncertainty linked to the war in Ukraine and global supply chain disruptions persist,” it concludes.

Adam Smith Germany