Category: Latest Updates

The war in Ukraine has changed the global long steel products market sentiment, as well as fundamentally altering the flow of raw materials and finished products almost overnight, the International Rebar Producers & Exporters Association said in its latest short-term outlook released April 7.

“Before the war, the expectations were that demand would determine the direction of prices, contrary to 2021 when supply was the driving factor. Today, however, supply has definitely taken the lead again and the market is in fact distorted,” it said.

Pointing out that supply disruptions of semi-finished and finished products had opened new opportunities for others, especially for Turkish mills that share the same geographical region, the association said it was for sure that the sanctions on Russia would remain in place for some time to come.

Highlighting the price imbalance between Asia and the rest of the world, IREPAS said international markets were becoming more regional than ever.

“European steel prices are now the highest in the world. Asian and especially Chinese prices are substantially lower than anywhere else. The steel trade is changing direction from selling to Asia to buying from Asia,” it said.

As scrap exports from Russia and Ukraine were almost at a standstill, Turkish mills had compensated for the missing quantities by the extra availability of European scrap. This had allowed them to keep scrap prices under control while at the same time exporting extra volumes of steel to the EU market, IREPAS said.

Turkish deepsea import ferrous scrap prices have remained largely stable in recent days after initially rising $150/mt from $508/mt CFR on Feb. 24, when the Russian invasion began.

The Platts Turkish import price of premium heavy melting scrap 1/2 (80:20) was assessed at $653/mt CFR April 6, up 50 cents/mt on the day, according to data from S&P Global Commodity Insights.

Scrap price increases would continue, but the war was a major negative factor for the market, IREPAS said.

“It will take some weeks for the market to find its equilibrium. Under the current circumstances, the market can be described as fluctuating and unstable. The outlook is very uncertain as the fundamentals may change daily,” IREPAS added.

— Cenk Can

Ukraine’s steel companies reduced production in January-March due to the Russian invasion of Ukraine, according to the Ukrainian association of secondary metals, UAVtormet.

Output amounted to 3.65 million tonnes, down by 31,3% on-year, Kallanish notes. In March alone, only Metinvest subsidiary Kametstal produced steel in pre-war volumes, while other metallurgical enterprises stopped or idled production.

Kametstal, formerly DMK, produced in the first 15 days of March 104,000 tonnes of steel, 158,500t of sinter, 96,000t of pig iron and 30,000t of rolled products (see Kallanish passim). In February, it produced 286,800t of sinter, 180,400t of steel, 168,100t of pig iron and 70,200t of rolled products. Kametstal has also managed to establish logistics product shipments.

Metinvest said earlier that Ukraine has lost around 30-40% of its pre-war steelmaking capacity due to the Russian invasion. Its idled Azovstal and Ilyich Steelworks plants, in the besieged city of Mariupol, remain under the control of the Ukrainian army.

In March, the Ukrainian ferrous scrap market actually stopped, UAVtormet says. The only company that bought scrap, again, was Kametstal, which was supplied with about 41,500t. At the same time, deliveries were carried out mainly by rail.

In general, in the first quarter of 2022, almost 530,000t of scrap metal were shipped to Ukrainian steelmakers, down by 36.6% on-year, the association notes.

In January-March, total exports of ferrous metals from Ukraine amounted to about 3.17mt, down 35.6% and worth $3 billion. In December 2021, Ukraine’s parliament decided to increase the duty on the export of ferrous scrap to €180/tonne ($196).

Before the war, it was expected that Ukrainian steelmakers will consume about 3.84mt of ferrous scrap in 2022 (see Kallanish passim).

Svetoslav Abrossimov Bulgaria

Voestalpine has taken measures in the past few weeks to procure additional quantities of coal due to the Russian invasion of Ukraine and new sanctions against Russia, the company confirms to Kallanish.

“To date, part of the metallurgical coal required for the blast furnaces has come from Russia, but we can replace Russian coal entirely,” the enterprise claims. “The supply will be diverted to existing and new suppliers, and existing stocks will last for several months.”

Earlier, Voestalpine said it has taken “the first important decision” on the path from the coal-based blast furnace route to steel production using electric arc furnaces powered by green electricity (see Kallanish passim).

This summer, it will start clearing construction areas and converting infrastructure at its two sites in Linz and Donawitz, in preparation for its EAF transition. Next year, the group’s supervisory board will take the final decision to invest in the two EAFs, construction of which will begin in 2024. By early 2027, one EAF each at Linz and Donawitz should commence operations. From today’s standpoint, the total investment costs will run to around €1 billion ($1.1 billion).

The Austrian steelmaker has chosen the project term “Greentec” for the venture of phasing out the traditional blast furnace/oxygen route. However, sufficient quantities of renewable energy at competitive prices and efficient power grids are needed to adhere to the decarbonisation timetable.

Svetoslav Abrossimov Bulgaria

Hot rolled coil import offers into Europe have softened somewhat since the end of last week, mainly from Asian sources. EU import quotas for the product remain available, Kallanish notes.

Indian sources indicate that HRC offers into Europe are at some €1,100-1,150/tonne ($1,200-1,255) cfr Europe for large orders. A European trader confirms the slight reduction in offers but warns that these might prove to be a boomerang if duties will need to be paid on the arrival of material in the third quarter.

Another trader says Japanese HRC is offered at €1,200/t cfr southern Europe. He adds that the market has mostly stabilised rather than softened. “Turkish mills, for example, are not too competitive as they remain at above €1,200/t cfr Europe,” he comments.

New EU safeguard quotas have become available since the beginning of April, with higher allocations for other countries due to the redistribution of quotas from Russia and Belarus. HRC quota allocations do not seem to be under pressure at present, with quotas still largely available for Turkish, Indian and South Korean material.

More pressure is reported on other coil products, with China having exhausted its Q2 quota for metallic coated sheet and India for organic coated sheet. Indian cold rolled coil import quotas are also in a critical situation, with only 60,000 tonnes still available on Thursday 7 April.

The lack of trade with Ukraine could become a problem for flats supply in Europe going forward. The country has a large allocation of safeguard quotas for quarto plates and CRC. According to the official European system, virtually none of the newly-allocated quotas for Ukraine were used during the first week of April. In Q1, Ukraine used up more than half of its allocation of over 200,000t for quarto plate.

Emanuele Norsa Italy

The rapidly increasing tonnages of steel produced since the early 2000s will begin to enter the scrap market in the next decade, enabling a significant reduction of steel industry emissions, says worldsteel. The majority of scrap supply growth will come from China and other Asia, Kallanish notes.

Global steelmaking capacity experienced a phase of explosive growth from the early 2000s largely fuelled by investment in new capacity in China. With steel products having an average lifespan of 40 years, this steel will come up for recycling from the 2030s, the association observes. Global end-of-live scrap availability is forecasted at 600 million tonnes in 2030 and 900mt in 2050, with China, especially, increasing its share dramatically.

Today, it is estimated that the global steel industry annually uses about 2 billion tonnes of iron ore, 1 billion tonnes of metallurgical coal and 575mt of steel scrap to produce about 1.7 billion tonnes of crude steel.

Scrap plays a key role in reducing industry emissions and resource consumption. Every tonne of scrap used for steel production avoids the emission of 1.5 tonnes of carbon dioxide, and the consumption of 1.4 tonnes of iron ore, 740kg of coal and 120kg of limestone. The future expansion of scrap-based steel production will depend on the availability of high-grade scrap, worldsteel points out.

Adam Smith Germany

New EU safeguard quotas for imports have become available since the beginning of April. Turkey, as expected, has already exhausted a large part of available second-quarter quotas for long products, despite having received higher quotas than in previous quarters after the Russia-Belarus quota reallocation.

In March, the European Commission reallocated the quotas of Russia and Belarus to other countries after banning imports from Russia and Belarus due to their involvement in the Ukraine war (see Kallanish passim). As a consequence, large import suppliers such as Turkey and India have benefitted from higher allocations.

During the first week of April, nevertheless, Turkey exhausted all available quotas for key imports of long products such as rebar and wire rod. Availability of quotas for Turkey has also become critical for other products, such as hollow sections, merchant bar and light sections.

In the rebar and wire rod markets, the only alternatives for importers to Turkey were Russia, Belarus and Ukraine, countries that are now either banned from trading with Europe or suffering from supply issues linked to the war.

Emanuele Norsa Italy

UK steelmaker Tata Steel is investing tens of millions of pounds in a new cold mill at its Corby site in Northamptonshire, it said April 7.

The work will include completely replacing one of the site’s four mills with new technology leading to improved efficiency, reduced energy consumption and better availability for customers, Tata said.

The site processes steel made at Port Talbot in South Wales and the new mill will roll steel into formed structural tubes in both round and rectangular sections for use in construction and engineering applications.

The new mill is expected to be completed by the end of 2023 and produce around 300,000 mt of an enhanced product, Tata said, without giving an exact investment amount.

“This key investment is part of the wider investment into our Corby site… We will continue to operate the current cold mill while the new one is built ensuring there is no impact on our customers,” Tata Steel CCO Anil Jhanji said.

He added that the new mill would allow the company to explore additional market opportunities.

The new investment came on the back of the recent GBP4 million ($5.2 million) spent on a new warehouse which was nearing completion, Corby Works Manager Gary Blackman said.

Both projects form part of a wider GBP30 million Corby transformation program to make the operations more efficient.

S&P Global Commodity Insights assessed the CRC ex-works Ruhr price at Eur1,465/mt April 6, up 36.9% since the start of 2022.

— Jacqueline Holman

Meeting increasing demand from the highly metals-intensive process of decarbonisation will require substantial capital allocation to the production and recycling of these metals, says BHP. The additional steel demand created will more than offset waning demand from fossil fuel industries.

However, investors will need to engage constructively with the sector to help drive down emissions from the production of metals by ensuring clean energy alternatives beat carbon-emitting technologies.

“Significant technological progression will be required to feasibly and affordably address the emissions from industrial activity, notably steelmaking,” among others, BHP says in a joint report with asset-management firm LGIM.

“If rapid technological progress does not occur, then these harder-to-abate sectors would have to explore the viability of decarbonising at considerable cost and potential delay, both at the individual plant level and via broader infrastructure requirements, by deploying known but very expensive technology options, such as the deployment of green hydrogen direct reduced iron steelmaking,” the report seen by Kallanish continues.

Besides servicing traditional sectors, metals producers will need to “provide the material building blocks of the hardware required to radically reconstitute how we produce energy and use land,” the report observes. This will include wind turbines and carbon capture infrastructure, and result in climate adaptation and rising material intensity.

In the coming 30 years, cumulative demand for metals is expected to grow substantially compared with the prior 30 years. In the 1.5°C scenario that BHP described in its Climate Change Report 2020, demand for iron ore and coking coal is forecasted to increase by 1.8 and 1.5 times respectively.

“Steelmaking raw materials do a little better than one might think in the scenario – with an uplift over traditional crude steel ranges due to additional demand from extra wind turbines and carbon distribution pipelines, which should be more than enough to offset a loss of steel demand from the fossil fuel industries as their output falls in the long run,” the report states.

Adam Smith Germany

From its plant in Belval in Luxembourg, ArcelorMittal is supplying “XCarb”-certified sheet piling to one of Norway’s largest and most important fishing ports, Kallanish hears from the company.

Local company Pelagia Egersund Seafood is currently expanding its fishing port in Egersund. The construction of the new port infrastructure will be based on a circular cell structure using more than 2,000 tonnes of AS500 straight sheet piles from ArcelorMittal Belval.

The sheet piles for this project are made from 100% recycled steel and with 100% renewable electricity, ArcelorMittal claims. They carry the group’s proprietary XCarb recycled and renewable manufactured label.

XCarb has a global warming potential of 370 kilogrammes of CO2 equivalents per tonne of steel externally, certified by the EcoSheetPile Plus EPD. Life cycle assessment shows that the embedded carbon footprint of EcoSheetPile Plus is only one fifth of that achieved by ArcelorMittal’s competitors, the company claims.

Christian Koehl Germany

The Lloyd’s Joint War Committee (JWC) has added all Russia’s territorial waters to the listed areas of war, piracy, and terrorism hazards, the marine insurance advisory board says in a statement.

The move obliges all shipowners to notify their insurers of a proposed voyage to the listed area, and gives significant grounds to insurers to deny the cover or negotiate the premiums appropriate to risks costs.

Steel suppliers from Russia are already facing severe complications with shipping non-sanctioned products to export markets, as some destinations do not accept Russian vessels, flags, or/and captaincy. The EU confirmed on Monday it will ban Russian vessels from its ports, with very strict exceptions. This means suppliers, already squeezed by existing restrictions, will face even tighter shipping conditions and higher premiums, Kallanish notes.

Most recently, before the addition of all Russia’s territorial waters to the listed area by Lloyd’s JWC, shipping of a medium-sized pig iron cargo to Italy from the Black Sea was quoted at $140/tonne. This is compared to around $40/t before Russia’s invasion of Ukraine on February 24.

The majority of Western shipowners have already left the Russian freight scene, with Lloyd’s move expected to expand that number further. Russia has a relatively small fleet compared to the size of its international maritime trade. Its largest shipbuilding company – United Shipbuilding Corporation – was sanctioned by the West in February.

Katya Ourakova UK