Category: Latest Updates

Turkey’s EU steel export quotas rose as the European Commission decided to allocate Russia’s quota to other countries following a ban on Russian steel, according to a statement from EC March 15, raising expectations of pricing support for Turkish mills.

The rise in Turkey’s steel quotas could support Turkish mills’ steel pricing in the coming quarters, which already rose notably in the last three weeks amid the Russia-Ukraine conflict, a service center manager told S&P Global Commodity Insights March 16.

Turkey was well placed to provide steel to the EU in the absence of mills in the Commonwealth of Independent States due to Russia’s invasion of Ukraine, Ugur Dalbeler, vice president of the Turkish Steel Exporters’ Association and CEO of major steelmaker Colakoglu told S&P Global on March 15.

“Imports from Belarus and Russia subject to the safeguard measure will no longer be able to enter the Union,” EC said in a statement March 15.

“Thus, the Commission has decided to adjust the functioning of the safeguard measure to ensure that these import bans do not create a shortage of supply in the Union market in the categories affected, and that Union steel users can continue sourcing those volumes from other sources,” according to the statement.

As a result of EC decision, Turkey’s hot-rolled sheets and strips quota rose to 430,246 mt for the second quarter of 2022 from 323,200 mt in the first quarter.

Merchant bars and light sections quota increased to 97,010 mt for Q2 from 64,156 in Q1.

Turkey’s rebar quota rose to 86,412 mt for Q2 from 60,591 mt in Q1, while wire rod quota increased to 107,758 mt for Q2 from 78,653 mt in Q1.

Hollow sections quota of Turkey also rose substantially to 90,057 mt for Q2 from 68,575 mt in Q1.

Turkey’s large welded tubes quota rose to 13,668 mt for Q2 from 9,628 mt in Q1, while Turkey’s other welded pipes quota remained relatively stable, according to the EC statement.

— Cenk Can

Hot-dip galvanized and cold-rolled steel prices rose sharply March 16 as supply chain issues and higher market capacities drove up prices.The weekly Platts HDG North Europe price from S&P Global Commodity Insights was assessed at Eur1,495/mt ex-works Ruhr, up Eur295, while the weekly HDG South Europe price was assessed at Eur1,470/mt EXW Italy, up Eur285.

Cold-rolled coil in southern Europe was assessed at Eur1,450/mt EXW Italy, up Eur300.

Market participants consistently linked HDG and CRC levels but stressed a reduction in end-user demand for CRC.

Due to demand pressures for hot-rolled coil, with which cold-rolled material shares production lines, CRC was reported by one distributor source more as upstream supply for long-route HDG production than its own finished product. “CRC is a lot rarer on the market for the moment in comparison to [galvanized] due to a focus on long-route production,” the distributor said. “Companies like Arcelor put HDG on a higher premium than CRC, but there’s really a limited difference in [the] base price.”

A trader source confirmed that CRC also showed reduced demand on the import market, with the usual Eur100 premium to HRC reduced to as little as Eur50 in some cases.

ArcelorMittal returned to the market March 16 with new price levels for coil products: Eur1,400/mt for hot-rolled material, Eur1,500/mt and Eur1,550/mt for CRC and HDG, respectively.

Deals in southern Europe were heard at Eur1,470/mt EXW Italy.

In the northern market, few transactions were reported, although tradable value submissions from sources were relatively homogenous, around Eur1,500/mt ex-works.

Offer levels in northern Europe were heard as low as Eur1,450 in the week that started March 14 – although with new prices from ArcelorMittal. It is yet to be seen whether these levels will remain on the market.

— Benjamin Steven

Brazil steelmakers are moving to recover lost margins after a rapid rise in the price of raw materials and semi-finished steel seen since Russia’s invasion of Ukraine.

According to several sources, mills are pushing a price increase of up to 20% on domestic orders for April, in both flats and long products.

The increases are set to be divided into two parts, expected to be applied at the start of April and in the middle of the month.

Companhia Siderúrgica Nacional, in an interview with local media, disclosed plans to raise prices 12.5% April 1 and 7.5% April 15. The increases would affect both the company’s flats and long steel portfolio.

Gerdau proposed a 10% increase for early April on flats products, according to multiple sources. Despite the lower percentage, the company was one of the few that enforced a 7% hike on March orders.

Usiminas is expected to increase flats prices by a total of 20%, divided into two parts starting with 10%-12% at the start of April, according to sources.

“A second wave of increase should come in mid-April, with all mills converging to the 20% price increase,” a market participant said.

Mills proposed a 5%-8% price increase by late February, but sluggish demand within the sector forced most domestic mills to step back and resume negotiations on old listings.

On the longs side, both Gerdau and ArcelorMittal are pushing a 10%-12% price increase, while ArcelorMittal limited orders, probably waiting to see how the hike would be absorbed in the market.

Gerdau has announced a second 15% increase on its long steel products, according to notices consumers received.

“We will certainly receive the new pricing list until the end of this month, with higher prices effect,” said a construction company source.

Gerdau, Usiminas, and ArcelorMittal declined to comment on their price policies.

The increasing costs of imported metallurgical coal and global semi-finished products have dented companies’ margins.

S&P Global Commodity Insights assessed the weekly Platts Brazilian steel slab price at $1,100/mt FOB Brazilian ports March 11, up $250 from the previous week, based on a $1,000-$1,200/mt FOB range. In comparison, the Platts Brazilian domestic HRC price was Real 6,100/mt ($1.194/mt) ex-works March 11, showing a very compressed spread between the semi and the finished product.

The same occurred on Brazilian domestic 10mm rebar, assessed at Real 4,205/mt March 11, or $832.11/mt, while the Platts Turkish price for the export-oriented billet was $890/mt FOB March 1, based on a range of $880-$900/mt FOB range.

Among raw materials, S&P Global assessed the Australian premium low volume hard coking coal at $670/mt March 14, a 52% jump since Feb.14, while the Brazil export-oriented pig iron was assessed at $800/mt FOB southeastern port March 11, a 47.7% surge from Feb. 14.

— Jose Guerra

The London Metal Exchange (LME) suspended nickel trading on LMEselect on Wednesday morning shortly after it had restarted due to an IT system error. Trading then resumed again at 14:00 GMT.

In the morning, upon reopening, the uncrossing algorithm discovered an opening price of $45,590/tonne – the lower daily limit – but then LMEselect allowed a small number of trades to be executed below this lower daily price limit.

All nickel trades executed on LMEselect at the lower daily price limit remained valid. The small number of nickel trades executed on LMEselect below the lower daily price limit were cancelled.

The inter-office market and the Ring continued to operate as normal for nickel trading, with the daily price limits still in operation. LMEselect remains open for trading of all other contracts.

The LME resumed nickel trading at 08:00 GMT on Wednesday and applied upper and lower price limits to all outright contracts in all base metals on all execution venues. Nickel trading was initially suspended on Tuesday last week after nickel prices reached an unprecedented $101,365/t (see Kallanish passim).

The exchange said it is carrying out a review of trading activity and nickel market conditions leading up to the suspension. If the review indicates abusive activity by one or more participants, LME could commence a formal investigation.

Adam Smith Germany

The European Commission has confirmed the imposition of countervailing duties on stainless cold rolled coil imported from India and Indonesia.

The anti-subsidy duties have been set at 7.5% for India and 21% for Indonesia. They will be added to the anti-dumping duties of 10.2-35.3% imposed on the same products from India and Indonesia in November 2021, Kallanish notes.

“Combined, these duties bring the level of protection for the EU steel industry to above 40%, thereby countering the unfair advantage that these trade distortive practices give to the imported steel products from Indonesia and India,” the Commission says.

The anti-subsidy probe into imports from Indian and Indonesia was opened last year. The Commission said it was looking at “countering the highly trade-distorting export restrictions on key raw materials – linked also to Chinese financing”.

Emanuele Norsa Italy

Italian steel trade association Assofermet has asked local steelmaker Acciaierie d’Italia to immediately withdraw its request for a retroactive energy surcharge for contracts signed before 10 March.

In a letter sent to Kallanish, the association says that such a withdrawal would help the resumption of dialogue with its members and steelmaker customers, with the objective to ease future negotiations for new contracts.

Association members consider the retroactive increase unfair and an attempt at “unilateral renegotiation of contracts already stipulated, confirmed and ‘closed’ in every respect,” Assofermet’s letter states. “This initiative, which is not reflected in the General Conditions of Sale applicable in the contractual phase, has generated a situation of strong unease among the companies concerned, who risk finding themselves in very serious difficulty in coping with sales orders already acquired,” it continues.

Kallanish hears from service centres that some have decided not to pay and intend to involve lawyers.

Acciaierie d’Italia is implementing an energy surcharge on all contracts agreed before 10 March. The surcharge will be calculated based on the average between the gas price at the time of the order and the gas price at the time of production and shipping (see Kallanish 16 March).

Meanwhile, due to rising energy costs, other producers are mulling similar surcharges on future contracts.

Natalia Capra France

The European Commission published on Wednesday the new distribution of safeguard quotas effective from April, following its decision to ban imports into the EU of steel from Russia and Belarus. Turkey and India are the main beneficiaries.

Quotas have been redistributed proportionally to other exporting countries based on the most recent available data of imports into Europe in 2021. “This approach ensures a fair treatment of the different origins, allowing that EU steel users make effective use of the volumes that originally were subject to the quotas attributed to Belarus and Russia, thereby avoiding any risk of potential shortage of supply in the Union market resulting from the import bans on these two countries,” the Commission says in a note seen by Kallanish.

Turkey and India have seen their quarterly hot rolled coil quotas, for example, jump by some 100,000 tonnes each.

Ukraine’s quotas have also increased as part of the redistribution. However, market sources are concerned that production and shipment issues at Ukrainian mills will affect supply from the country for a long time. Last year, Ukraine supplied into Europe some 2.5 million tonnes of finished steel products, according to Eurofer data.

The review of EU safeguard measures initiated in December 2021 is still ongoing. Further changes to the system could well be implemented in due course.

Emanuele Norsa Italy

Italian steelmaker Acciaierie d’Italia is implementing an energy surcharge that will be applied retroactively, Kallanish learns from a source within the company.

Electricity and gas costs are strongly impacting producers’ margins in Italy as the country is completely dependent on energy imports. Last week, most Italian mills idled their hot-end areas mostly due to the escalating cost of gas as a result of the war in Ukraine, Kallanish notes.

Acciaierie d’Italia will apply the energy surcharge on all contracts agreed before 10 March. The surcharge will be calculated based on the average between the gas price at the time of the order and the gas price at the time of shipping.

Another major European producer told its clients this month it is applying additional energy surcharges to contracts already agreed and other flat product makers are mulling similar retroactive increases.

Natalia Capra France

The London Metal Exchange (LME) will resume nickel trading at 08:00 GMT on Wednesday and apply upper and lower price limits to all outright contracts in all base metals on all execution venues.

The LME suspended nickel trading on Tuesday last week after nickel prices reached an unprecedented $101,365/tonne (see Kallanish passim).

“Whilst price moves in the nickel market have been a key focus, the LME has observed high levels of volatility across the base metals markets more broadly. Market participants have raised concern regarding the risk of sudden, extreme price moves in other metals, particularly given the geopolitical backdrop,” LME says. The precise levels of the limits for nickel will be confirmed by notice by 14:00 London time on 15 March.

The upper daily price limit for any outright contract will be the previous business day’s closing price for that contract, plus for nickel, at least 5% having previously guided 10%, and will keep under review in light of market conditions.

The LME also confirms the deferral of delivery to 23 March at level of all nickel contracts entered into prior to 16 March and due for delivery between 16 and 22 March inclusive.

“The LME shall undertake heightened monitoring on all trading following the resumption of nickel trading,” it says. “The LME’s review of trading activity and nickel market conditions leading up to the suspension is ongoing, and will be informed by the information obtained under its information gathering powers in the LME Rulebook. If that review indicates that there may have been abusive activity by one or more participants, either on the LME’s market or on the LME in combination with the OTC market, the LME has powers under the LME Rulebook to commence a formal investigation.”

Adam Smith Germany

The UK government has imposed a new round of sanctions against Russian and Belarussian individuals and trade, including steel products, in response to Russia’s invasion of Ukraine.

The UK is to deny Russia and Belarus access to the “Most Favoured Nation” tariff for their exports, thus depriving them key benefits of WTO membership. The initial list of goods – worth £900 million ($1.17 billion) – will now face an additional 35% tariff on top of any existing tariffs, Kallanish notes.

The list includes products that “have been selected to inflict maximum damage on the Russian economy while minimising impact on the UK” and include iron, steel and iron ore. The UK has also banned exports to Russia of luxury products, such as high-end fashion, works of art and luxury vehicles.

Additionally, the UK has widened the list of sanctioned persons, which now also includes Severstal owner Alexey Mordashov.

The measures come in the wake of the EU’s fourth round of sanctions that ban the import from Russia of finished steel products (see separate article).

Earlier this month, the London Stock Exchange suspended trading in 27 companies with links to Russia, including Evraz, Severstal, NLMK and MMK.

Katya Ourakova UK