Category: Latest Updates

European steelmakers’ association Eurofer called on the London Metal Exchange (LME) and the Financial Conduct Authority (FCA) on Wednesday to resolve artificial fluctuations in nickel prices and ensure they do not reoccur.

“In the last days, and since markets opened on 7 March in particular, we have seen an unprecedented surge in nickel prices that cannot be explained by supply and demand, nor by the sanctions recently imposed on Russia,” said Eurofer director general Axel Eggert.

Previously, in summer 2019, there was a similar situation of possible market manipulation by a specific player, Eurofer points out. “It is of utmost importance to solve this issue once for all so we do not see this happening a third time,” warns Eggert.

Following further unprecedented overnight increases in the three-month nickel price, the LME suspended nickel trading on Tuesday (see Kallanish passim). Nickel prices reached $101,365/tonne during night trading into Tuesday.

The LME concluded that the significant price moves during early hours trading activity on Tuesday morning “had created a systemic risk to the market, including in relation to margin calls, which if LME had not acted would have closed at levels far in excess of those ever experienced in the LME market”, it says. “The LME and LME Clear had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults.”

On Thursday, LME said the two criteria needed for trading to resume were yet to be met. These are operational procedures to effect a safe re-opening, and analysis of the possibility of netting-off long and short positions prior to re-opening.

The LME however said it was doing everything it can to reopen the market as safely and swiftly as possible. This includes working on price bands, both for nickel and for all other physically-deliverable contracts. “In relation to netting off long and short positions, the initial responses indicated limited potential uptake, particularly from those with short positions, and considerable differences in view on the appropriate price,” LME said.

Eurofer requested the LME to keep the market closed until stability and normal price levels are restored. It has asked for an investigation of the trading practices by some market players to determine whether they may constitute market abuse or the creation of a disorderly market, or another prohibited practice.

Adam Smith Germany

Italian stainless steel scrap activity has reached a standoff this month. Given ballooning nickel prices, scrap sellers and buyers are at odds with each other when it comes to quoting.

Last week, nickel prices ballooned and the London Metal Exchange suspended nickel trading, with scrap suppliers calling the situation a “global price inferno”.

Based on the few transactions registered this month, prices seem to have increased €300/tonne ($330/t) versus February for grade 304, but uncertainty has frozen activity.

Some merchants have so far refused to grant their suppliers the €300/t increase and decided to wait as values are escalating every day. The entire stainless steel sector is practically stopping. Service centres and re-rollers say “there is no market” (see separate article).

Some local long product mills are not buying scrap, while others have purchased grade 304 this month at approximately €2,500/t delivered. This grade sold at the beginning of January at $2,050/t delivered on average, Kallanish notes. As a consequence of high energy prices and the lack of raw materials, Italian and European mills are either stopping production or reducing it.

Nickel levels for cash buyers reached $100,000/t at the beginning of last week and then went down to $80,000/t, versus $23,225/t on 3 February.

Natalia Capra France

Russia’s government looks set to introduce a national commodities and goods pricing regime as the country’s economy takes a hit from Western sanctions.

Russian deputy industry and trade minister Evgeniy Evtukhov told steelmaker, trader and scrap procurement firm representatives during a 10 March meeting that domestic steel prices – which he cited at RUB 75,000/tonne ($558/t) – are unacceptably high and need to be lowered. The formula that the ministry has offered to producers is cost of production plus around 20-25% maximum, with traders’ margin set at “3-5-7%”, Evtukhov said at the meeting, a recording of which was obtained by Kallanish. Companies were given several days to come up with their exact numbers.

Any attempt to increase prices any higher, use additional middlemen, or refuse to comply would be passed on to appropriate departments for further action. Those traders who do not agree to the terms are welcome to close their business, even if leads to bankruptcies, Evtuhov is heard as saying. Prices in export markets will however not be regulated.

The deputy minister, answering questions from representatives about feedstock prices, explained that every single extractor and producer will be following this formula, so there should be a reduction in prices throughout the whole chain. These meetings have also apparently been held with other industries’ representatives, including food.

Evtuhov told representatives that this regime was likely to last for several months. He also noted that a reduction in output in order to increase cost of production will not be tolerated. Steelmakers are also expected to carry on with their modernisation plans, even while they are earning less. “You had a very good last year; I am sure you can continue with modernisation plans for a while using these resources,” he concluded.

Katya Ourakova UK

The European Commission will ban imports into the EU of “key” iron and steel products from Russia, as part of its fourth package of sanctions against Russia announced on Friday. Authorities are however yet to specify what exact products will be targeted, Kallanish notes.

The ban “will hit a central sector of Russia’s system, deprive it of billions of export revenues and ensure that our citizens are not subsidising Putin’s war,” the Commission said in a note on Friday.

Other measures, being enacted together with G7 partners, include revoking Russia’s status of most-favoured-nation, which includes working to suspend Russia’s membership in leading multilateral financial institutions. The EU will also continue pressuring Russian elites close to Putin as well as their families and enablers, and make sure the Russian state and its elites cannot use crypto assets to circumvent sanctions.

It will also aim to ban the export of any EU luxury goods to Russia and ban new European investments across Russia’s energy sector.

Previous rounds of EU sanctions have hit Russian banks and certain oligarchs linked to the steel sector, which coupled with drastically reduced Black Sea shipping activity have made it more difficult to trade steel with Russia. However, the overwhelming majority of Russian steelmakers were not technically prohibited from exporting to the EU, if financing and freight could be arranged. This latest round of sanctions appears to be the hammer blow to ferrous trade between Russia and the bloc.

Adam Smith Germany

Steel distribution group Klöckner & Co has come up with a system by which it would introduce carbon-reduced steel to its customers. The topic was the focus of the company’s annual press conference, held in Düsseldorf on Wednesday, attended by Kallanish.

In collaboration with Boston Consulting Group, the company has developed a categorisation metric for green and low-carbon steel. The metric is rooted in international, science-based standards and categorises low-carbon steel into six categories, ranging from CO2 shares of 1,750 kg down to 400 kg/tonne of finished steel.

This is “an easy way to reliably assess and compare the carbon footprint of green steel, so that customers in the future can reliably, transparently and easily see the carbon footprint of a product purchased from Klöckner,” the company claims.

It will be able to provide low-carbon steel in various categories towards the end of this year. Klöckner & Co aims for the two lowest-carbon-footprint categories to account for over 30% of its entire range by 2025 and 50% by 2030.

“There is no common denominator yet for what is ‘green steel,’” ceo Guido Kerkhoff said at the conference. The definition offered by Klöckner differs from the approaches taken by the steelmakers because it takes the perspective of the customer, he pointed out.

“Mills find it hard to find a common ground because they come from different paths of making steel,” he said. “Our aim was a definition that customers can use as a tool for their calculation.”

Klöckner last year already sought partnership with the Swedish venture H2 Green Steel, and is one of the first companies to secure access to substantial quantities of steel produced as of 2025. In fact, representatives from H2 Green Steel attended the conference as a station of a business trip campaign to find more partners in Germany and its neighbours.

Christian Koehl Germany

Scarica l’approfondimento di siderweb dedicato al percorso dell’acciaio Made in Eu verso la sostenibilità economica e ambientale
A cura di Gianfranco Tosini – Ufficio Studi siderweb

L’industria siderurgica europea ha una lunga storia ed è leader nell’innovazione, qualità e prestazioni ambientali. Tuttavia, essa ha lottato negli ultimi anni con domanda stagnante, distorsioni del commercio internazionale e pandemia, che ha interrotto le catene di approvvigionamento e ha avuto un impatto rilevante sui settori a valle. Allo stesso tempo, l’industria siderurgica europea dovrebbe investire nella ricerca e nello sviluppo, ripensare i propri processi di produzione e attuare una sostanziale riduzione delle emissioni, al fine di rimanere competitiva e contribuire a raggiungere l’obiettivo di neutralità entro il 2050.

Lo speciale Il futuro dell’industria siderurgica europea, a cura di Gianfranco Tosini dell’Ufficio Studi siderweb, è un itinerario che parte da peculiarità e problematiche attuali dell’industria siderurgica europea per illustrare le sfide del settore nel prossimo futuro. Un focus particolare è dedicato ai temi della sostenibilità, principale elemento che condizionerà metodi di produzione e i prodotti stessi Made in Eu.

EDF is planning to develop a 30-50-MW electrolyzer in Teesside, UK, to produce renewable hydrogen for decarbonizing steel production in the region, the company said in a statement March 9.

The planned Tees Green Hydrogen plant, to be situated near the former Redcar steelworks, will be powered by the nearby Teesside Offshore Wind Farm, together with a new solar farm that EDF Renewables plans to construct close by.

The hydrogen production capacity could be scaled to over 500 MW as further demand emerges, EDF said.

“Tees Green Hydrogen […] will utilize locally produced green electricity to create the means to decarbonize local industry and safeguard its operation for many years to come, well beyond Net Zero 2050,” EDF Renewables UK Director of Strategy and Analysis Tristan Zipfel said in the statement. “In the current world climate the importance of locally produced renewable power cannot be underestimated.”

The hydrogen could be used to decarbonize port operations and steel production in the region, EDF said.

EDF is to supply PD Ports with hydrogen to decarbonize port operations, and British Steel has a memorandum of understanding with EDF Renewables on green hydrogen. British Steel launched a low-carbon road map in October, which includes plans to develop hydrogen use in its operations.

“This development will allow us to explore innovative technology options that could support the implementation of our low-carbon road map and our ambition to deliver net-zero steel by 2050,” British Steel’s Teesside operations manager, Matt Stockwell, said in the statement.

The project would directly support PD Ports’ ambitions to reach carbon neutrality across its Tees-based operations by 2027, CEO Frans Calje said.

A timeline for the project was not yet available, though EDF said detailed plans would be released later in 2022, and a consultation on the 49.9-MW Tees solar development is due later in March.

Conservative MP and chair of the All Party Parliamentary Group for hydrogen Jacob Young said hydrogen projects were vital to the UK’s security of energy supply.

“Given the current uncertainties in gas prices, it’s vital that we see more projects like this which demonstrate diversity in our energy sector and embrace the fuels of the future, like hydrogen,” he said in the statement.

S&P Global Commodities Insights assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP15.80/kg ($20.79/kg) March 9, based on month-ahead grid power prices. Prices were down from a recent high of GBP20.88/kg on March 7, as the Russian invasion of Ukraine sent underlying gas and power prices higher.

— James Burgess

Italian distributors are facing price chaos as long products and pipe values are increasing every day. The current situation is considered unsustainable, particularly by smaller companies that have stopped purchasing at current prices.

All Italian longs mills are this week either stopping their hot-end areas and re-rolling using billet stock or reducing shifts to avoid producing during peak electricity hours. Despite the current instability, distributors say they are working well with a high level of demand and high margins.

The challenge however is understanding which price to apply when producers continue to increase quotes. On Thursday, some longs makers increased their values again by a further €50/tonne ($55) after already implementing hikes in the previous days, sources tell Kallanish. They are grappling with raw materials shortages, forced stoppages and expensive energy.

Prices for coil derivatives including welded tube and sheet are also skyrocketing. Distributors say that tube discounts are down to ten points on average. At the beginning of the week, the market was talking about 15 points, while last month in Italy the level of discount was some 25 points. Each point of discount for re-rollers who use this pricing system is equal to €16-17/t, sources say.

Re-rollers are busy updating their price lists often. Hot rolled coil prices have reached the level of €1,300/t base ex-works this week, but this is only a price indication valid until the end of this week. Kallanish understands that Marcegaglia – due to the HRC price escalation – is going to update its price list to allow distributors to sell using the re-rollers’ list and resume its June 2021 list.

Sheet prices have gained over €200/t in the past ten days, with values reaching €1,650/t for some galvanised grades.

Natalia Capra France

Acerinox says it has decided to temporarily stop melting at its Spanish mill located near Algeciras. Globally, the company is also stopping new order intake, sale of stocks and purchases of raw materials to assess the volatile market situation.

In a release seen by Kallanish, the company notes that other stainless steel suppliers are doing the same and that Acerinox prefers for the market to normalise or stabilise before fully restarting commercial activities.

“We cannot allow that the jump impacts our purchasing price of nickel and scrap; we also cannot allow that these lift the prices of our final product (they would duplicate), with the risk of breaking the market,” says Acerinox Group chief executive Bernardo Velazquez.

This week, global nickel prices jumped dramatically, forcing the London Metals Exchange to halt nickel trading and bringing turmoil to the entire steel sector. The war in Ukraine is also lifting energy and natural gas prices dramatically in various parts of Europe, including Spain.

Acerinox is discussing with its Spanish trade unions a temporary layoff scheme to be applied for the period of the downturn at the Algeciras plant. A number of other steelmakers in the country stopped melting activities at their electric arc furnaces since the end of last week.

Emanuele Norsa Italy

European market participants report that hot rolled coil offers are increasing further this week amid the Ukraine-war driven cost escalation.

ArcelorMittal is reported by multiple sources to have lifted new offers for HRC to €1,300/tonne ($1,432) ex-works base for all its European clients. Only last week the company announced to customers an increase in offers to €1,150/t ex-works base for Europe.

This week’s move was widely anticipated by market sources and is now being followed by most European suppliers. A further price hike has not been ruled out as soon as next week, as the war in Ukraine drags on and the market continues to suffer from disrupted feedstock supply and increasing raw materials and input costs, Kallanish notes.

The new €1,300/t ex-works base target level is above the all-time record northern European HRC transaction price registered by Kallanish in August 2021, which was at slightly above €1,230/t ex-works northern Europe.

Emanuele Norsa Italy