Category: Latest Updates

The start of formal talks between the UK and US to address the US’s 232 steel and aluminium tariffs is welcome news, given the US is the UK’s second largest market. The talks must be concluded swiftly to erase the competitive disadvantage UK suppliers are suffering versus their EU counterparts, after the bloc’s own deal with the US came into effect from 1 January, says UK Steel.

“Given the competitive disadvantage created by the EU deal, it is vital that these talks are concluded swiftly to limit any additional damage to UK producers,” says Gareth Stace, director general of the association representing UK steelmakers. “The tariffs have already reduced UK exports to the US by nearly 50%. Importantly, we hope the UK Government can put its new independent trade powers to full use, building on the terms of the EU’s deal and delivering the best possible outcome for UK producers.”

US Secretary of State Gina Raimondo and UK Secretary of State for International Trade Anne-Marie Trevelyn met virtually on Wednesday to discuss their shared global overcapacity concerns (see Kallanish passim). Raimondo, Trevelyn, and US Trade Representative Katherine Tai will begin formal discussions to address these issues that threaten the industries of both nations. This will include appropriate trade measures and what the UK hopes will be the eventual removal of the tariffs.

According to US government data, approximately 265,391 tonnes of steel products were exported from the UK to the US in 2021. Cold rolled sheet, heavy structurals, large-diameter pipe, and stainless semi-finished steel were the most exported products.

Adam Smith Germany

Steelmaker ArcelorMittal said Jan. 20 it is offering more certified recycled and renewably produced long steel products in Germany and will expand accessibility to using online sales later this year.

ArcelorMittal said in a statement it is increasing availability of its XCarb-branded steel beams, which is stated at 333 kg of CO2 per ton of finished product including raw materials supply and transportation.

The company referred to a published environmental product declaration for XCarb recycled and renewably produced structural sections and merchant bars, published by Institut Bauen und Umwelt, which states 1.1631 mt of scrap is used to produce 1 mt of finished steel.

The beams offered from its Essen Downstream Solutions center are in the following dimensions: HE100 to HE300, IPE180 to IPE600 in grades S235JR+M and S355J2+M.

The XCarb beams, made at ArcelorMittal Differdange in Luxembourg, are the first to offer a guarantee of 100% recycled steel scrap and 100% renewable electricity from solar and wind projects in its production, it said.

Long steel products are typically produced via ferrous scrap in electric arc furnaces, with power supplied through various generation sources and rolled and processed into finished sizes and grades. Some producers are becoming more interested around upstream raw materials and transportation emissions, certifying energy supplies, and carbon prices and markets for industry benchmarking.

“In Germany, the demand for low-CO2 products is growing, as climate change mitigation has become the most important challenge of the 21st century,” the company said.

Downstream Solutions supplies mainly steel for construction to distributors and construction partners and usually handles large requests for major German projects from Essen, including projects requesting XCarb beams, it said.

“The volume we have stocked now will help us to take the first step with our customers, leading the way in a sustainable direction,” said Oliver Menrath, managing director of Downstream Solutions Germany. “While the XCarb brand is now only available through traditional sales, we also plan to sell these low-CO2 beams through our e-steel platform later this year, becoming the first in the market to offer low-emissions steel online.”

XCarb brands all ArcelorMittal’s carbon reduced and zero carbon steel product offering. In addition to recycled and renewably produced steel, ArcelorMittal offers to sell blast furnace-based steel with XCarb green steel certificates, which include CO2 savings made by the group an independently confirmed by DNV GL.

— Hector Forster

The Steel Manufacturers Association Jan. 20 urged the US government to exercise caution as it negotiates with other countries on arrangements to replace its 25% Section 232 steel tariff, adding that the best interests of the domestic steel industry must be considered.

“It is important that America maintains a strong Section 232 program for the US steel industry at a time when imports are surging, capacity utilization is trending down and major domestic steel producers are making monumental investments that are modernizing and electrifying our steel industry,” SMA President Philip Bell said in a statement.

Bell said that the US should be concerned about any additional alternative arrangement that will lead to increased steel imports and support countries not committed to free and fair trade.

Bell’s comments follow a Jan. 19 joint statement from US and UK trade representatives that announced the start of bilateral discussions to address global steel and aluminum excess capacity and resolve a metal tariff dispute.

It is expected that the US will modify the enforcement of its steel tariff on UK exports, much like the US’ previous deal reached in October to replace the tariff on imports from the EU with a tariff-rate quota arrangement.

The Section 232 steel and aluminum tariffs were imposed on most countries in 2018 under former President Donald Trump.

Total US steel imports in November 2021 hit 2.86 million mt, significantly up from 1.24 million mt in November 2020, according to US Census data. In the same comparison, steel imports from the UK rose to 17, 219 mt from 11,885 mt.

In 2021, US steel imports reached 26.98 million mt through November, already surpassing the 2020 full-year total of 20 million mt.

“The announcement that the US and the UK will start negotiations to find an alternative scheme to the current 232 tariffs was expected,” Bell said.

However, Bell added that the UK steel industry is export-oriented, and its production is “dominated by firms from China and India.”

“We must ensure that any agreement does not have unintended consequences and is structured in a way that meets the trade and climate objectives of our country,” he said.

The SMA represents the US electric arc furnace steel industry, which accounts for about 70% of domestic steel production.

The American Iron & Steel Institute, another trade association that represents the US steel industry, echoed the SMA’s sentiment.

“We think it is essential that the [Biden] administration ensures that the various new agreements it is considering do not result in a flood of imports that could undermine the goal of the Section 232 program to maintain a healthy domestic capacity utilization rate,” AISI CEO Kevin Dempsey said in a Jan. 19 statement to S&P Global Platts.

— Nick Lazzaro

German steel distributor Krönlein is building a new warehouse at its headquarters in Schweinfurt, in northern Bavaria.

Like many of its kind, Krönlein is also a provider of sanitary equipment and building materials. It has four locations, of which the sites in Schweinfurt and Fulda are steel distribution hubs, offering sections, sheet, pipe, and rebar with bending services.

The new warehouse in Schweinfurt will have a storage area of nearly 10,000 square metres, including high-bay storage racks. Built by construction company Goldbeck, it is scheduled to be completed this summer, Kallanish learns from the company.

According to Krönlein managing director Ulrich Herrmann, the company has outgrown its existing capacities after good development over recent years. He attributes the growth partly to the alliance with the larger Lotter group, which some two years ago took over Krönlein. This strengthened Krönlein’s activities, especially in the states of Saxony and Baden-Württemberg (see separate story).

Christian Koehl Germany

Grain-oriented electrical steel with a particularly low carbon footprint has been ordered from thyssenkrupp Steel by SGB-SMIT, a German maker of transformers that is fulfilling an order for energy group Eon.

Since October last year, thyssenkrupp Steel has been offering certified CO2-reduced steel under the “Bluemint” brand name. For the batch now delivered to SGB-SMIT, reduced iron has been used in the blast furnace, enabling a reduction in coal usage, Kallanish hears. Including all further processing steps in Duisburg and in Gelsenkirchen, a CO2 saving of 50% per tonne of Bluemint is achieved compared with conventional electrical steel, tk Steel claims.

“If low-CO2 power generation from renewable sources becomes predominant in the future, the share of CO2 emissions generated during the production phase of the transformer will come into even sharper focus,” says thyssenkrupp Electrical Steel managing director Georgios Giovanakis. “Therefore, the next logical step is now to offer electrical steel itself with reduced CO2 intensity.”

He underlines investments undertaken to enable the unit’s plants in Germany, France and India to make sophisticated grades characterised by particularly low core losses, and thus achieve high efficiencies in current transport.

Christian Koehl Germany

Spanish steelmaker Celsa Group has become one of the initiators of the country`s largest multisectoral consortium for the development of a hydrogen network – SHYNE. The project involves 21 other companies and 11 associations, technology centres and universities in Spain.

SHYNE will research competitive technologies and will promote the domestic industry and its infrastructure towards the energy transition and decarbonisation of the economy through renewable hydrogen. The total investment is € 3.23 billion ($3.66 billion) and involves ten autonomous communities, generating more than 13,000 jobs.

Celsa’s participation in this project is fully aligned with its plan to introduce hydrogen into its steel production processes to help speed up its complete decarbonisation.

“Being the European leader in circular steel production, we have identified renewable hydrogen as a key element to achieve our strategic goal of being net positive by 2040,” company executive director Francesc Rubiralta says in a note sent to Kallanish.

“We are already a low-emissions company in our sector, but we are working to achieve zero net carbon emissions in our business. Being part of this project allows us to do so and also to contribute to the development of the ecosystem necessary for Spain to become a European leader in the production and consumption of green hydrogen,” he adds.

According to its hydrogen strategy, SHYNE plans to use different technologies to reach a capacity of 500 megawatts in 2025 and 2 gigawatts in 2030. This is half of the target set in the Hydrogen Roadmap published by the Spanish government last October. It will also promote the use of hydrogen in all transportation segments and the creation of infrastructure with at least 12 hydrogen filling stations by 2025.

Todor Kirkov Bulgaria

Increasing energy costs are forecast to continue impacting Italian steelmakers’ output and scrap deliveries, Italian steel trade association Assofermet says in its monthly market report sent to Kallanish.

Skyrocketing energy prices have had the effect of slowing production and logistics this month. This, coupled with increased transport costs and uncertainty amid the pandemic, is promising some hardship for truck deliveries at a national and international level. January looks like a “chess game” between mills and scrap merchants, with mills trying to reduce prices as much as possible and merchants refusing to sell at very low levels, the association observes.

After the long Christmas holiday break, Assofermet notes high prices and tension over the high automotive grades such as new arisings E8 and packs of E8, but large availability of low demolition grades and steel turnings. While Italian scrap prices continue to weaken significantly, demand in other European countries persists for high-quality scrap, keeping prices stable month-on-month. “Many European countries seem to want to maintain the levels of December prices in consideration of the scarcity of scrap, in particular of the high qualities,” the report states.

Meanwhile, pig iron short supply is evident in the European market. CIS pig iron producers have already filled up order books for their February and March production. The absence of Brazilian pig iron offers continues in Italy. Over the past week, however, the international pig iron market has been positively affected by a return of Chinese buying interest, Assofermet says.

In Italy, pig iron prices remain stable compared to the beginning of the month, with few transactions. The latest deals at the end of December between distributors and CIS producers were concluded at $560/tonne cfr Italy, but the market expects an imminent price decline in new transactions. Domestic scrap values are also falling by €50/tonne ($56) month-on-month in a quiet market (see Kallanish passim).

Natalia Capra France

US, UK enter into tariff trade talks

Leaders from the US and UK have officially begun talks to address the US’s 232 steel and aluminium tariffs and the retaliatory tariffs imposed by the UK.

US Secretary of State Gina Raimondo and UK Secretary of State for International Trade Anne-Marie Trevelyn met virtually on Wednesday to discuss their shared global overcapacity concerns. In agreement that overcapacities in steel and aluminium are being driven largely by China, the leaders plan to work together to address their shared worries over countries practicing “harmful market-distorting policies.”

Raimondo, Trevelyn, and US Trade Representative Katherine Tai will begin formal discussions to address these issues that threaten the industries of both nations. This will include appropriate trade measures and what the UK hopes will be the eventual removal of the tariffs.

No timeline for the talks was provided.

US and EU leaders formalised a deal late last year to replace the 232 tariffs originally imposed in 2018 by then-US president Donald Trump with a tariff-rate quota agreement. Under the arrangement, 3.3 million tonnes/year of EU steel products may enter the US tariff free. Since the UK is no longer a member of the EU as of 2020, it was excluded from that deal and its exports to the US still face the 25% tariffs.

The US is also currently in formal discussions with Japan over the 232 tariffs, Kallanish mentions.

According to US government data, approximately 265,391t of steel products were exported from the UK to the US in 2021. Cold rolled sheet, heavy structurals, large diameter pipe, and stainless semifinished steel were the most exported products.

Laura Miller USA

The market remains quiet and uncertain this week for Italian coil, with expectations on the buyside of price decreases, and sales poor, particularly for hot and cold rolled coil.

Producers are mulling increases for hot-dipped galvanised coil and CRC, as they have since the turn of the year been particularly affected by steep electricity and gas prices hikes. However, the market is stalling and conditions are too uncertain for a solid price hike, market sources tell Kallanish.

Interesting import offers are reported for CRC, but HDG imports are now closed for the first quarter due to exhausted safeguard quotas. European importers of HDG exhausted most safeguard tariff-free quotas for HDG in the 4a sub-group, but not for automotive (see Kallanish 13 January).

Domestic prices for CRC and HDG remain stable compared to the beginning of the month despite the weak activity. Buyers are waiting for better visibility on international prices and are not committing to high volumes.

HDG prices in the latest contracts are in the €1,050-1,100/tonne ($1,190-1,247) base ex-works range, while CRC, less demanded at present, is reported at €1,030-1,100/t base ex-works. ArcelorMittal Europe recently implemented a €30/t hike on these two products, pushing prices to €1,150/t base ex-works in Italy (see Kallanish 11 January).

Natalia Capra France

With established and startup automakers backing the BEV movement, consumers can expect many new entries to the US market

Akin to the California Gold Rush of the mid-1800s, established and startup automakers are hitching their wagons to the battery electric vehicle (BEV) movement and it’s touching off an unprecedented number of new entries into the US market. 

Looking back to 2000, buyers in the US ‘only’ had a choice of 235 unique models across 37 brands*. Fast forward to 2021, and that number has increased to just below 330 models from 43 brands – an average increase of 4 models per year. Over the next five years, that number is expected to skyrocket by nearly 17 new entries per year, with the number of models in the market increasing to over 400 – approaching double what was available to consumers in 2000.

Part of this growth can be attributed to established automakers like GM, Hyundai, and VW fragmenting their showroom as they transition from ICE to BEV models. Also helping to propel the model growth over the next five years is an influx of 18 new brands dedicated to BEVs, with that number seemingly growing every day. Fifteen of those BEV brands are startups looking to take advantage of the open gate to entry that the EV movement – and a new administration and regulations – has afforded. Backed by big dollars and even bigger aspirations – and aided by a somewhat less complex vehicle development process – these BEV startups also come with little brand equity and a high degree of cost and risk, factors that historically have closed the gate on those who wanted to enter this market.

From Arrival to Workhorse and Canoo to Rivian, these startup EV automakers are projected to have close to 40 models available for Americans. While most of these upstart brands are not expected to surpass sales of over 50k units annually over the next five years, they do pose a risk to established automakers in terms of market share loss, if only because of the sheer number of choices that fall outside of their brands. 

The influx of startups should be a boon for production in North America, as we see these manufacturers adding over one million units of capacity over the next five years; Rivian will account for over 50% of that. But the high degree of risk also flows into production as we see the utilization of those plants, based on expected demand, at just 30% – a sobering reality check to the big dreams. 

Just as not all the forty-niners of the California Gold Rush came away rich, not all these BEV startups are likely to strike gold. However, this generation’s BEV Gold Rush will benefit the US consumer, as heightened competition and fresh perspectives will likely improve all vehicles and provide customers with more choice.

*Excluding Super-Premium brands