Category: Latest Updates

Saarstahl has selected Vanilla Steel as the digital steel trading platform on which to sell its excess material, Kallanish learns from the Berlin-based e-commerce company.

According to Vanilla Steel, Saarstahl wants to further digitise its internal processes and gain first-hand experiences with open B2B-marketplace platforms. “In international markets and spot steel trading, a high customer reach across language barriers is critical in order to find the right buyer,” says Saarstahl sales director Jean Paul Timmerman.

In order to minimise time to market and achieve fair market prices in an efficient manner, “neither offline processes nor standalone online shops can compete with open platforms that are able to grow through network effects”, he adds.

With more than 1,300 registered buyers and 160 suppliers, Vanilla Steel claims to be Europe’s largest independent steel marketplace. Each week, it lists more than 10,000 tonnes of material, the majority being prime quality steel.

Christian Koehl Germany

China’s crude steel production is expected to reach 1.03 billion mt in 2021, down 35 million mt, or 3.3%, from 2020, Gao Xiangming, vice chairman of the China Iron & Steel Association said Jan. 10.

China’s crude steel output has declined on an annual basis for the first time since 2016.

Gao said he expected China’s steel demand in 2022 to remain at the level of 2021. Property construction will face downward pressure, but construction of infrastructure projects will accelerate, and the manufacturing sector will remain strong in 2022, he said.

However, some market sources said they believed steel demand growth in infrastructure and manufacturing would not be enough to fully offset the slowdown in the property sector in 2022, while China’s crude steel output might have to drop further in 2022 in order to strike a balance between supply and demand.

Due to constraints from high local government debts and a lack of new and steel-intensive infrastructure projects, some market sources said they expected infrastructure investment to see only low-single-digit growth in 2022.

China’s manufacturing sector is likely to face downward pressure in late 2022, with overseas demand likely to shrink fast as operations at overseas factories will be gradually back to normal, and the US may tighten monetary policy.

One mill source said China’s steel margins was likely to decline notably in 2022 from 2021 due to sluggish demand, but added that loss-making is unlikely to be seen in the steel industry as China is also planning to cap crude steel production in 2022 at 2021 levels, which would provide support to steel margins.

Crude steel output seen rising

According to CISA, China’s daily crude steel output over Dec. 21-31 rebounded 9.7% from mid-December to 2.634 million mt/day. As a result, daily crude steel output in December averaged 2.604 million mt/day, up 12.7% from November but still down 11.6% year on year. The rebound was largely because most Chinese steelmakers had ramped up production after they had met 2021 steel output cut requirements by November or mid-December.

Some mill sources said China’s crude steel output was likely to continue to climb in January but remain lower than a year ago, as steel output cuts in northern China had remained stringent to guarantee clear air ahead of and during the Winter Olympics in Beijing over Feb. 4-20.

They said they expected China’s crude steel production to rise along with demand for most of the first half of 2022, before falling in the second half in tandem with slower steel demand of both home and abroad.

— Staff

Thyssenkrupp has signed a contract with Shell for its planned 200-MW Hydrogen Holland I electrolyzer plant in Rotterdam, Thyssenkrupp said Jan. 10.

Construction of the electrolyzers is planned to start in spring, with a final investment decision from Shell on the Holland Hydrogen I plant expected in 2022, and hydrogen production starting from 2024, Thyssenkrupp said in a statement.

Thyssenkrupp Uhde Chlorine Engineers will engineer, procure and fabricate the plant based on its 20-MW alkaline electrolysis module, the company said.

The facility will produce 50-60 mt/day of hydrogen once at full capacity, engineering contractor Worley said in a statement announcing early design works in 2021.

The plant will be linked to renewable electricity from the 759-MW Hollandse Kust Noord offshore windfarm, using guarantees of origin. The windfarm is due to start in 2023.

Holland Hydrogen I will be built in the Tweede Maasvlakte area of the Port of Rotterdam.

“We are looking forward to support building a major hydrogen hub in central Europe and to contribute to Europe’s transition to green energy,” Thyssenkrupp Uhde Chlorine Engineers Head of Green Hydrogen Christoph Noeres said in the statement.

“With our large-scale standard module size, we will further strengthen Shell’s hydrogen strategy,” he said. “Our partnership perfectly combines our engineering excellence with Shell’s competence of a large global energy player.”

Hydrogen from the plant will be transported by pipeline to Shell’s Energy and Chemicals Park Rotterdam, and used for industry and the transport sector, the statement said.

The Netherlands is one of the leaders in Europe for green and blue hydrogen plans, with several projects in the pipeline.

Blue hydrogen produced from fossil fuel sources coupled with carbon capture and storage is currently projected to be cheaper to produce than green hydrogen from electrolysis powered by renewables, but costs are expected to fall rapidly this decade.

S&P Global Platts assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur15.02/kg ($16.96/kg) Jan. 7 (Netherlands, including capex), based on month-ahead power prices. PEM electrolysis production was assessed at Eur17.81/kg, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur5.99/kg.

— James Burgess, Annalisa Villa

China continued to raise its share in the Turkish stainless steel market with competitive prices, according to the latest monthly Turkish Statistical Institute (TUIK) data sent to S&P Global Platts.

Turkey imported 82,000 mt of stainless steel coil (HS code: 7219-7220) in November, of which 25,500 mt was from China, up 68% on the year, the data showed.

Stainless imports from China thus reached 207,800 mt in the first 11 months of 2021, 86% higher on the year, while Turkish mills’ overall stainless steel imports totaled 690,000 mt, around 150,000 mt higher on the year, on higher stainless steel consumption in Turkey with the easing of the pandemic.

The cost of these imports also rose to $1.5 billion in that period, 53% higher on the year due to globally higher steel pricing.

Following China, another Asian country, South Korea, became Turkey’s second largest stainless steel supplier in the 11-month period at 130,000, 15,000 mt lower on year.

Turkey’s imports of stainless flat steel from another Asian country, Indonesia, totaled 102,000 mt in January-November, more than double on year.

Turkey also imported 39,000 mt of stainless steel coil from Spain in that period, while imports from Italy totaled 37,000 mt.

Turkey decreased its duty on imports of cold-rolled stainless sheets to 8% from 12% effective Jan. 1 2022, amid increased stainless flat steel demand in the country.

The tariff does not apply to countries, such as those of the EU, with which Turkey has a free trade agreement, according to a decree published in the country’s Official Gazette.

Turkey’s sole stainless cold-rolling mill, Posco Assan TST, based in Izmit, Kocaeli, near Istanbul, has a production capacity of 300,000 mt/year of 0.3-3.0 mm thick stainless cold-rolled coil up to 1,600 mm wide.

— Staff, Cenk Can

The Carbon Border Adjustment Mechanism (CBAM) as proposed by the European Commission could cause extra costs of up to €2 billion ($2.27 billion) for German steel fabricators, a study says.

It was carried out by the Cologne Economic Institute (IW Köln), and commissioned by the steel and metals working industry federation Wirtschaftsverband Stahl- und Metallverarbeitung (WSM). The study finds that CBAM would protect steelmakers from foreign competition with greater CO2 burdens at a lower CO2 price, but would massively hurt steel processors due to rising input material costs. Hence, CBAM could increase the risk of relocation of production sites to foreign shores, WSM fears.

The federation says it does not question the need for the border adjustment mechanism, but criticises its limitation to materials like steel, aluminium and cement. WSM is therefore urgently calling on the European Commission to make improvements and to include the entire value chain, Kallanish reads in a statement.

According to the study, the European Commission’s regulation would swallow up a steel fabricator’s entire 2% return on sales, especially since the mostly medium-sized companies would not be able to pass on the costs. Since many of the firms are strong exporters, national costs for CO2 certificates would need to be reimbursed in the case of exporting finished goods, as is the case for steel, WSM argues.

Christian Koehl Germany

Acerinox, the Spanish-headquartered stainless steel supplier, has announced to its European clients the decision to implement an energy surcharge on all new deliveries from January, Kallanish learns.

The surcharge will be included in the alloy surcharge that is set monthly, the firm says in a letter to its clients. The extra will be calculated monthly and will be influenced by the average cost of electricity and gas.

The company stresses that the energy surcharge will nevertheless not cover 100% of the energy costs it incurs. For January, the energy surcharge will be €253/tonne ($287) for flat products and €284/t for long products.

The move by Acerinox follows similar moves by other European steelmakers implemented since the end of the third quarter of 2021.

Emanuele Norsa Italy

Underlying issues in the energy and carbon systems are giving rise to a broadening competitive disadvantage for UK energy intensive industries (EIIs), the UK-based Energy Intensive Users’ Group (EIUG) said Jan. 7, calling for the UK government to use levers at its disposal to alleviate the pressure on industries including steel.

The government needs to help manage the impact of sustained high energy costs for EIIs, it said in a statement.

EIUG represents UK EIIs including manufacturers of steel, chemicals, fertilizers, paper, glass, cement, lime, ceramics and industrial gases.

“EIUG are calling on government to rethink their approach by taking action to bolster the currently limited EII support package,” the statement said. “Furthermore, the second triggering of the Cost Containment Mechanism must be used to correct carbon price escalation in the immature UK Emissions Trading System.”

A spokesperson for UK Steel, a producers’ group, said that its recent study “shows that we pay 61% and 51% more, respectively, for our electricity than our German and French counterparts [the UK’s two main competitors]. That gap cost the sector GBP 90 million last year.”

Liberty Steel Group said in recent weeks it is operating its UK electric arc furnace only at night due to electricity prices, while other UK steelmakers have been adding an energy surcharge to their product prices.

Carbon costs

The situation has become critical in the case of carbon costs in the UK, which are now considerably higher than carbon costs in the European Union, broadening the UK industry’s disadvantage, the EIUG said.

UK (carbon) Allowance (UKA) futures contracts for December 2022 delivery on the ICE Futures Europe exchange rose to an all-time high of GBP 80.97/mt at the close Dec. 16, compared with GBP 46.25/mt when the contract started trading on May 19, 2021. Converted to euros, this stood at Eur96.97/mt – more than 11% higher than the equivalent EU Allowance price of Eur85.71/mt the same day.

The UK Emissions Trading System is a much smaller market and trades in lower liquidity than its EU equivalent. However, its rules on regulatory intervention are more responsive to excessively high prices. The UK government announced Dec. 31 that UKA prices were high enough in October, November and December to trigger a meeting in January to consider market intervention.

That could include bringing forward auction supplies in a bid to cool the market. The government said it would make an announcement on possible carbon market intervention by Jan. 18 at the latest.

An informed source in the energy sector said he considered the worst may be yet to come in the UK energy sector, with some “big shocks ahead.”

— Diana Kinch, Frank Watson and Andreas Franke

French automotive production declined in the first nine months of 2021 compared to the previous year, says French carmakers’ association Organisation Internationale Des Constructeurs Automobiles (OICA).

Nine-month production was 1,011,556 passenger cars and light commercial vehicles, an increase of 14% on 2020, the year of the pandemic, but a significant fall of 40% compared to 2019. About 676,113 were passenger cars. This segment’s output increased 7% year-on-year but fell as much as 47% on 2019.

According to data published by Inovev, passenger car production in the country improved slightly in full-year 2021 compared to 2020, by 8%. But it decreased again significantly on 2019 levels due to the effect of the global pandemic and the global components shortage that caused the sector’s output to slow.

France produced 1.5 million cars and light vehicles in 2021, or 37% less than in 2019, Kallanish notes.

Natalia Capra France

Brazilian miner Vale, steelmakers Usiminas and Companhia Siderúrgica Nacional (CSN), and tube producer Vallourec say they have adopted a special restricting plan for their mining activities in Minas Gerais state, Kallanish notes.

Mineração Usiminas (Musa) temporarily suspended iron production at the Itatiaiuçu mine on 10 January due to rains in the region being significantly more intense than the historical average.

“Activities should be resumed upon the improvement of weather conditions which allow safe access to the mines and proper functioning of equipment, as well as after a review of the general conditions of facilities,” says Musa. For now, the suspension of activities will not affect the supply of raw materials to Usiminas as Musa’s stocks will be used. The miner confirms it has also activated the initial level 1 of alert of the Emergency Action Plan for Mining Dams for its Central Dam, which was deactivated in 2014.

Vale is also taking similar action for its mines in Minas Gerais. The company has partially halted production in the Southeastern and Southern Systems to guarantee the safety of its employees and communities, while monitoring its Minas Gerais dams daily. Vale suspended Estrada de Ferro Vitória train services, as well as shipments from the Brucutu and Mariana complex, where production remains halted.

The heavy rainfall is not impacting the Itabira complex, Vale explains. In the Southern System, due to the closure of stretches of the BR-040 and MG-030 highways, output at all the complexes is temporarily halted.

“The Northern System continues to operate in line with the production plan, which considers the seasonal impact of the rainy season on all operations and, therefore, Vale reiterates its production guidance of 320-335 million tonnes for 2022,” the miner adds.

Also, on 10 January, CSN’s Casa de Pedra mine temporarily suspended operations, with the expectation of a return to activities in the next few days. The company has kept its loading port terminal in Itaguaí closed. “CSN has taken all necessary precautionary measures to ensure employee safety and expects a gradual resumption of activities as soon as weather conditions permit,” says the company.

Meanwhile, Vallourec Brazil says there was no dam failure at its iron ore mining unit, contrary to media reports on Sunday. “Due to the excessive rains of the last few days, the solid material was transported from the Cachoeirinha pile to the Dique Lisa, located in Nova Lima, causing the overflow of this dike, which is close to the BR 040 highway,” Vallourec clarifies. “The dike is a rainwater containment structure and is therefore not a mining tailings dam. The massif is intact and there was no rupture of the structure.”

Other manufacturing industries in Minas Gerais state have also confirmed taking precautionary measures and have signalled a potential reduction in production.

Todor Kirkov Bulgaria

Negotiations for long-term coil contracts between Western European mills and their large customers have dragged on relatively long this year, which is not surprising given the exceptional price moves seen last year.

Meanwhile, various deals are finally heard to have been concluded. And, apparently, the year-on-year premium bargained for so intensely has settled at a value of around €500/tonne ($567), at least for hot-dip galvanized coil. Such is the value heard from a deal between a German mill and a tier 1 automotive supplier, with other deals’ premiums apparently landing at between €490 and €520.

“We have been bargaining for a plus of €480-490, but we would make do if we ended at €500,” a buyer of another automotive supplier tells Kallanish. A common basis reached in last year’s talks for HDG was €600-650/t. This would mean that contracts for 2022 are worth €1,100-€1,150/t, meaning on the upper end, or actually above current spot prices.

For 2021 contracts, negotiations were rushed by mills in autumn 2020, as nobody anticipated the price eruption that would later follow.

Christian Koehl Germany