Category: Latest Updates

Vitkovice Steel has bounced back into profit after several loss-making years, posting a CZK 25 million ($1.1m) net profit in the nine months through September. This was supported by strong steel demand and production efficiency improvement. The firm says the outlook is also positive despite rising utility prices.

Last year Vitkovice posted a CZK 267m loss. This was still better than previous years. The previous time the firm posted annual profit was in 2017 but this was due purely to high exchange rate profit from revaluation of shareholder loans. Before that, the firm last registered profit in 2008.

“The circumstances faced by steelmaking are still full of risks, from the EU climate package up to the growth of prices of utilities and emission credits, but the strong revival of demand for steel products plays into our hands,” Vitkovice Steel general manager and chairman Dmitrij Scuka says in a note seen by Kallanish. “Now we are doing our utmost to improve the favourable conditions in order to strengthen our position of a leading steel plate producer.”

Efficiency has been improved by modernising procurement logistics, streamlining production planning, and introducing a new software for rolling, the Czech steelmaker says.

Vitkovice Steel chief financial officer Radek Strouhal says: “We believe that the market conditions will continue to be positive for steelmakers. Steel, as a 100% recyclable material, should play a leading role in the economic and environmental approach to the development of society.”

Vitkovice has a 755,000 tonnes/year capacity plate mill and seldom-used 170,000 t/y heavy sections mill. The firm switched to sourcing merchant slab when it shut down its 950,000 t/y electric arc furnace-based meltshop in 2015.

Adam Smith Germany

Seaborne iron ore prices topped $100/tonne on Wednesday for the first time since 4 November. Vale’s announcement that it would increase production in 2022 was still supportive, with its new guidance falling below some analysts’ expectations.

The Kallanish KORE 62% Fe index gained $4.95/t to $101.85/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $5.33/t to $117.18/dmt cfr, and the KORE 58% Fe index appreciated $3.65/t to $71.58/dmt cfr.

On the Dalian Commodity Exchange January iron ore settled up CNY 18/t at CNY 600.5/t ($93.99/t), while on the Singapore Exchange December 62% Fe futures settled up $4.31/t at $103.05/t. The same contract for 65% Fe and 58% Fe futures settled up $4.76/t at $117.77/t, and up $1.75/t at $70.72/t respectively.

Both Chinese scrap and billet prices also continued to increase. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta increased CNY 33/t to $3,192/t. In Tangshan, billet prices increased CNY 60/t to CNY 4,320/t.

Vale is reportedly seeking board approval this week for a production guidance of 330-350 million tonnes in 2022. The miner has said output this year would be in the bottom half of its guidance of 315-335mt. Expectations however were for Vale to produce at least in the top half of its reported guidance for 2022, and perhaps more.

In China, meanwhile, expectations of a pick-up in crude steel production continue. Improved weather and freer lending to real estate have caused a short-term improvement in steel demand.

Tomas Gutierrez UK

German steel product sales resumed a downwards trajectory in October after a September upturn, and overall inventory levels have continued to rise in recent months, German steel stockholders’ association BDS reported Nov. 24.

Overall sales in the month of October were 865,119 mt, down 2.4% from September’s 886,742 mt, with falls noted in both long and flat product categories as well as other product types, BDS said. Sales were as much as 11.7% lower than the 979,598 mt total of October 2020, which had been a strong month, it said.

“Production decline in automotive has an effect on the sales as we see in the figures for flat products,“ a BDS official commented.

The automotive sector is typically the second biggest steel consuming sector. Automotive production has been impacted throughout Europe in recent months by a shortage of semiconductors and in recent weeks by a tightness of magnesium for lightweight autoparts due to a fall in Chinese production and exports, leading to slower steel orders.

Flat products sales fell notably to 510,765 mt in October, down 3.3% from September; while long products sales fell proportionally less, by 0.5% to 267,475 mt.

Stocks continue to inch up

German steel products stocks reached 2.18 million mt in October – their highest for nearly two years, the BDS data showed. The overall stocks were 1.1% higher than the 2.16 million mt of September and 3.2% higher than the 2.12 million mt of October 2020.

“Stocks have risen in the last couple of months but are still on a moderate level,“ the BDS official said.

Inventories varied according to product in October, with flat products stocks growing as much as 4% in the month to the end of October, reaching 1.34 million mt, while long products stocks fell 3% from September to 779,977 mt, the BDS data showed.

— Diana Kinch

European domestic steel sections prices softened in the week to Nov. 24, as sources cited slow demand.

S&P Global Platts’ European medium sections price (category 1, S235 JR) was assessed at Eur985/mt delivered Nov. 24, down Eur15/mt on the week.

One Benelux-based distributor source cited a workable level for medium sections category 1 in the domestic market at Eur995/mt delivered, expecting that prices might move lower next week. The source also noted that demand was quiet as customers were expecting prices to soften further as the year-end approaches.

A second distributor source in the Benelux region cited slow demand but noted that prices were stable on the week at Eur970-Eur980/mt delivered for medium sections category 1.

The source told Platts that mills were planning to increase prices for the second half of December order amid high energy costs, strengthening scrap and strong order books.

“In Belgium, prices are not going down. Also, for rebars and wire rods, big players are placing big orders,” he told S&P Global Platts. For orders placed at the beginning of December, shipments will be made in January, he told Platts. There is a bottleneck for transportation, which is currently a big issue in the market, he said, adding that the steel industry does not pay the best rates for transportation, so truck drivers prefer to take shipments for other products.

In Northern Europe, the S&P Global Platts November assessment for domestic shredded scrap was at Eur410/mt delivered Nov. 10, up from Eur380/mt in October.

Meanwhile, domestic rebar prices in Northwest Europe also softened on the week. Platts assessed TSI Northwest Europe Rebar at Eur790/mt ex-works Nov. 24, down $5/mt on the week.

One distributor source cited tradable levels for domestic rebars at Eur805/mt delivered.

One Italian mill source put mill offers for rebars to Germany at Eur800/mt delivered, noting that demand was quiet.

One seller source also cited workable levels for rebars in the Northwest European domestic market at Eur810/mt delivered.

— Rabia Arif, Staff

Asian hot-rolled coil prices rose for the first time in two weeks amid a strong rally in the Chinese market led by raw materials, which saw higher offers in the regional market, while buyers were waiting for a clearer market trend.

S&P Global Platts assessed SS400 HRC of 3 mm thickness at $765/mt FOB China Nov. 24, up $5/mt on the day. On a CFR Southeast Asia basis, the same grade of coil was assessed at $771/mt, up $3/mt on the day.

The Chinese spot market climbed on the day, driven by a strong futures market led by raw materials including coal and iron ore, amid reports that some mills would resume production from December after reaching the yearly output control targets.

One eastern China mill increased the SS400 HRC offer by $10/mt on the day to $800/mt FOB, while the offer level for a northern Chinese mill was heard at $780/mt FOB.

“After the domestic market corrected downward sharply, this round of price rebound might be more sustained,” a Chinese trader said. “Offers were all up, as futures surged and mills saw improved sales today,” a second trader said.

Some offers for Chinese SS400 were heard at $795-$805/mt CFR for January to February shipment. Buyers were heard waiting on the sidelines assessing the sudden rise in the Chinese market.

Platts assessed SAE1006 HRC at $815/mt FOB China, up $5/mt on the day. On a CFR Southeast Asia basis, the same grade of coil was assessed at $808/mt, up $5/mt over the same period.

In Vietnam, some low offers heard previously were absent on the day, due to the expectation of higher tradable levels for Chinese mills for SAE1006 HRC and an unclear market outlook. “The offer-bid spread is wide as … [the buyer] might be unable to secure SAE coils from Chinese mills below $830/mt CFR today,” a Vietnam-based trader said.

Some market sources in South Korea heard a major Chinese export mill suspend its offer to the market due to the strong rally seen in the Chinese market for both raw materials and steel.

In Shanghai, the spot price of Q235 5.5 mm HRC was assessed at Yuan 4,770/mt ($747/mt) ex-stock, including value added tax, up Yuan 95/mt on the day. The assessment had been moving lower since Oct. 20, falling more than Yuan 1,000/mt from Yuan 5,800/mt on Oct. 19.

The most actively traded January 2022 HRC contract on the Shanghai Futures Exchange closed at Yuan 4,599/mt, up Yuan 176/mt, or 4%, on the day.

Separately, Platts assessed Q235/SS400 grade 12-25 mm thick plate, or equivalent, at $840/mt CFR East Asia, down $4/mt on the week. The assessment was normalized to Dangjin port in South Korea.

Offers from Chinese mills were heard at $825-$875/mt FOB, but CFR offers were absent due to the lack of buying interest with the buyers’ indications far below the tradable level, a Chinese trader said.

Domestic prices of the same grade of material were at Yuan 5,060/mt ex-stock Shanghai, including value-added tax, down Yuan 10/mt week on week.

— Staff, Ashima Tyagi

Mardi, le tribunal de l’entreprise de Liège a validé le plan de restructuration proposé par Liberty Steel, évitant au sidérurgiste la liquidation. Une bonne nouvelle pour Dudelange.

Liberty Steel fait toujours face à d’importantes difficultés financières depuis la faillite de son principal créancier, Greensill. À Liège, la situation était devenue tendue avec les travailleurs des différents sites.

Le soulagement est venu du tribunal qui a accepté, mardi, la proposition de restructuration financière du sidérurgiste. Ce dernier va créer une nouvelle société avec un client industriel qui va devenir un partenaire dans le cadre d’une joint-venture avec la Sogepa (l’équivalent de la SNCI). Seule ombre au tableau: le plan prévoit la suppression de 90 emplois, «surtout administratifs», selon des sources syndicales. Initialement, ce plan prévoyait la suppression de 153 personnes. Ce partenariat à trois devrait maintenir l’activité de Liberty Steel en région liégeoise et sauver 690 emplois sur les sites de production de Tilleur et Flémalle.

Pour le site de Dudelange, la décision du tribunal liégeois est une bonne nouvelle dans la mesure où les sites belges vont pouvoir continuer à fonctionner, et donc à approvisionner le site luxembourgeois. «C’est effectivement rassurant pour les travailleurs du site de Dudelange. Même s’il faut maintenant voir comment ce partenariat à trois va se construire et comment il va fonctionner en matière de volume», tempère Robert Fornieri, secrétaire général adjoint du LCGB.

Une production toujours très faible à Dudelange

À Dudelange, Liberty Steel n’a toujours pas retrouvé la pleine capacité de production que peuvent offrir sa main-d’œuvre et ses outils en raison de problèmes de liquidités pour acheter des matières premières. Une situation accentuée par la hausse des prix de l’énergie qui pénalise également la sidérurgie, grande consommatrice d’électricité. «Il y aura jusqu’à la fin de l’année une production assez faible sur le site de Liberty Steel à Dudelange et les prévisions pour 2022 tablent sur une reprise progressive assez lente», explique le syndicaliste.

Dès lundi, les syndicats et la direction doivent d’ailleurs se rencontrer à nouveau pour faire le point sur la situation et les perspectives à venir. Actuellement, le site produit seulement à 20% de ses capacités.

Rappelons tout de même que 30 à 40% des effectifs du site sont encore en chômage partiel. «On commence à atteindre les limites du chômage partiel puisque certains travailleurs vont devoir retourner en poste, car ils arrivent au plafond maximal du chômage partiel, qui est de 1.200 heures», pointe Robert Fornieri.

Depuis les déboires de GFG Alliance, maison mère de Liberty Steel, les syndicats luxembourgeois plaident pour un départ du sidérurgiste et l’arrivée d’un investisseur industriel avec le soutien de la SNCI. Interrogé sur la possibilité d’un scénario à trois comme en Belgique, Robert Fornieri a répondu par la négative. «On a toujours été contre. On a toujours plaidé pour un autre partenaire industriel, mais sans Liberty Steel. Malheureusement, Liberty Steel n’a aucune envie de lâcher Dudelange et l’on doit faire avec. Mais ils doivent alors apporter des garanties sur la pérennité du site et les volumes de production à venir», conclut le syndicaliste.

Écrit par Jeremy Zabatta

Publié The 24.11.2021

After reaching a historical high of 3.5 million mt in August, Turkish crude steel output reached the same high level again in October, notably up by 8% on year, with the support of newly added steel capacity, according to World Steel Association data Nov. 23.

Russian steel giant, Magnitogorsk Iron & Steel Works, resumed operation of its 2.3 million mt/year hot mill at MMK Metalurji in Turkey on Aug. 9, supporting Turkish crude steel output figures in recent months. Production of 200,000-260,000 mt of HRC is planned for 2021, with the plant due to reach full capacity in 2022.

Turkish mills’ crude steel output reached 33.3 million mt in the first ten months of the year, 14.2% higher on year, according to worldsteel.

If the increasing trend continues, the Turkish Steel Producers’ Association (TCUD) expects 2021 production to exceed 39 million mt, a record high, and notably higher than the 35.8 million mt produced in 2020 amid the COVID-19 pandemic.

New Turkish steel mill investments announced this year could carry annual Turkish steel output substantially above 40 million mt in the coming years, and Turkey could even become Europe’s largest steel producer, surpassing Germany, industry sources observed.

Germany produced 33.6 million mt of crude steel in the first ten months of 2021, up 15.1% on year, according to worldsteel.

— Cenk Can

Global crude steel production fell 10% year on year in October to 145.7 million mt, the third consecutive year-on-year drop as output in China dropped for the fifth straight month, weighing on volumes, according to World Steel Association data published Nov. 23.

However, the global production was 0.9% higher than September’s 17-month low.

Largest producer China produced 71.6 million mt of crude steel in October, down 22% year on year and falling 2.9% on the month to the lowest monthly volume since February 2019.

October was also the first month since March 2018 that China produced less than 50% of total global crude steel, at 49.14% of the total share.

“China is a clear player in the world market, and their reduced production has had a general impact on global production. I can’t believe that a [Chinese] production increase is possible, but I know some volumes are exported from China from what can’t be sold in the Chinese market. They’d like to support domestic prices,” a German mill source told S&P Global Platts.

The world’s second-largest steel producer India increased output in October by 2.4% year on year and 2.6% month on month to 9.8 million mt.

Production from Japan climbed 14% on the year and 1% from September to 8.2 million mt, while output from the US also rose 21% year on year and 2.8% month on month to 7.5 million mt.

Russia is estimated to have produced 6.1 million mt, up 0.5% year on year and a 3.4% month on month increase, while output from South Korea dropped 1% on the year to 5.8 million mt, although this was 6.2% higher than the previous month.

European production rises

Crude steel production in the whole of Europe, including the UK, climbed 6.8% year on year to 17.8 million mt, which was also up 5.2% month on month.

Germany, the largest European steel producer, produced 3.65 million mt, up 7% year on year and 9.4% month on month.

The European market has been contending with a surplus of steel as automobile manufacturers relinquish steel volumes on the back of falling demand from the ongoing semiconductor and chip shortage, resulting in reduced automobile production.

The return of large automotive orders has resulted in speedier delivery from mills for as early as December — two months earlier than expected.

Sources have expressed their concern about ramping up production amid the ongoing auto demand crisis. In response to this, some producers were heard to temporarily suspend their galvanizing lines until there is further clarity on real European demand for steel.

“I don’t know what to think of mills ramping up production. It’s risky, but perhaps they want to catch as much volume as possible before there is a real collapse,” a UK trading source told Platts.

Turkey, Brazil increase output

Meanwhile, Turkey produced 3.5 million mt, up 8% on the year and 4.9% higher than September’s volume.

Brazil’s estimated output rose 10% year on year to 3.15 million mt, which was down 3.2% from the previous month, while Iran’s estimated production fell 15% on the year to 2.2 million mt, although climbed 75% month on month.

Iron produced in blast furnaces worldwide in October amounted to 100.9 million mt, down almost 12% year on year and 1.4% lower than the previous month.

Production of direct reduced iron climbed 9.5% year on year to 9.1 million mt in October, which was also 3.5% higher on the month.

The data released covers the 64 countries that report to worldsteel, accounting for around 98% of the world’s crude steel production.

— Jacqueline Holman, Amanda Flint

As European mills are suffering from skyrocketing energy costs, the outlook for carbon-free steelmaking appears troubled.

For an annual output of 42 million tonnes, German mills use approximately 25 terawatt hours (TWh) of electricity. Around two thirds of steel output comes via the blast furnace/oxygen converter route, which consumes some 400 kilowatt hours (KWh) per tonne of steel produced. The electric arc furnace route has a higher power consumption, at 530 KWh per tonne, according to a dossier issued by the German economy ministry.

The current plans and pledges of the country’s steel industry envisage that steelmaking, along with the production of electricity needed in the process, will be based entirely on hydrogen by mid-century. But this aim requires a power consumption of 130 TWh – more than five times the amount used at present, Kallanish learns from industry federation WV Stahl.

The lion’s share of this volume, 112 TWh/year, will be needed for electrolysis for the generation of 2.2 million tonnes of green hydrogen, mostly used in direct iron reduction. Under this scenario, the scrap-based EAF route is the lesser consumer of electricity, and will take only around 15 TWh, assuming that in future the route still accounts for one third of national output.  

2021 has seen a massive increase of electricity prices in various European countries (see separate story). Compared to October 2020, the price per KWh went up from some €0.04 to more than €0.13, and is expected to climb further.

For the calculation of steel production costs, this means a year-on-year increase from €16 to €52 ($18-58) per tonne on the oxygen route, and from €21 to €69 on the EAF route. It must be noted that oxygen-route integrated mills, by way of co-generation and combined cycles, generate a large share of their power demand themselves, while most EAF mills do not have this synergy.

Christian Koehl Germany

Higher inventories than in the previous two years will moderate iron ore prices in 2022, but cost inflation – including shipping rates and environmental compliance – will limit downside risks in the coming years, says Fitch Ratings.

The credit rating agency has cut its 2022 iron ore price assumption to $90/tonne from $100/t cfr China for 62% Fe fines. “We expect the iron ore market to be more balanced in 2022 following a large deficit in 2021,” it says in a note sent to Kallanish.

For hard coking coal, the agency has revised up its price assumption for 2022 to $160/t from $135/t fob Australia. Prices will moderate from current levels due to lower demand from China, driven by the government-induced decline in steel production and winter season curbs. “However, supply is likely to remain disrupted, while there are some pockets of growing demand, including India, which support our higher-than-previously expected short-term assumption,” Fitch observes.

Nickel is meanwhile seen at $16,000/t LME spot in 2022 versus the previous $15,000/t amid residual effects of low stocks and higher prices in 2021. But in the longer term there is the risk of increased supply from Indonesia, which could potentially lead to small market surpluses.

Adam Smith Germany