Category: Latest Updates

European HDG prices were stable Oct. 27, with sources seeing a bottoming in current prices, and expectations of further stabilization. Market participants from across Europe are attending the BlechExpo fair in Stuttgart, Germany, to make sense of fluctuating market dynamics.

A European mill source said automotive manufacturers had relinquished HDG volumes as a lack of demand from the ongoing semiconductor and chip shortage restricts automotive production.

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

A deal for 300 mt was heard for Eur1,250/mt ex-works Ruhr for December delivery, and another subsequent deal heard for Eur1,200/mt ex-works Ruhr.

The European mill source expected greater clarity on the semiconductor and chip shortage to come from the BlechExpo fair, though the market would mostly need to rely on the situation in China and Vietnam, where the bulk of those components are produced.

“Everyone is expecting to know more at the fair. Volvo has no problem with production apparently, we are hoping they will take HDG again,” the mill source told Platts. “But no one knows when this will happen, has to come from China, Vietnam – we are relying on this.”

The source was confident, however, that the shortage would be short-term, and did not expect the influx of rejected automotive material to have any severe consequences on HDG prices.

The looming reality of higher energy costs is likely to raise prices in the near term, as mills struggle to contend with higher production costs, particularly along the EAF route.

The supply situation is very imbalanced sources have pointed out, with plenty more availability on HRC compared to critically low stocks of CRC and HDG, though returning auto volumes could ease this supply tension slightly.

— Amanda Flint

Global crude steel production in September dropped 8.9% year on year to 144.4 million mt, the second consecutive year-on-year drop as lower output in China weighed on the volumes, according to World Steel Association data published Oct. 26.

China produced 73.8 million mt of crude steel in September, down 21.2% year on year, although India, the second-largest producer, saw output rise 7.2% to 9.5 million mt.

Japan’s production rose 25.6% to 8.1 million mt and output from the US climbed 22% to 7.3 million mt.

Russia is estimated to have produced 5.9 million mt, down 2.2% year on year, while output from South Korea dropped 5% to 5.5 million mt and Iran’s estimated production fell 51.4% to 1.3 million mt.

Germany, the largest European steel producer, produced 3.3 million mt, up 10.7% year on year, while Turkey produced 3.3 million mt, up 2.4% and Brazil’s output rose 15.3% to 3.1 million mt.

Iron produced in blast furnaces worldwide in September amounted to 102.50 million mt from 110.20 million mt in August, while production of direct reduced iron dropped to 7.30 million mt in September from 7.60 million mt in August, the worldsteel data showed.

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

— Annalisa Villa

As the intelligent control of material flows has become an enormously demanding task, thyssenkrupp Materials Processing says it has come up with a package coordinating the entire supply chain.

At its core is a data dashboard that provides an overview of planning and call-off order data for the customer and its various suppliers at all times, Kallanish learns from the company.

The issue has become increasingly dire over recent months, especially with carmakers stopping and restarting their assembly lines amid a rapid post-Covid-19-lockdown demand rebound followed by semiconductor shortage-induced stoppages.

The “Control Tower”, as the new service is called, enables the company to work dynamically and intelligently with partners in a network, to mitigate supply chain risks. As with a control tower at an airport, all the information flows together into one place, on the dashboard, the firm explains. The company can now react at an early stage and find alternatives if, for example, a supplier of input materials experiences bottlenecks, says Thomas Wölk, head of Business Development at tk Materials Processing Europe.

Another advantage is that small quantities can be grouped together, enabling customers to plan more in line with demand and thus avoid tying up a lot of capital, the company points out.

Christian Koehl Germany

Swedish steelmaker SSAB said Oct. 25 that there is “great interest” from customers for low-emissions steel, while bringing on more supplies will need developments in power transmission, permitting and supportive steel market policies.

SSAB said it continues to study accelerating its offering of commercial low-emissions supplies, currently targeted by 2026, in a quarterly report. The move is contingent on electric arc furnaces (EAFs) being installed at Oxelosund in southern Sweden and at its other Scandinavian sites in the future, the company said.

“We are exploring the prerequisites to convert to fossil-free production earlier than the original plan,” SSAB said. “However, this requires that society can ensure power transmission, effective permit processes and a level playing field within Europe and beyond.”

SSAB brought on Mercedes-Benz in the third quarter, among new partnerships with steel users to demonstrate lower emissions through the steel value chain. Truck and bus manufacturer Volvo Group in Q3 successfully used steel plate rolled at the Oxelosund blast furnace works from hydrogen-based hot-briquetted iron sourced from the HYBRIT pilot plant in Lulea, to demonstrate use in a mining haulage vehicle. SSAB is a partner in HYBRIT, which is using renewable power for electrolysis to produce hydrogen, compared with typical direct reduction iron plants which use natural gas.

Heating cold ferrous scrap and HBI supply has hampered usage rates for steelmaking through the blast furnace’s basic oxygen furnace, while some companies are now trying to optimize use of scrap and HBI with iron ore in the blast furnace to cut down on coke and other fuel emissions.

“SSAB’s fossil-free steel is based on HYBRIT technology, where the coal and coke used in traditional ore-based steelmaking is replaced with fossil free electricity and hydrogen,” it said. “By 2026, SSAB plans to supply the market with fossil-free steel at a commercial scale following the replacement of the blast furnaces in Oxelosund with electric arc furnaces.”

In the meantime, SSAB said the industry’s sustainability can be enhanced by using SSAB’s high-strength steel. In 2021, this overall saving may correspond to 10 million mt/year of CO2 during steel use, split between SSAB EcoUpgraded products with 80% and premium automotive steels with 20%.

SSAB, which relies 100% on use of iron ore pellets rather than sintered ore and lump, saw iron ore purchase pricing double from Q3 2020, and rise further from Q2, as market pellet premiums rose to record levels.

Average iron ore pellet prices in Q3 rose by 9% in US dollar terms compared with Q2, it said. SSAB said it buys pellets from LKAB and Severstal.

SSAB’s coking coal purchasing prices rose 31% on the quarter in in Q3, and by 64% from Q3 2020.

SSAB sourced coking coal from Australia, the US and Canada, usually through annual supply contracts with monthly pricing, the company said in its report.

— Hector Forster

European steelmaker Tata Steel has installed a 30-MW generator at its Port Talbot plant in South Wales to improve environmental efficiency and reduce carbon emissions, it said Oct. 25.

The generator will provide a number of environmental benefits, it said, as more process gases from the blast furnaces, steelmaking plant and coke ovens could be converted into useful energy, reducing emissions from external power generation by around 43,800 mt/year of CO2.

In addition, the installation will reduce Tata’s energy bill by millions of pounds per year at a time when rising energy prices are a major concern for steelmakers.

Gas and power prices have risen up to five times higher than a year ago, with heavy industries that are most exposed to such price spikes, including some steelmakers, being forced to react by temporarily shutting down plants.

Tata’s new generator is part of its wider GBP37 million ($51 million) investment in the Port Talbot site’s power station and was installed in the new turbine hall.

The power plant uses process gases to heat water into steam to drive a turbine, which in turn drives an electrical rotor to generate electricity, Tata Steel’s Project Manager Guy Simms explained.

“We have a number of these ‘turbo-alternators’ but not enough to use all the steam we can create. This latest addition, energy, however, will make a step-change to our energy-generation capacity. We’ve been hot commissioning the plant and have run it up to its capacity of 30 MW,” Simms added.

In September, climate research house Industry Tracker called on steel companies to rapidly shift their business models to reach net zero, saying that the European steel industry has less than 26% (12%-35%) of its carbon budget remaining.

— Jacqueline Holman

German steel inventory levels for long and flat steel at stockholders grew to the highest level since August 2020 as stocks for both product groups increased in September, according to data provided by German stockholder association BDS Oct. 25.

Flat steel stocks rose for the third consecutive month to 1.29 million mt to the highest level since August 2020. The month-on-month change stood at 2.5%, while the year-on-year change was slightly down 0.73%.

Stocks for long steel increased to 804,792 mt, up 2.1% month on month and 3.6% year on year.

The average for third-quarter 2021 was at 1.24 million mt for flat steel and 794,857 mt for long steel, showing that, despite recent restocking, stock levels remain at low levels compared with inventories generally seen pre-pandemic.

Sales of both product groups rose as well in September after a sluggish August. Flat steel sales increased to 7.2% month on month to 528,408 mt, down 2.6% year on year.

Sales of rebar increased 2.4% month on month to 268,828 mt, seeing a year on year 9.98% decrease.

September 2020 was marked by a rapid comeback of demand following months of pandemic-related shutdowns and a depressed market.

Though sources said that in September this year the usual end-of-summer demand pickup did not happen, particularly for flat steel, the figures for September show that there has been a considerable increase in sales volumes for stockholders.

What had been on the downside were steel prices during that month. The daily Platts hot-rolled coil EXW Ruhr assessment dropped Eur75/mt over the course of that month, while the weekly rebar North European DDP assessment fell Eur45/mt to Eur790/mt Sept. 29. Rebar prices have since been volatile but have recovered to Eur815/mt DDP Northwest Europe Oct. 13.

The hot-rolled coil assessment, however, continued its downward trend and fell to Eur1,022/mt EXW Ruhr Oct. 22.

— Laura Varriale

The extreme increase in energy prices seen in recent months means that many medium-sized steel and metal processing firms will no longer be able to cover their costs, warns their federation, WSM.

The exchange electricity price for procurement in 2022 has risen since October 2020 from around €40/MWh ($46.50) to over €128/MWh (base load), if taking the prices of the EEX stock exchange at day-end. Prices of €400 reported earlier were possibly only peak bids at certain hours during the day. Gas prices in the same period have risen from less than €30/MWh to around €130/MWh, with previous daily peaks of €160/MWh. 

WSM – Wirtschaftverband Stahl- und Metallverarveitung – represents mostly small and medium-sized companies, and emphasises that this segment is suffering, in particular, from rough economic spells.

On average, the industry achieves a profit margin of 1.5% (2019), Kallanish hears from WSM. Even with the average energy cost share of 2.1%, “it is clear even to school kids that the companies will run into considerable losses from 2022 onwards”, the federation states. “Experience shows that it is extremely difficult to pass on the costs to customers.”

Within the German economy, the segment of small and medium enterprises, with many so-called “hidden champions”, has a special reputation as the backbone of industry. Hence, the cost surge will affect family businesses, which have often been the largest employer in their regions for years. “In contrast to listed groups, SMEs still maintain close relationships with their employees; they take on social and societal responsibilities,” WSM notes.

Christian Koehl Germany

Creos Deutschland, Encevo, GazelEnergie, GRTgaz, H2V, Hydrogène de France, Stahl-Holding-Saar GmbH et Steag GmbH se sont réunis pour former un groupement européen d’intérêt économique (GEIE): «Grande Region Hydrogen».

Ce regroupement a pour objectif de produire jusqu’à 61.000 tonnes d’hydrogène par an.

Une ambition nécessitant plus de 600 millions d’euros pour les installations de production et les infrastructures de transport afin de développer un écosystème devant permettre de réduire les émissions de CO2 de plus de 980.000 tonnes/an d’ici 2030.

Une première étape avant d’atteindre la neutralité carbone d’ici 2050.

United States Trade Representative Katherine Tai, European Commissioner for Trade Valdis Dombrovskis, and US Commerce Department Secretary Gina Raimondo met Oct. 22 to advance negotiations regarding the US Section 232 tariffs on steel and aluminum as the parties face an end-November deadline to reach a resolution.

Work on reaching an agreement continues, Dombrovskis said on Twitter following the meeting. The EU and US have agreed that a deal on steel and aluminum must benefit workers and producers on both sides, Tai said in a statement, also posted to Twitter.

The meeting comes as the G7 trade ministers gathered in London Oct. 22, with Raimondo joining the tariff discussion virtually.

In a joint statement following the G7 meeting, G7 trade ministers said the group affirmed the importance of the OECD’s Global Forum on Steel Excess Capacity to help address the issue of global steel excess capacity in a multilateral framework.

The GFSEC was established in late 2016 at the instruction of leaders from the G20 group of wealthiest nations. The forum aims to gather information and report on the evolution of steel supply and demand conditions, steel production capacity, and government policies that lead to global overcapacity, including subsidies.

“We will continue to support and work with the OECD to build on their excellent work undertaken to date, including a continued focus on the analysis of the incidence and magnitude of market-distorting practices and the impacts these may have on issues such as creating and maintaining overcapacity,” the G7 joint statement reads. “We will step up our efforts in countering these practices, through appropriate tools and levers, and to develop stronger international rules on practices such as market-distorting industrial subsidies and trade-distorting actions by state enterprises.”

The US and EU in May agreed not to escalate the dispute over the metals tariffs for six months in order to negotiate a settlement, with the truce set to end in November.

Former President Donald Trump applied a 25% import tariff on steel products and 10% tariff on aluminum in March 2018 using a national security justification under Section 232 of the Trade Expansion Act of 1962.

— Justine Coyne

The automotive sector, currently slowed down by a lack of semiconductor chips, will flourish again next year, believes voestalpine chief executive Herbert Eibensteiner.

“We are optimistic for next year, because at some point the vehicles have to be built,” he said on Thursday at the Gewinn, a finance industry trade fair in Vienna. Apart from the car sector, demand for voestalpine products is healthy in almost all customer segments, he is quoted as saying by Austria’s Industriemagazin. He is upbeat about the next two years, because of the catch-up effects that must and will occur, he said, citing international economic researchers.

While some raw material and energy prices are reaching record levels, counteracting effects are providing a balance, he noted, referring to the fall in iron ore prices versus the rise in coal prices.

The multitude of criteria affecting steel demand and prices is giving all players a hard time, and actually unnerves many customers, a manager at an Austrian service centre concurs.

A southern German coil buyer takes Eibensteiner’s optimism a step further, to a possibly critical point in time. “Once the chip supply gets going again, the conveyer belts might quickly restart at high speed,” and steel demand could see another leap upwards, he tells Kallanish.

Amid the unpredictable see-saw of variables, price offers vary widely, all players agree. While in the Benelux prices for hot rolled coil from northwest European mills are still seen above the historical threshold of €1,000/tonne ($1,164) ex-works, lower offers are reported from southern Germany and Austria.

Here, more influence on local prices is exerted by Eastern European mills with offers of as low as €850/t delivered. Prices for cold rolled coil as well as hot-dip galvanized coil from domestic sources do not go much beyond €1,150, if that. In the Benelux, however, these prices can reach towards or go above €1,200/t.

Christian Koehl Germany