Category: Latest Updates

European scrap prices are about to increase significantly as merchants are beginning to ask for €20-40/t hikes in Italy, France and Germany, depending on grade and availability, sources say. The market is being pushed by the latest scrap price increase announcements from large steelmakers for May.

One northern European steelmaker is said to be offering a month-on-month increase of €40/t ($48) for the high-quality grades of new arisings E8 and shredded E40, and a €30/t hike for lower, older grades. The tight supply of E8 and E40 in northern Europe, together with producers’ strong order books, are boosting the need for scrap. However, E8 and E40 grades are in high demand also in southern Europe and particularly in Italy.

Thanks to April’s high prices and fears of declines, many European scrap sellers sold as much as they could last month, with the result of depleting their stocks. This month in Italy, France and Germany E8 is seen reaching €410/t for the mixed grade and €440/t for the high grade. E40 is also forecast to go over the level of €400/t delivered, sources say.

Since scrap values started to increase this year, prices in European countries are aligning, Kallanish notes.

Natalia Capra France

Turkish cold roller and galvanizer Tatmetal has fully started its new 1.2 million mt tandem cold rolling mill supplied by Italian plant maker Danieli.

Danieli said the mill installed in Eregli, northern Turkey, was linked to an existing continuous pickling line.

The mill consists of five, six-high stands with 22,000-kN separating force to roll quality high-strength strip from 0.2 to 3.0 mm thick, up to 1,550-mm wide, with superior flatness correction capabilities, the company said.

With a capacity exceeding 1.5 million metric tons, Tatmetal processes steel grades such as commercial, deep drawing, extra deep drawing, low alloy, high strength steels, medium- and high-strength structural steels and enameling steel.

It also performs cut to length, slitting and roll forming operations in its steel service centers in line with customer requirements.

Tatmetal exports to more than 60 countries on six continents.

— Cenk Can

Prices of long products in Italy and Europe are expected to remain elevated until the end of the year at least, says Feralpi Group chief executive Giuseppe Pasini.

In a Siderweb on Tuesday, the executive noted he is not sure if prices will continue to rise, but he is convinced the current trend of high prices in the market will remain for the remainder of the year. Prices are set to continue being supported by international levels, as well as the ongoing demand recovery and good order books in the long products supply chain. “Some companies in our sector already have orders for Q1 2022,” Pasini noted.

According to Kallanish price indexes, northern European rebar prices have returned to the peak of €665/tonne ($799) ex-works base, previously touched in January. European longs suppliers have recently announced new increases, to push prices further up after relative stability in the first few months of 2021. In the Italian domestic market, the January 2021 peak has already been surpassed, with prices now at above €610/t ex-works base.

Emanuele Norsa Italy

Cognor says it could reduce billet sales if the trend continues of scrap prices increasing faster than basic oxygen furnace mill feedstocks, thereby making the Polish electric arc furnace-based steelmaker less competitive.

The firm produced 2.8% on-year less crude steel in the first quarter as all its meltshops were already running at full capacity, it says without providing tonnages. Consolidated shipments fell only 0.7%.

The feedstock cost position of EAF producers versus BOF mills remained positive, but there are signs of deterioration. “If the current trend which manifests itself with a faster increase of scrap metal price as compared to the increase of the mix of main input materials used by BOF manufacturers continues, Cognor may lose its competitive advantage at some point in time, which could result in a decline of sales of our billets,” the firm says in a report seen by Kallanish.

Conversion spreads grew considerably in Q1 due to the faster pace of billet and finished steel price growth versus scrap prices. This was further supported by lower prices for certain production components, as well as by lower consumption of various inputs as a result of completed efficiency investments. This was slightly offset by a 6.3% and 5.4% fall in scrap and finished steel shipments respectively, Cognor says.

First-quarter revenue rose 27% on-year to PLN 584.1 million ($155.1m), while Ebit soared 250% to PLN 66.77m and net profit hit a quarterly record PLN 45.9m versus only PLN 2.8m last year.

Cognor expects to be eligible for a total of PLN 15.2m CO2 emission rights compensation in 2021 based on the act adopted by the Polish parliament in 2019.

Adam Smith Germany

The UK has opened two new investigations into existing EU anti-dumping duties to determine if they are fit for purpose in the UK. These cover certain cold rolled flat steel products from China and Russia, as well as high fatigue performance (HFP) iron or steel concrete reinforcing bar and rod from China.

The Trade Remedies Investigations Directorate (TRID) will consider whether the duties are needed to offset dumping and if UK industry would be damaged if the duties were no longer applied.

“The initiation of these two new investigations means we now have 11 active transition reviews, with more to come. In every case our focus is on defending UK economic interests against unfair international trade practices,” TRID chief executive Oliver Griffiths says in a note seen by Kallanish.

The investigations will cover the period of 1 April 2020 to 31 March 2021. In order to assess injury, TRID will examine the period from 1 April 2017 to 31 March 2021.

TRID will shortly become an independent arms-length body of the Department of International Trade, as the Trade Bill has now become law.

Adam Smith Germany

Germany’s construction industry has expressed some concern that material shortages and price surges will cause interruptions to ongoing projects and hamper new projects.

According to industry federation Hauptverband der Deutschen Bauindustrie, companies are mostly concerned about steel and bitumen. But supply of wood and insulation materials has become critical, too, according to a rebar bending firm in central Germany. It notes that rebar in coils and wire mesh, especially, are scarce, and that prices for all products could inch up in May.

In fact, other distributors have already told Kallanish about hike attempts by mills that would lift the base price for rebar to €420-430/tonne ($507-519). Adding the size extra of €265, this could mean prices of slightly below €700/t delivered. Coils will fetch €20-30 more than bars, and base prices for wire mesh recently reached €540/t, with lead times of 5-6 weeks.

One western-based manager bemoans the missing opportunities of importing material from abroad, especially for coil and wire mesh. “It does not work for logistical reasons,” he explains. “You may get some smaller volumes by truck from Eastern Europe, but overseas transports by ship don’t work.”

Against this background, it is interesting to note that Kardemir is investing with the clear intention to produce more compact coils specifically for transport and container shipping. The Turkish steelmaker recently placed an order with SMS for key components of its wire rod mill. A new ring distribution system will serve to improve the packing density, with the outside diameter of the coils reduced from 1,080 to 1,040mm.

Christian Koehl Germany

US sheet pricing continues to creep up on the back of strong demand and still-limited supply, Kallanish learns from market sources. 

Kallanish raised its hot-rolled price Monday to $1,450-1,500/short ton and lifted its cold-rolled price to $1,625-1,675/st. All prices are ex-works, domestic mill. 

A source at one top-tier mill says the demand picture is likely to remain tight until well into the summer. 

“The market is still very much in demand for steel, and customers are beginning to focus their eyes on July, which appears to be a very strong demand month,” he says. “Many OEMs have cancelled their downtime around the Fourth of July due to the need to make more goods.”

Auto producers, in particular, will be in catch-up mode due to the ongoing semiconductor shortage. Several market sources have pointed out that the short-term losses in auto will likely mean a longer build season and cancelled vacations through year-end.

Dan Hilliard USA

US raw steel capability utilization rose the week ended May 1, to 78.7% from 78.4% the previous week, the American Iron and Steel Institute reported May 3.

Production increased by 0.4% to 1.788 million st during the week ending May 1, up from 1.781 million st the previous week, according to the data.

Production in the week ended May 1 was up 44.4% compared to the same week a year earlier, when capability utilization was at 55.2% and production totaled 1.238 million st.

Adjusted year-to-date production through May 1 totaled 30.315 million st, with a capability utilization rate of 77.4%. The total is 4% higher than the 29.143 million st produced during the same period last year, when the utilization rate was 73.6%.

Last week’s production totaled 160,000 st in the Northeast, 616,000 st in the Great Lakes region, 185,000 st in the Midwest, 756,000 st in the Southern district and 71,000 st in the Western region.

The tonnage data is estimated, compiled from weekly production data provided by 50% of domestic producers combined with monthly production data for the remainder.

— Ingrid Lexova

Steel distribution group Klöckner & Co, which in the first quarter benefited massively from strong demand and prices, attributes its good performance also to progress with digitalisation. Digital sales share in overall sales increased by ten percentage points year-on-year to over 45%, compared with 35% in the first quarter of 2020, Kallanish hears.

Kloeckner Assistant, an AI-driven software application for automated processing of quote requests and orders, has in just one year automatically processed around half a billion euros ($605 million) in sales. About €200m was in the first quarter of 2021 alone. Together with the Klöckner & Co online shops, which now have over 65,000 registered customers and over half a million annual log-ins, the tools have digitalised large sections of Klöckner’s sales processes.

Xom Materials, the independent online steel market platform initiated by Klöckner, made progress especially with its eProcurement solution, which it rolled out in the USA and Latin America during Q1. Gross merchandise volume (GMV) – the value of all products sold on the platform – came to around €150m in Q1, Klöckner states.

The Surtsey project launched by the company last year to accelerate its digital transformation generated restructuring effects to the value of around €20m in Q1. It is expected to contribute over €100m to earnings in the full year. “This allows us to benefit even more strongly from the positive market environment,” says outgoing ceo Gisbert Rühl.

Christian Koehl Germany

French pipe maker Vallourec is registering better performance in its target markets. It has therefore announced an improved 2021 outlook compared to the negative outlook published in its 2020 financial earnings report in February.

The company expects higher sales volumes and prices this year for OCTG in North America, and “a higher contribution from the iron ore mine in Brazil”, it says in a note. The firm adds that it targets Ebitda of €350-400 million ($421-481m) in 2021.

Vallourec’s 2020 revenue was strongly affected by the pandemic impact on oil demand worldwide. Last year the pipemaker recorded revenue of €3,242 million ($3,920m), down 22% compared with 2019, as well as a 30% drop in shipments (see Kallanish 18 February).

Natalia Capra France