Category: Latest Updates

CMC Poland anticipates healthy sales volumes driven by growing demand from construction and industrial end-use markets, while margins should grow sequentially following price hikes in the February quarter, says US parent CMC.

CMC Poland’s deliveries declined 7% on-year in the second fiscal quarter through February to 353,000 short tons. Merchant and other products shipments rose 17% to 275,000st, but rebar sales slumped 46% to 78,000st, Kallanish notes.

Demand from construction and industrial end markets remained healthy, but deliveries declined due to the high base effect, as the previous year’s quarter saw “unusually high volumes” being shipped, CMS says. The reduction in rebar shipments from a year ago reflects a shift in product mix to capitalise on market conditions, rather than any softening of market conditions, it adds.

Average sales price surged to $532/short ton versus $449/st a year earlier, but cost of ferrous scrap utilised also grew to $328/st from $251/st. This meant metal margin was $204/st versus $198/st a year earlier.

February-quarter net sales rose 12% on-year to $202.1 million, while adjusted Ebitda grew 20% to $16.1m. Profitability improved thanks to the expansion in margin over scrap, as well as the impact of selling lower-cost inventory amid rising steel prices.

In the six months through February CMC Poland’s shipments thus grew 4% on-year to 750,000st. Net sales grew 15% to $396.7m, with adjusted Ebitda up 23% to $30.6m.

The Polish mill currently produces up to 1.3 million st/year of rebar, wire rod and merchant bar. The firm plans to add by August 200,000 st/year of long steel production capacity and absorb excess melting capacity.

Adam Smith Germany

The entire supply chain of raw materials has to be taken into account when producing “green steel”, says Sebastian Kreft of Metalshub, a Düsseldorf-based e-commerce trading platform for ferroallyos.

Speaking at the recent “Zukunft Stahl” conference organised by German business daily Handelsblatt, Kreft bemoaned the opacity of the global supply chain with respect to the reliability of sources. In his presentation he said that 90% of the world’s manganese production takes place in China, with manganese ore bought mostly from Africa. But “mills in Europe buy mostly via traders, and have no idea what emissions occurred in the production,” Kallanish heard him say at the event.

Another example is that South Africa, a typical mining country, operates on electricity mainly from coal power plants. Against that, Finland, with its water-based hydropower, accrues only a third of the emissions South Africa does. But European mills do not evaluate and honour that. However, “they will have to in view of a looming supply chain law”, he admonished.

Cloud-based digitalisation would lay the basis that provides audits of the suppliers, and all the documents needed for shipping companies, financing partners, and traders along the chain, Kreft said.

Christian Koehl Germany

Weather disruptions took their toll on Germany’s crude steel production in February as output dropped 10% year on year, according to data published by German steel federation WV Stahl March 22.

The drop to 3.1 million mt in February put an end to the continuous production increase following ramp-up efforts by German mills once steel demand came back in mid-2020.

WV Stahl said the recovery of German steel production remains “volatile.”

The drop in crude steel production could be seen in blast furnace as well as electric arc furnace production. BF-based production decreased 9.9% year on year to 2.1 million mt, while EAF-based output fell 11.3% on year to 991,000 mt. Pig iron production fell 8.4% to 1.9 million mt.

Hot-rolled production fell 5.9% year on year to 2.8 million mt, the data showed.

German mills were severely hampered by adverse weather in February with steelmaker Salzgitter declaring force majeure in February. Severe disruptions caused rail tracks to block, truck deliveries on hazardous goods temporarily banned and waterways disrupted as well.

“It was two weeks of mills having to produce at minimum level because materials such as gases couldn’t get delivered,” a German market participant said.

“This led to worsening backlogs, and those were already long,” the source said, adding that normally mills would be able to make up for performance issues, but because the material shortage has continued to mount, this was no longer possible.

“I do expect a bounce-back in March however,” the source added.

Lead times across European mills were currently in August as mills try to meet demand. The market usually has an eight- to 12-week delivery time.

The persistent material shortage boosted Europe’s steel price rally, with the Platts hot-rolled-coil assessment for EXW Ruhr close to reaching its all-time high at Eur795/mt EXW Ruhr March 19, Eur5/mt below its record seen in June 2008.

— Laura Varriale

The Turkish long steel market started the week subdued as Turkish lira and stock markets lost more than 10% value on March 22, following the dismissal of Central Bank governor with a presidential decree on March 20.

The Central Bank raised interest rates by 200 basis points to 19% on March 18, 100 basis points higher than market expectations, as Platts has reported.

This decision drew a reaction from Turkish President Recep Tayyip Erdogan, who objects to interest rate hikes. He dismissed the bank’s governor, Naci Agbal, and appointed Sahap Kavcioglu, a professor and former parliamentarian of Erdogan’s ruling AK party, as the new governor with the weekend decree.

Kavcioglu became the fourth central bank governor in the last five years. These changes are harming market stability expectations and causing sharp currency fluctuations, sources said.

Turkish lira was trading in a wide range of Lira 7.85-7.95/1 on March 22 afternoon, compared to 7.28-7.32 range seen on Friday, March 19.

The Turkish long steel market started the week silent in this sentiment, as market participants generally preferred to monitor the currency fluctuations before making new purchases.

The depreciation in Turkish lira is expected to pull up lira-denominated domestic rebar list prices notably in Turkey in the coming days, which could restrict end-users demand, although mills’ list prices declined on a dollar basis on March 22, amid lower scrap costs and slow demand.

Major Turkish long steel producer Icdas pulled up its lira-denominated domestic rebar list prices by a notable Lira 280/mt in this sentiment. The company started offering 12-32 mm rebar at Lira 5,790/mt ex-works Biga on March 22, including 18% value-added tax (VAT), which equated to $621/mt ex-works, excluding VAT, around $20/mt lower on a dollar basis week on week. The exchange rate was Lira 7.90/$1.

Icdas’ offer prices for 12-32 mm rebar in the Istanbul region were around $10/mt higher at Lira 5,870/mt ($630/mt) ex-works.

The company’s 10 mm rebar list price was at Lira 5,910/mt ex-works and the 8 mm rebar price was at Lira 5,950/mt ex-works in the Istanbul region, including VAT March 22.

Bastug Metalurji, based in Osmaniye, southern Turkey, also opened its lira-denominated domestic rebar order book March 22. But instead of announcing its lira-based list prices, the company said their 12-32 mm domestic rebar list price will be calculated from the daily currency exchange rate, equating to $620/mt ex-works plus 8% value-added tax (VAT), the company informed Platts.

The company’s new list price was also reflecting a roughly $20/mt week on-week decline on lower scrap prices and slow demand.

Other Turkish steel producers could also join this move in the coming days, taking into account the currency fluctuations, demand conditions and scrap pricing, sources said.

— Cenk Can

European hot-rolled steel coil prices were heard to be at their highest levels since the peak of the financial crisis in June 2008, when prices rallied to Eur800/mt ex-works Ruhr.

As the steel market grapples with unprecedented steel shortages, long lead times from mills, and tightening imports, prices exceeding Eur800/mt have been highly anticipated, sources told S&P Global Platts.

Customers have become more agreeable to accepting higher prices with few buying outlets available for material, with those caught between mill and buyer finding deals exceptionally hard to finalize because of limited credit options.

“I see real difficulty for customers, service centers, and distributors to finance deals,” a German distributor said, adding “you need a higher credit limit, and that’s the problem for many participants in the supply chain. Our insurance companies don’t give enough credit limit[s] for our use. We agree [to] the price and material, but we cannot do the contracts with end-users.”

Mills were also heard to still be holding back offers because of increasingly large backlogs and extended lead times, with second-quarter delivery times now extending into early Q4.

“Mills don’t take new orders — they are so delayed with their order book that they’re simply not able to offer,” the same German distributor said.

Meanwhile, in the Italian market, prices were also encroaching on Eur800/mt territory, with tradable values heard at Eur810/mt EXW Italy.

An Italian service center said he expected prices to move “little by little” to the new asking prices ArcelorMittal announced last week at Eur850/mt EXW.

— Amanda Flint

Scrap futures contracts on the London Metal Exchange remained at largely stable levels over the week to March 18, as physical spot prices continued to fall on the week.

S&P Global Platts assessed the March scrap contract down $1/mt on the week to $439.50/mt on March 18, while the April contract increased $3/mt to $452/mt. The May contract also rose, up $2/mt to $458/mt, with June up $4.50/mt to $457.50/mt.

The forward curve remained in a contango structure for March-May contracts over the week. This suggests that futures traders still expect near-term strength in the physical market, despite losses in the physical spot market over the week.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) dropped $15/mt on the week to $425/mt CFR Turkey March 18, as mills largely held back from buying, attempting to pick off lower-priced cargoes amid news of multiple offers in the market.

“From what I see, no buyer is rushing at all,” an EU trading source said, citing an indicative tradable value for premium HMS 1/2 (80:20) at $425/mt CFR, with down to $420/mt CFR also considered possible.

Weekly scrap futures trading volumes over the week to March 18 totaled 55,740 mt, sharply down from 125,850 mt recorded last week.

Rebar futures saw minor losses on the week for March-April contracts, with the forward curve moving from a slight near-term backwardation into a soft contango over March to May contracts.

Platts assessed the March contract down $3/mt on the week to $629.50/mt March 18, while the April rebar contract decreased 50 cents/mt to $630/mt. The May contract rose $3/mt to $633.50/mt, while June was stable at $631/mt.

The Turkish physical rebar export prices also fell amid soft demand, although some Turkish mills tried to maintain elevated offer levels. Platts assessment of Turkish exported rebar fell $18/mt over the week to $619.50/mt FOB Turkey March 18.

Rebar futures weekly trading volumes this week on the London Metal Exchange totaled 19,400 mt, slightly down from the 22,020 mt last week.

The outright spread between Turkish exported rebar and import scrap was down $3/mt on the week to $194.50/mt March 18.

— Viral Shah

Production at Russia’s Red October (Krasny Oktyabr) increased in January, the company says. It amounted to 34,093 tonnes, up by 29.7% on-year.

In December stainless steel output was 24,400t, less 0.7% on-year (see Kallanish passim).

Red October managed not only to maintain its leading position in the first month of the year, but also to increase its share of stainless steel production in Russia to 38.9%, according to national special steel association USSA.

The Volgograd-based steelmaker produced 207,990t of stainless steel in 2020, up by 2% on-year.

Last year, the plant reduced consumption of gas by 30% with a complete overhaul of the reheating furnace at the large sections mill (see Kallanish passim).

Earlier, Red October upgraded the wet gas cleaning system at the arc steel-making furnace No.5 and the roller furnace in the thin-sheet rolling shop. Metso Lindemann shears were put into operation in the scrap shop after renovation, and a new Sennebogen material handler was purchased for more efficient unloading and loading of scrap.

Svetoslav Abrossimov Bulgaria

ISTA, the International Steel Traders Association, has sent a letter to the European Commission to express its opposition to the potential extension of safeguard measures beyond June 2021.

In the letter seen by Kallanish the association stressed that for the moment only 12 European countries called for the measures to be extended, less than half of the overall member states of the EU.

A key point raised by the association is the shortage of supply from domestic mills within the EU. “ISTA points out that in the months from July 2020 to March 2021 there have been long waiting periods/delivery times for the supply of steel from EU mills. ISTA reports that due to technical problems, breakdown of furnaces and unpredicted repairs, some EU mills cannot supply their long-standing customers on time. A major EU mill has notified end-users that they cannot supply scheduled tonnages for Quarters 3 and 4 2021,” the letter said.

The shortage issue is being exacerbated by safeguard measures in key areas such as automotive coil products, ISTA said.

A special attention was drawn by ISTA to the issue of stainless steel and the shortage registered in that market. “Due to uncertainty caused by pending anti-dumping investigations against India and Indonesia together with safeguard quotas, members estimate that supply is some 800,000 tonnes short nowithstanding price increases of 30-35%,” the letter continues. Extreme price volatility is also set to be reduced without safeguard measures.

“ISTA believes a ‘safeguard holiday’ for perhaps 12 months should be contemplated to ensure that, post-Covid, EU steel consumers can have a greater degree of confidence regarding supply without the prospect of having to pay penal 25 per cent duties if quota levels are breached or experiencing unwelcome price hikes as a result of supply shortages,” the letter concludes.

Emanuele Norsa Italy

After ticking up in January, crude steel output in Italy increased again in February by 1.6% year-on-year to slightly over 2 million tonnes. Output also went up over the first two months of the year, by 1.2% y-o-y to 3.9 mt, according to data issued by local steelmakers association Federacciai.

However, flat production decreased again in February by 4.5% to 891,000t, and by 0.8% to 1.8mt over the period January-February, compared to the same period last year. Conversely, long production soared last month by 8.9% to 1.1 mt y-o-y and by 7.3% reaching 2.1mt in January-February, Federacciai says.

The significantly reduced output from the Taranto steelworks of ArcelorMittal Italia is contributing to the current Italian coils shortage situation, responsible for pushing coils prices up by €30/tonne ($35) on average every ten days over the past weeks (see Kallanish passim).

In full-year 2020, Italian crude steel production was 20.4mt, down 11.9% compared to 2019. Long output fell by 9.5% to 11.1mt. Flats production fell by 15.9% to 9.5mt, Federacciai says.

Natalia Capra France

On Friday, the last rolling orders were fulfilled at thyssenkrupp Steel’s heavy plate mill in Duisburg-Hüttenheim. The rolling mill, the key unit of the plant, has been shut down, the company says in a press release. 

The final closure of the entire business unit will be completed by September 30. Until that date, the remaining finished products will be delivered to customers.

thyssenkrupp Steel had decided to close down this business unit as part of its steel Strategy 20-30 since it did not see any economically viable future for it within the group. The hot strip cut-to-length line in Antwerp belonging to the heavy plate unit will not be affected by the closure. High-strength and wear-resistant cut-to-length plates for trucks, construction or agricultural machinery will therefore remain in the portfolio, the group notes

Despite its size and significance, thyssenkrupp’s plate unit over the years faced much criticism. Tk Steel’s works council, for example, repeatedly bemoaned that the group failed to provide enough funds for investment into renewal.

“It could have been turned into a cash cow,” a works council spokesman once told Kallanish. The lack of investment was denied by the press department, which pointed at upgrade measures that had indeed taken place in the past 10 years.

One former employee at the unit claims that the product planning system on the sales side was insufficient for a long time, dating back into the 1990s.

“People never received what they had ordered,” he says.

Christian Koehl Germany