Category: Latest Updates

The European Commission (EC) must implement regulation to force EU member states to invest in the charging infrastructure required to accommodate the growth of electric vehicles, says European carmakers association ACEA.

ACEA, together with Transport and Environment (T&E) and the European Consumer Organisation (BEUC), recently made an appeal to Frans Timmermans. They petitioned the EC’s Green Deal executive vice president to set objectives that specify the exact number of public chargers and hydrogen stations that each member state is required to deploy, Kallanish notes.

ACEA director general Eric-Mark Huitema says the upcoming revision of the Alternative Fuels Infrastructure Directive (AFID) “must be used by the Commission to force member states to deploy 1 million public charging points across the EU by 2024, and to triple that number to three million by 2029”. Likewise, some 1,000 public hydrogen stations should be made available for cars and vans before 2030.

Failing this, EU climate change targets are at risk. In addition to public charging infrastructure, a stronger focus is also needed on workplace and home charging, he continues.

In 2020 hybrid electric vehicles made up 11.9% of total car sales across the EU, up from 5.7% in 2019. Electrically-chargeable cars accounted for 10.5% of all new registrations in the EU, while they only made up 3% of car sales the year before. For the first time ever, more than 1 million units of both hybrid electric (1,182,792) and electrically-chargeable (1,045,831) passenger cars were sold in the EU last year.

The AFID revision must be concluded before the EU’s review of CO2 targets for cars and vans, Huitema says. “There needs to be a direct link between the CO2 targets set for vehicle manufacturers and the actual level of deployment of charging and refuelling infrastructure on the ground,” he adds.

“I strongly believe that a Regulation would be the best way forward, as it allows for the swift implementation of binding national infrastructure targets,” Huitema concludes.

European stainless steel coil prices have increased again by €100/tonne ($121) compared to the beginning of February. They are likely to rise further in March due to strong demand and severe supply shortages, market participants tell Kallanish.

The main European mills are selling for July and August delivery. Stainless hot rolled coil is now at €2,500-2,600/tonne delivered on average. Cold rolled coil is at €2,700-2,800/t, sources say. The large gap between prices comes from differing delivery times. The shorter the lead time, the higher the price, sources say.

Stainless coil increased by as much as €500/t compared to December and the current material shortage is seen persisting. However, in May the EU will decide on the extension of stainless CRC duties from India and Indonesia. Buyers hope the market will be opened as procuring material is becoming so challenging that service centres and re-rollers are forced to purchase from their competitors’ stocks, Kallanish is told.

February’s wide-flanged H-beam import prices into Southeast Asia gained for the fourth straight month, as sellers hiked offers later in the month amid surging raw material prices, sources said.

S&P Global Platts assessed the February price of wide-flanged S275JR H-beams at $750/mt CFR Southeast Asia, up $10/mt from the month prior.

A cargo of South Korean-origin H-beam was sold at $750/mt CFR Singapore early-February, up $10/mt from buying ideas the month prior, however with offers held back at the end of February as mills witnessed a surge in raw material costs.

“South Korea sold beams to us about three weeks ago but withdrew offers after scrap prices surged,” a Singapore-based stockist said. “Some mentioned that selling in their own domestic market is better and are aiming $790/mt now.”

H2 scrap FOB prices assessed Feb. 24 have surged Yen 6,800/mt ($64/mt) or 19% from its previous low in January, according to Platts data.

Offers for Thailand-origin H-beams, however, were heard edging up slightly on the month at $750/mt CFR Singapore end-February, from a $745-$750/mt range the month prior, with buyers citing similar tradable levels.

Meanwhile, in Singapore, construction activities were heard picking up since the Lunar New Year holidays, boosting sites’ demand for upstream construction steel.

“We are getting better sales from the end-users as construction in Singapore picks up,” the stockist said. “Prices in March too may remain supported but it also depends on how China’s steel market moves.”

H-beam prices to Southeast Asia last witnessed similar highs of $755/mt CFR February 2013, Platts data showed.

— Marcus Ong, Samuel Chin

German steel producer Salzgitter said Feb. 26 it had obtained certification for the production of lower carbon emissions galvanized steel and slab from verification agency TUV SUD based on cuts of up to 75% compared with the blast furnace route.

Salzgitter said it had obtained two conformity statements certified in line with TUV’s VERIsteel procedure for steel from its ferrous scrap-based Peine mini mill, in combination with the galvanizing plant in Salzgitter.

“We are the first European producer to obtain a conformity statement for green steel products,” said Ulrich Grethe, chairman of the management board of Salzgitter Flachstahl, in a statement. “Many of our customers consider it important to take delivery of a real, physical reduced-CO2 product now rather than being satisfied with more or less theoretical CO2 footprint projections.”

Germany’s TUV verified the carbon footprint procedures for producing strip steel from blast furnaces and EAFs, and found the new steel process achieved reductions of more than 75% in the CO2 footprint of slabs and more than 66% in that of galvanized coils, based on 2018 data, the statement said.

The VERIsteel process provides proof of product-specific CO2 emissions in steel production, and tracks decarbonization, it said.

“These steel grades have met with great interest from customers operating in range of different sectors,” it said.

The steel group planned to offer a range of low-emissions flat steel products before the end of 2020 after making changes to the Peine electric arc furnace (EAF) mill, owned by Salzgitter’s Peiner Trager, which produces beams and sections. One of the two continuous casting lines at Peine was fitted to cast slabs for the low-emissions flat steel initiative.

The company will increasingly pursue the path toward decarbonization with direct reduction iron (DRI) plants, through its SALCOS – Salzgitter Low CO2-Steelmaking project, Grethe said.

“This innovation project enables us to switch entirely from conventional steel production to hydrogen- and natural gas-based processes, which enables CO2 to be lowered by up to 95 %,” Grethe added. “The political and economic framework conditions for this to happen must be set in place as quickly as possible.”

— Hector Forster

The European Commission has opened an investigation to determine whether the current system of EU steel import safeguards should continue after its expiry on June 30, following requests from EU steelmaking nations, according to a Feb. 26 publication in the Official Journal of the EU.

Interested parties are being invited to submit their views to the EC within 15 days. A decision on whether the safeguards, based on a tariff-rate-quota system, may or not be continued will be made by June 30, the commission said. A mill source close to the investigation said that the decision is expected mid-May.

“Initiation of this investigation follows a duly substantiated request received from twelve EU Member States,” the EC said in a statement. “The Commission will in its investigation determine, in accordance with the requirements of EU and WTO rules, whether the safeguard measure continues to be necessary to prevent or remedy serious injury to the EU steel industry and whether the industry is adjusting.”

The member states consider that prolongation is necessary due to the “existence of continuous significant import pressure from third countries…the fact that global overcapacity remains at a very high level, that a large number of trade restrictive measures and trade defence measures by third countries continue being adopted, and that there are no elements suggesting that the US will be removing the Section 232 measures on steel,” according to the Official Journal statement.

After surging in 2017-18, certain steel imports into the EU have been restricted since July 2018 by a three-year import safeguards system involving quotas, introduced provisionally for its first six months and formalized in January 2019. The measure followed the imposition in March 2018 of the US’ Section 232 taxes on steel imports, which caused trade deviation, and the EC said it “aimed to prevent economic damage for EU steel producers, given the risk of further import increases linked, inter alia, to the introduction of trade restrictions by the US on steel products.”

Following introduction of the curbs, finished steel imports into the EU fell to 25.378 million mt in 2019, from 2018’s 29.279 million mt. Further falls came in 2020, when carbon steel imports fell 15.4% on-year to 20 million mt, almost a third lower than the 2018 peak, according to the European Steelmakers’ Association Eurofer’s website.

Surging prices

While steelmakers may support the continued existence of import curbs, steel consumer groups are typically against them as prices tend to be higher in a protected market environment.

The COVID-19 pandemic has also altered market dynamics in recent months. Following shutdowns amid a market slump last year, European steel mills see prospects for only a moderate increase in crude steel production in H1 2021, which is being outpaced by a demand recovery backed by government economic stimulus. A resultant tightness of material, particularly coil products, in EU markets has pushed some product prices to 13-year highs.

Current lower imports into the EU are seen partly due to China attracting greater import tonnages of third-country steel in recent months to feed its strong domestic demand. In past years a major steel exporter, China emerged last year as a substantial importer of semi-finished steel products. Rising international steel prices have also made imports less attractive in the EU market.

Some industry lawyers have recently argued that an extension to the EU steel import curbs would be unlawful under World Trade Organization rules. However, the commission said Feb. 26 that an extension of the safeguards system is legally permissible so long as the current investigation takes place first.

“In accordance with Article 19 of Regulation (EU) 2015/478 and Article 16 of Regulation (EU) 2015/755, the initial period of duration of a safeguard measure may be extended,” the EC said in its statement. “In order to establish whether such an extension is warranted, the Commission should carry out an investigation pursuant to Article 5 of Regulation (EU) 2015/478 and Article 3 of Regulation (EU) 2015/755 respectively.”

Member states to vote

The EC has issued questionnaires to EU steel producers to assess their economic situation, and will subsequently make a proposal to member states for a vote, it said in the statement. The proceeding will also include consultations with third country governments, it said.

Steelmakers in Turkey, a traditional supplier to the EU and whose steel output overtook Germany’s last year, are firmly against any extension of the safeguards.

Ugur Dalbeler, vice chairman of Turkish Steel Exporters’ Union (CIB), and also the CEO of major Turkish steelmaker Colakoglu, told S&P Global Platts Feb. 26 that he is hopeful that, following the review, the EC will terminate the existing safeguard measures without any extension.

“We have two reasons for our hopefulness: first of all the chairman of the EU commission said he is not intending to extend the measures,” Dalbeler said. “We are also thinking that the EU Commission will take into consideration our and some other countries’ panel requests at the WTO against protection measures as these measures are against the WTO rules….we believe the WTO could regain its actual function again after Trump,” he noted.

A commission spokeswoman did not immediately respond to a request for comment on the Turkish executive’s statement.

— Diana Kinch, Cenk Can and Laura Varriale

World crude steel production in January grew 4.8% year on year to 162.9 million mt for the 64 countries reporting to the World Steel Association, the group said Feb. 25.

Asian and Oceanic countries registered a production increase of 6.3% to 119 million mt, worldsteel said in a statement. China saw an increase of 6.7% to 90.2 million mt, while Indian production rose 7.2% to 10 million mt.

The 27 European Union member countries saw less production in January, slipping 0.4% to 11.2 million mt, although Germany, the largest European steel producer, bucked that trend and increased production 6% to 3.3 million mt.

In European countries outside the EU, including Bosnia-Herzegovina, Macedonia, Norway, Serbia, Turkey and the UK, production increased 11.2% to 4.4 million mt. Turkey triggered the increase with a jump of 12.7% year on year to 3.4 million mt.

North American production dropped 7% to 9.6 million mt.

African production moved down 7.9% to 1.2 million mt. Worldsteel includes output from Egypt, Libya and South Africa in its production tally, but not major producer Algeria.

South American production went up by 11.4% to 3.8 million mt, led by Brazil, the ninth-largest steel producer in the world, which saw production increase 10.8% to 3 million mt.

CIS production grew 4.5% to 9.2 million mt of crude steel.

— Annalisa Villa

After a rocky 2020 as COVID-19 hit both supply and demand, European steel mills see prospects for only a moderate increase in crude steel production in H1 2021, to be outpaced by a demand recovery backed by government economic stimulus.

Four major blast furnaces are currently being brought back on stream, while another three will go offline for maintenance later this year. Product tightness in some areas — driving some steel product prices to up to 13-year highs — may therefore be expected to continue, maintaining upwards price pressure as lead times stretch until Q3.

According to the World Steel Association, the EU produced 138.8 million mt of crude steel in 2020, down 11.8% on the year, and a third consecutive year of decline from the recent peak of 169 million mt in 2017. Industry sources do not foresee a return to pre-pandemic levels until at least 2023 in the case of production and 2022 in the case of demand.

European steelmakers’ association Eurofer forecasts that only 7.4% of the regional production volumes lost in 2020 will be made up in 2021 with further volume growth of 4.1% in 2022. Consumption will recover faster, Eurofer says: gaining 13.3% in 2021 and a further 3.4% in 2022, after last year’s 13% decline.

“2020 is likely to be one of the worst years on record, even if we will see positive figures in the fourth quarter,” said Axel Eggert, Eurofer director general, in a report this month. A Q3 rebound failed to compensate for exceptionally poor H1 performance, Eggert said.

Infrastructure

** Crude steel production in the broader European area, including Russia, CIS and Turkey, finished 2020 at 268.58 million mt, 6% below levels at the start of 2019, according to worldsteel data.

** Demand in 2020 was substantially hit by shutdowns in the automotive sector, which accounts for 19% of steel consumption, but which had largely recovered by Q4, partly on government stimulus encouraging electric vehicles production.

** In the EU, the pre-pandemic steel production decline is blamed partly on high import levels and changes in the automotive industry due to tightening emissions legislation.

** Government stimulus flowing into regional economies from Q3 2020 kickstarted both steel demand and prices after the pandemic’s first wave, prompting the restart of some blast furnaces (BFs) and electric arc furnaces (EAFs).

** EU steel production and demand are set to benefit from the European Commission’s EUR1.8 trillion ($2.19 trillion) recovery plan for a post-COVID-19 Europe, to support regional economies and steel industry decarbonization.

** Jefferies International analyst Alan Spence estimated mid-February that up to 5 million mt of EU capacity was still offline, although as much as 80% of the nearly 25 million mt of crude steel capacity idled by COVID-19 at the height of the pandemic in early 2020 is back online.

** Russia continues Europe’s largest crude steel producer by far, with 73.401 million mt produced in 2020, up 2.6% on 2019, with rising exports from some companies favored by a weak ruble. Russia’s MMK Magnitogorsk is set to idle its BF No. 9 in December for 134 days’ maintenance.

** Turkey marginally overtook Germany as Europe’s biggest steelmaker outside Russia in 2020. Turkey’s 2020 output increased 6% on the year to 35.764 million mt, compared to Germany’s 35.658 mt, which was 10% below 2019 output.

** Turkey’s steelmakers produce mainly from EAFs which are easier to switch on and off according to demand fluctuations than blast furnaces, where ramping up and cooling down many take weeks of careful monitoring to prevent damage.

** Isdemir, Turkey’s biggest integrated steelmaker, restarted its BF No. 2 in January after maintenance: it now has three of its four blast furnaces running.

Trade flows

** After a 2017-18 surge, steel imports into the EU have been restricted since mid-2018 by a three-year import safeguards system to expire June 30. Carbon steel imports fell 15.4% on the year in 2020 to 20 million mt, almost a third lower than the 2018 peak of 29.3 million mt, Eurofer reported.

** Lower EU imports are partly due to China attracting greater import tonnages of third-country steel in recent months to feed strong domestic demand. Rising international steel prices have also made imports less attractive in the EU market.

** China emerged in 2020 as a major importer of semi-finished steel. Russian mill NLMK said in October 2020 that despite freight rates to China being $20-$30/mt higher than to Europe, it foresaw relatively high levels of steel slabs to China until April.

** Mills in Turkey expect their exports to increase 10% on the year to 23 million mt in 2021, following a 2.8% decline to 20.6 million mt in 2020.

** Turkish mills continue to diversify their export business in the face of continuing trade barriers in major export destinations including the EU and US, shipping to 197 countries in 2020, according to Turkish Steel Exporters’ Union CIB.

** Adnan Aslan, CIB chairman, expects 2021 to be a “very positive” year, even if exports to the EU and the US remain limited. “Turkey has started to dominate Africa, Far East and South America markets in the last three years, with the removal of China from these markets,” he said.

** Russian imports were the second highest source of hot rolled coil, or HRC, imports into the EU in January-November 2020 at 1.27 million mt, after Turkish-origin imports at 1.64 million mt. The European Commission announced a provisional anti-dumping duty of 4.8-7.6% on imports of HRC from Turkey early in 2021.

** Ferrous scrap usage fell 10.5% on the year in H1 2020 to 209.83 million mt due to lower demand and collection and shipping restrictions during COVID-19 lockdowns, reported International Recycling Bureau BIR. This led to market distortions, with Russia raising its scrap export tariff and South Africa temporarily banning exports. China opened up to ferrous scrap imports on Jan. 1 following years of tariff barriers.

Prices

** A marked price uptrend in steel prices generally since late 2020 has been driven by a tightness of materials as demand rebounds, particularly of coil products in some parts of the EU, aggravated by logistic bottlenecks and extreme weather in Germany.

** S& P Global Platts’ North European domestic EXW Ruhr HRC pricing has averaged EUR710/mt since the start of January, having gained more than 70% over the last six months, amid lagging production and soaring costs of raw materials including iron ore, hovering around nine-year highs. Platts’ North Europe HRC assessment reached EUR730/mt Feb. 24, continuing at a 13-year high.

** In long products, Platts’ Turkey FOB export rebar assessment stood at $640/mt this week, 45% higher than a year ago. While US dollar values have weakened over the past year, accounting for some dollar-denominated price gain, the strong rebar prices also reflect a construction industry demand upturn in many nations, and a recent surge in scrap prices.

** Platts’ assessment for Turkish Heavy Melting Scrap 1&2 (80:20) import scrap – the main raw material for steel long products – hit $482.50/mt on Jan. 4 – its highest since the commodities price spike of early 2011 – squeezing mills’ margins despite the higher finished product prices.

— Diana Kinch, Laura Varriale

German flat steel stocks dropped further in January, continuing a 33-year low, while long steel stocks picked up slightly, figures by German steel stock association BDS have shown.

Although the pace of the month-on-month drop slowed in comparison with the change from November to December 2020, German steel stocks are alarmingly empty and a result of the ongoing material shortage in the market.

Flat steel stocks decreased 0.8% on the month to 1.4 million mt in January, seeing a 7.2% year-on-year drop.

Long steel stocks increased by 4.7% on the month to 748,387 mt, recording nevertheless a 9.3% decrease on the year.

Typical for the time of year, sales volumes increased sharply as December is usually a slow sales month. Flat steel sales jumped 53% from December to January to 575.901 mt, still falling 3.5% behind last year’s January.

Long steel sales also increased significantly by 33% month on month to 244,949 mt, down almost 13% however in a year-on-year comparison.

German steel distributors have had a busy start of the year with buyers turning to distribution rather than mills as lead times from European producers remain — at 12 weeks or more — unusually long as the steel shortage continues. Ramp-ups by European mills with blast furnace production are expected to have an easing effect on material availability by end of Q2, according to sources.

In the case of flat steel, however, material in stock is also getting low, leaving buyers in desperate need, while import opportunities remain scarce.

The shortage has been reflected in steel prices as the daily Platts HRC assessment continues at a 13-year high of Eur730/mt EXW Ruhr Feb. 24.

— Laura Varriale

The European Commission has today announced a review investigation of the EU Steel Safeguard Measures – ref. SAFE009R4 – to decide whether they should continue beyond 30th June 2021.  

See Official Journal ref. 2021/C66/14 (page 50).

Seaborne iron ore prices rebounded again on Thursday. Vale meanwhile has reaffirmed its commitment to expanding its presence in China.

The Kallanish KORE 62% Fe index rebounded $1.52/t to $172.63/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index gained $1.55/t to $96.47/dmt cfr, and the KORE 58% Fe index increased $1.94/t to $159.18/dmt cfr.

On the Dalian Commodity Exchange May iron ore settled up CNY 16/t at CNY 1,131.5/t ($175.16/t), while on the Singapore Exchange March 62% Fe futures settled up $1.49/t at $171.10/t. The same contract for 65% Fe and 58% Fe futures settled up $1.20/t at $194.51/t, and up $2.05/t at $157.77/t respectively. In Tangshan, billet prices gained CNY 40/t to CNY 4,270/t.

Expectations for iron ore prices remain positive, but trading has been a little quiet. Mills have material for the short term and are waiting to see how fast steel demand increases in March to assess the production rates they will be able to maintain.

Vale China president Tracy Xie told China Daily that the company sees China as its core customer and a core market. Sales to China accounted for 67% of Vale’s sales in 2020 at 192 million tonnes. The company has announced a number of investments over the last two years, including blending and processing operations and a new sales platform on WeChat which is due to be active early in 2021.

China is targeting greater self-sufficiency in iron ore, including by investing in new African sources of supply. This has largely been framed as increasing independence from Australian supply rather than Brazil, but all suppliers to China could be affected.