The increased cost of EU carbon allowances is creating a widening gap between EU steel prices and import prices from suppliers in countries not burdened by carbon regulations. This means there might be an opportunity for imports into the EU, says EUROMETAL president Fernando Espada.
Huge increases in electricity costs are meanwhile driving long steel prices in the bloc so high that there may also soon be imports seen in this segment, Espada said at Kallanish Flat Steel 2022 in Istanbul on Thursday.
EU mills are “facing a crisis”, Espada observed. “Distributors have to be careful.” There may currently be opportunities to import, but if the import prices are so much lower than values from EU domestic mills, “we may kill our own suppliers”.
He also added that since steel prices soared earlier this year and have now come down dramatically, distributors are having to sell at prices lower than the cost of their stock, which is a “problem”. There is not much that can be done, but distributors are “defending prices as much as we can”.
Asked about the EU’s safeguard duties, Espada added it is “nonsense” to expect the European Commission to remove these unless the US first removes Section 232.
The panel also keenly discussed the prospects for increased scrap use in steelmaking amid decarbonisation.
Espada said there is not enough scrap in the world to electrify all steel production. Scrap is “the new gold”, and surging demand for the material will push up prices. To ensure production of sufficient steel volumes, direct reduced iron will also need to be used as a feedstock.
Danieli vice president key account Andrea Diasparro, however, pointed to the fact integrated plants will also start using more scrap in their BOFs, which will have a huge impact on scrap prices. This will allow these mills to reduce carbon emissions, control scrap prices and kill off the EAF competition, he added.
International Tube Association Gunther Voswinckel meanwhile pointed out that numerous alloy steels cannot be produced using EAFs, and that either integrated or DRI-based plants are required.
Adam Smith Poland