Plate and hot rolled coil prices will bottom and stabilise in the near term amid improved global demand, says head of Metinvest Western Europe Roberto Re.
The “red line” for HRC prices is approaching for European producers due to the high cost of gas and energy. “I think that prices during the month of June can somewhat change, maybe not in the sense of a complete trend inversion, but also thanks to the international demand resumption, as we expect better demand from China and the USA,” Re said at the Kallanish Europe Steel Markets 2022 conference in Milan on Monday. “We believe prices will stabilise, which will also cause apparent demand to restart.”
However, there will be no going back to pre-pandemic levels. International trading limitations are resulting in a “structural change” that is seeing the regionalisation of prices, Re observed. In the next 3-4 years, Europe may see quite high prices driven by the future post-war reconstruction of Ukraine.
The steep March price increase followed by the rapid decline seen in recent weeks has halted apparent steel consumption. In Italy, state infrastructure projects have been suspended due to escalating construction material prices.
Ukraine’s Azovstal and Ilyich plants are meanwhile severely damaged but “we will never work under any legislation that is different from Ukrainian”, Re pointed out. The company has no plans to restart production in Mariupol as the area has been taken over by Russian forces. The firm has however restarted Zaporizhstal which produces billet for its European re-rolling facilities, particularly Promet Steel in Bulgaria. Metinvest’s Kametstal plant was meanwhile the only steelmaker to maintain operations in Ukraine in March during the Russian invasion.
Zaporizhstal is currently facing some logistical issues but trying to reach 50% capacity for the production of HRC. Metinvest’s other European mills are Trametal and Ferriera Valsider in Italy, and Spartan UK in Newcastle.
All the flat steel mills are currently going ahead with production. Despite the disruption in semis’ supply, Metinvest succeeded in running Valsider until 25 April and Trametal until 11 May. Promet Steel was idled to give the steelmaker time to re-establish billet deliveries from Kametstal, while output at Spartan UK was reduced.
The Italian units are currently undergoing maintenance works due to slow slab deliveries. Trametal is scheduled to restart in the next ten days and Valsider towards the end of June.
“We’ve changed our supply chain completely. We have become re-rollers again,” Re observed. Trametal was a slab re-roller souring from the merchant market before Metinvest purchased the mill.
Metinvest needs around 160,000 tonnes/month of slab to run all its European units. Towards mid-March, European non-integrated re-rollers such as Marcegaglia and Technosider in Italy, and Laminoir des Landes in France, went to the global market to procure high volumes of slab. This caused a speculative bubble, particularly for material from the Far East.
After the outbreak of war in Ukraine, the main sources of global slab supply were countries such as Malaysia, Indonesia and China. The supply chain is now easing, with some more price stability and a larger pool of suppliers including steelmakers from India, Brazil, South America, China and Indonesia, Re said. However, quality is the issue, not volumes, he added.
“Our idea in Europe is to make an important investment in steel production,” Re stated. In an interview with Italy’s RAI television network earlier this month, Metinvest owner Rinat Akhmetov said the firm is going ahead with its plan to build in Italy a new 2 million tonnes/year flat products steel mill supplied by equipment maker Danieli (see Kallanish passim). It may however have to amend its plan of sourcing slab for the new mill from its Ukrainian steelworks.
Natalia Capra France