German fabricators catch up on production

Steel and metal processing companies in Germany increased production by 20% on-quarter in the third quarter, according to their association, Wirtschaftsverband Stahl- und Metallverarbeitung (WSM).

The association speaks of a “…rapid recovery” from the preceding production trough caused by the coronavirus impact. Compared with 2019, production was still -10.6% down in Q3 and down -15.7% in the nine months through September.

In Q4 it should be possible to further reduce the gap to the previous year, despite the renewed pandemic-related restrictions on public life in November, WSM believes. Its economist, Holger Ade, confirms the forecast for full-year 2020 given earlier, that the on-year production drop should be between -12% and -15%.

Exports fell more sharply than domestic deliveries in Q2, but with a growth of 23.2% in Q3 they also recovered much more strongly than sales in Germany. Year to date, domestic and foreign deliveries declined -17.4% and -17.9% respectively.

However, the current development in coronavirus infection levels across Europe could endanger the further recovery in exports, Kallanish hears from WSM.

This has nevertheless not shown so far. Orders from abroad in Q3 increased by 45% compared with the previous quarter, while domestic orders rose by 35.4%. In September, total incoming orders were again up year-on-year by 5.8%, WSM notes.

UK car production down 18.2% year-on-year in October: SMMT

UK car manufacturing output fell by 18.2% year on year in October, with 110,179 units leaving factory gates, according to figures issued Nov. 26 by the Society of Motor Manufacturers and Traders.

“October’s performance rounds off an extremely tough 10 months for UK car makers and suppliers, and production is now down 33.8% since January to 743,003 units,” SMMT said in a statement.

Last month’s figure represented 24,490 fewer cars made than in the same month in 2019, with the impact of coronavirus and fresh lockdowns at home and overseas subduing demand in many key markets, the group said.

For the first 10 months of the year, 379,308 fewer cars worth around GBP10.4 billion ($13.9 billion) were produced.

October’s decline was driven largely by falling exports, particularly to the EU and US, down 19.1% overall and equivalent to a loss of 21,569 vehicles, SMMT said. Shipments to the US fell by 26.0% year on year, while exports to the EU by were down 25.7%.

“Major Asian markets fared better, with exports to Japan and China up 57.1% and 9.7%, respectively, reflecting less stringent lockdown measures, but this was not enough to offset losses elsewhere,” SMMT said.

Production for the domestic market also fell, by 13.6% to 18,629 units, with 2,921 fewer cars made for buyers in the UK than a year earlier.

“These figures are yet more bad news for an industry battered by COVID, Brexit and, now, the unprecedented challenge of a complete shift to electrified vehicles in under a decade,” said Mike Hawes, SMMT’s chief executive, in a statement.

The UK government’s Nov. 25 spending review “recognized the need to invest in a green industrial revolution, but this must be at globally competitive levels and equal to the scale of ambition to keep this sector match fit,” he said.

“Above all,” Hawes said, “we must have a Brexit deal, one with zero tariffs, zero quotas and rules of origin that benefit existing products and the next generation of zero-emission cars, as well as a phase-in period that allows this transition to be ‘made in Britain.”

The UK’s transition period as it exits the European Union ends on Dec. 31, with no trade deal with the EU in place as yet.

Earlier this week, SMMT released figures suggesting that production losses could cost as much as GBP55.4 billion over the next five years if the UK automotive sector was forced to trade under World Trade Organization conditions over the long term. Even a so-called “bare-bones” trade deal with the EU would cost the industry around GBP14.1 billion, SMMT said.

“Industry bosses will be glad to wave goodbye to 2020. Yet the outlook for next year is uncertain as manufacturers seek to adapt to a new trading environment and wait to see if the threat from coronavirus and its effect on consumer demand begins to diminish,” Stuart Apperley, director and head of UK automotive at Lloyds Bank, said Nov. 26.

“Many will hope that the recent positive vaccine news, and anticipated rollout, will boost consumer sentiment and give people the confidence to make big-ticket purchases, such as a new car,” he added.

In the longer term, the UK government’s plan to take all petrol and diesel vehicles, except hybrids, off the roads by 2030 “confirms a clear direction of travel,” Apperley said.

“Many UK carmakers are well-placed to capitalize on the new rules, though others have work to do,” he said. “Either way it’s a huge incentive for the industry — and its supply chain — to invest in the technology and nudge customers towards choosing cleaner vehicles.”

— Andy Blamey

UK needs separate Turkish HRC anti-dumping probe: sources

The UK will not be able to apply any anti-dumping measures resulting from the European Commission’s current investigation into hot rolled coil imports from Turkey, Kallanish learns from sources. If the country wishes to impose similar barriers, it will need to start a brand-new investigation of its own into these imports.

The ongoing investigation at the European level is expected to result in provisional measures being announced in January 2021. Nevertheless, because these would be the first new measures applied after Brexit has been completed, they would not apply to the UK.

Last week, Yuriy Rudyuk from Van Bael & Bellis confirmed during a Eurometal event that the UK has the possibility to transfer existing EU anti-dumping measures for use after Brexit. New measures confirmed after Brexit, however, will not qualify for this transfer and new independent investigations will need to be opened in the UK.

It is not clear if the UK will move towards opening an investigation into Turkish HRC at this stage.

According to Eurofer data, this year Turkish-origin imports of HRC have been virtually non-existent in the UK. In 2019 these surpassed 60,000 tonnes, while back in 2017 the level stood at above 80,000t. Overall, UK HRC imports this year should be around 150,000t, having surpassed 250,000t back in 2014-2015.

EU carbon tax to cost Russian steelmakers $800m

Russian steel companies could lose up to $800 million/year from the introduction of a carbon tax in the EU, says Russian industry and trade deputy minister Viktor Evtukhov.

“The introduction of such a tax will affect about 13 million tonnes/year of Russian steel exports to the European Union,” Evtukhov said at the “Metals and Mining in Russia and the CIS 2020″ summit monitored by Kallanish. “The EU is generally one of the largest consumers of our steel – a total value of more than $7 billion. Accordingly, if there will be a tax of more than €60 per tonne, as is now being discussed, the loses will be about $780-800 million per year.”

Russian industry is actively modernising; the level of investment is growing each year, including in 2020 despite the pandemic and macroeconomic factors, the deputy minister observed.

Russian Union of Industrialists and Entrepreneurs (RSPP) president Alexander Shokhin said it is important for Russia that cross-border carbon regulation does not turn out to be an instrument of unfair competition, or a form of protectionism for European companies.

“In Russia, the main CO2 emitters are large companies that are members of RSPP,” Shokhin observed. “They are implementing measures to reduce emissions by hundreds of billions of rubbles, and 80% of our electricity is generated at power plants with low specific greenhouse gas emissions.”

The EU announced its intention to introduce a carbon border adjustment mechanism as part of the planned Green Deal. According to European officials, this will provide a fair playing field in the EU market for products produced according to high climatic standards with minimal CO2 emissions.

The final decision on the border tax is expected to be taken in mid-2021.

Global steel production recovery gains momentum in October

Crude steel production in the 64 countries reporting to the World Steel Association (worldsteel) rose 7% on-year in October to 161.89 million tonnes, gaining further momentum from growth in August and September, Kallanish notes.

Chinese output continued its relentless growth, rising 12.7% in October to 92.2mt. Indian output finally rebounded to pre-coronavirus levels, increasing 0.9% to 9.06mt. Japanese and South Korean production however dropped -11.7% and -1.8% respectively to 7.2mt and 5.86mt. Vietnamese output surged 112% to 3.37mt.

The EU28 saw output drop -5.6% in October to 12.61mt, despite output in Germany rising for the first time since the pandemic struck, by 3.1% to 3.42mt. Italian output however dropped -4.6% to 2.12mt. Output grew significantly in Czech Republic, Finland and Sweden.

Turkish output continued its recovery, rising 19.4% in October to 3.21mt.

US production slumped -15.3% to 6.14mt but Brazilian output grew again, by 3.5% to 2.78mt.

CIS production rose 4.7% to 8.39mt, with Russian output estimated to have risen 4.3% to 6.05mt and Ukrainian output increasing 5.9% to 1.65mt.

Global steel output in January-October nevertheless still dropped -2% on-year to 1.51 billion tonnes.

For antitrust reasons worldsteel no longer produces a monthly global capacity utilisation ratio. Information on capacity can be found on the OECD website, worldsteel says.