Russia’s Severstal invests $2.8 mil in steel service center to boost processing

Russian mining and steel company Severstal is investing Rb200 million ($2.8 million) this year in new processing equipment of its Kolpino steel service center in northwest Russia’s Leningrad region.

The modernization will expand the center’s capabilities, increase its productivity and help it move from blank production to sub-assembly at some point in the future.

The center is to get a laser cutting machine designed to cut 1mm-20mm thick sheets and plate. Together with the facility’s existing equipment, this will enable Kolpino to process the entire 1mm-40mm range of flat rolled steel thicknesses.

It will also get a gas-plasma cutting machine, which will ensure higher precision of cutting.

A third piece of new equipment, a coordinate drilling machine, will provide high accuracy in hole marking and drilling.

The edge milling machine will finish plate or blank edges to high precision, and the last unit of the new equipment — a straightening machine — will ensure up to 0.2 mm/meter flatness in steel-made parts and blanks.

As a result of the investment, the company said that the Kolpino center will significantly improve its metal processing capabilities, offering customers new products and delivering larger output quantities, which will help it reduce operational costs and increase profitability.

— Ekaterina Bouckley

Steelmakers formalize offers for Hayange and Ascoval

Steelmaker ArcelorMittal, Italian long products maker Beltrame and German steelmaker Saarstahl have now all submitted bids to purchase French steelmakers Hayange and Ascoval, put on the market by the troubled Liberty Steel Group, the bidders have confirmed. The deadline to present offers to purchase Liberty’s French units has been reported to be June 15, sources told S&P Global Platts June 16.

Liberty put specialty steelmaker Ascoval and rail producer Hayange on the market together in May amid the metal group’s ongoing financial troubles after its main financier, Greensill Capital, filed for bankruptcy in March. The French government that month loaned Eur20 million ($24.2 million) to the two plants to cover working capital and capital expenditure costs, according to sources. The French government obliged Liberty to refinance operations by the end of May with an additional Eur20 million, or put the two companies up for sale if it could not, sources have said.

Of other steelmakers understood to have shown interest in Hayange and Ascoval, Acciairie Venete declined to comment and JSW did not answer Platts’ requests for comment. Sources said JSW is unlikely to have formalized an offer while Acciairie Venete may have bid for the two French mills.

German long products maker Saarstahl released an official statement June 16 confirming its offer. “This bid supports an industrial project for the future of the two plants, but also for an enduring development of industrial activities in the Nord and Moselle regions,” said Karl-Ulrich Kohler, chairman of Saarstahl’s management board. “In the face of international competition in the steel market, Saarstahl is offering a permanent acquisition of the Ascoval and Hayange plants based on a strong geographical and industrial integration of Hayange and Ascoval into the production network of the current plants of the group.”

Saarstahl’s project would aim to integrate a new rail market into Saarstahl’s commercial and industrial strategy, to diversify its portfolio, adding blooms and rails and to access electric arc furnace technology. “This project is fully aligned with the strategy of our Saarland Group, both in terms of strengthening competitiveness and structural transformation,” said Kohler.

The company has a continuously casting blooming line in Volklingen which could supply Hayange with some blooms in particular sizes that Ascoval doesn’t supply and which are currently supplied by British Steel, market sources told Platts.

Sources said there are however growing expectations that ArcelorMittal could win the bid as it is probably in a position to offer more for the two companies in terms of financial capacity and industrial plans, although there is the caveat that such a deal might not go ahead for competition reasons as the European Commission may consider ArcelorMittal’s existing strength in the rail market.

ArcelorMittal’s assets in the steel rail sector in Europe includes one plant in Spain, one in Luxembourg and two in Poland, which supply key rail markets including high-speed, metro, heavy-haul, urban transport and port operations. Sources said the company is checking if this might pose a problem in terms of already having a dominant market position within the EU. According to a Reuters report, EU antitrust regulators will decide by July 9 whether to clear ArcelorMittal’s bid for Hayange and Ascoval.

ArcelorMittal declined to comment on antitrust issues when approached by Platts, but it confirmed that it had submitted an offer to acquire the Hayange and Ascoval steel plants: “The Hayange and Ascoval plants would benefit from ArcelorMittal’s significant R&D capabilities in products and processes, particularly in the rail business, market knowledge and sales footprint, investment and business development capacity, logistics and storage capabilities. ArcelorMittal would also commit to maintaining employment at existing levels and would leverage its know-how and experience in HR development.”

ArcelorMittal produced approximately 8 million mt of steel in France last year, employing 15,500 people.

Italy-based longs producer Beltrame confirmed its interest. The company already has mills in France with LME (Lamines Marchands Europeens), located not far from Ascoval and has a mill in Romania that could benefit from Ascoval blooms, a company executive told to Platts. Beltrame’s Donalam mill in Romania is a new customer for Ascoval, which shipped 500 mt of blooms as a trial last month, sources told Platts.

None of the companies cited above said how much they had offered for the French companies, or other details.

Acciaierie Venete makes quality long steel products and is owned by the family of the head of the Italian Steel Association, Federacciai, Alessandro Banzato, who was always keen to expand his family business overseas but up until now had not done this, industry sources said. Market sources said that Acciaierie Venete is very solid, has cash and is very keen to increase its production mix so “it could be the right time for them to shop abroad.”

JSW Group produces blooms for rails in India and also produces rails at its steel plant in Italy in Piombino. Union sources indicated however that JSW has slowed down its investment in its Italian mill, which is largely at a halt.

— Annalisa Villa

China, Europe pricing trends may drift apart: conference

China’s control of its domestic steel industry could create price stability in the country, while in other regions, namely Europe, prices keep rising. This was suggested at the Kallanish Europe Steel Markets virtual conference on Wednesday by both Dick Sands of Stemcor and Kallanish European Editor Emanuele Norsa.

“China is keeping the lid on steel prices because, for them, it’s crucial to keep the local economy stable,” Sands said, with reference to the recent price correction and the taxation of exports. Unlike previously, “the export tax risk is now in the court of the buyer,” he noted.

Such moves can safeguard supply to the domestic market. Only then, China will take the next step – to reduce production internally in the interest avoiding pollution, without undermining the economy, Sands believes. He recounted a visit to the Korean coast years ago, “where the sky was blue when you looked east to Japan, and darkly polluted when you looked west to China”.

On the attitude of mills in Europe and North America, he stated that neither will be massively ramping up production, in the interest of keeping prices up. He believes this could sustain the high level of prices for years to come, a thought also expressed by Antonio Marcegaglia in the conference’s opening session (see separate story).

Looking at the moves of the new US government, he believes US prices should relax somewhat, while European prices may still inch up, “so that they will eventually converge later this year”.

Christian Koehl Germany

Gestamp sees bumper sales in 2021

Gestamp, the Spanish-headquartered supplier of components to the global automotive sector, says it has already secured 95% of targeted revenue up to 2022 in its order book.

During its Capital Markets Day presentation, the company said that although the automotive market remains challenging in the short term, it expects its own sales to outperform the automotive industry average, Kallanish notes.

“We estimate strong Ebitda generation reaching 13% of revenue in 2022, through various levers leading to profitability improvements,” Gestamp comments. “The company’s strong presence in the largest growing regions and segments should support our strong market performance in the next years.”

Gestamp is now focused on increasing profitability and free cash flow generation in 2021. The group expects revenue to outperform the global auto production market by a mid-single-digit, while its transformation plan aims to achieve Ebitda margin above 12% by the end of 2021.

Beyond 2022, the company will focus on new opportunities while keeping a prudent financial profile, Gestamp adds.

Todor Kirkov Bulgaria

Supply to catch demand by year-end: Tata’s Adam

Steel demand and prices are forecast to remain structurally high, while supply and demand should become rebalanced post-Covid-19-impact at the end of this year, Tata Steel Europe chief executive Henrik Adam said at the Kallanish Europe Steel Markets virtual conference on Wednesday.

“Our cost of supply has increased with iron ore being at record high levels … I think the price level will remain high and also with a more local focus after the pandemic,” Adam observed. “The pricing will be at a different level compared to what it was in the past for quite some time.” High steel values are not the result of volatility and speculation but a structural change, he added.

Overcapacity has been halved globally over the last year. It went down from 800 million tonnes/year to 400mt. The pandemic took producers by surprise and reduced demand from some sectors by 90% “more or less overnight”, the ceo commented.

Producers are still struggling to return to a supply-demand balance because the overall supply chain has been shaken by unexpected lockdowns. “Since the beginning of the year we are getting back on track,” Adam observed. “It is not a one-time effort … From one cast of liquid steel we serve different customers and not just one group, so we need to constantly reshuffle our production schedule which is causing delays. We think it will be some time until we go back to a normal performance.”

It may take 6-9 months to rebalance supply and demand after the pandemic market disruption. Towards the end of the year customers should see the beginning of a normal supply situation from most mills, Adam forecasted.

Decarbonisation will also make steel more expensive due to increasing carbon costs and heavy investment to produce “green” steel. Tata Steel has decided to implement a carbon surcharge as a new structural element in its pricing. The CO2 price per tonne has increased from the end of last year from €30/tonne ($36) to €50/t. The surcharge will be applied for every new contract, the ceo confirmed.

Tata Steel is Europe’s third-largest producer with a crude steel output of 12m t/y. It has steelmaking sites in the Netherlands and UK, and distribution sites across Europe and other parts of the world. The company is heavily investing in decarbonisation of steelmaking, including in hydrogen technology, and looking at scrap as a means of decarbonisation to start moving away from iron ore.

Natalia Capra France