EU HRC: Mills cut spot prices to move product

The northwest European hot-rolled coil (HRC) market was not immune to weakening global prices today, despite a raft of trade measures in place and firm raw material costs.

With Italian producers actively looking to sell spot product into the Benelux region at around €520-525/t delivered, northern mills were under pressure. Material from one Italian mill in particular was being offered at very competitive levels into northern Europe as it tried to strengthen its order book.

A tier-1 seller in the northwest was heard to be exporting into north Africa at $560-580/t (€496.85-514.00/t) cfr, depending on destination, as it looked for alternatives to offset slow domestic buying — although some said that this was normal business and not dictated by the market environment.

Domestically, customer enquiries were increasing but not translating into actual transactions, with people fishing for price quotes rather than looking to book, one German trader said. “We’re in discussions with customers, but they are not desperate to buy,” he said, adding that the softness was confined to spot business.

Demand was seasonally slow, with buyers not wanting to build stocks heading into the year-end. At the same time inventories were already sufficient, with further destocking and service centre margin compression expected in the next few weeks.

Concerns over the automotive market remained. “People are a little bit nervous around automotive contracts and demand, which will not be as buoyant as [the] past three years, where we saw 5-6pc growth,” one seller said.

A service centre source said construction activity could also slow into next year, which would impact consumer goods, and flat steels, as well as longs. Something had to give, with costs strong and finished steel prices falling, a trader said.

Despite the rundown in global coil pricing, imports were less of a threat as the reduction in domestic prices closed the arbitrage. And the weakening of the euro relative to the dollar — on the back of concerns over the Italian government’s clash with the EU — reduced import competitiveness further. One trader said €510/t cnf Antwerp was a workable price today.

The inaugural Argus daily northwest Europe HRC index was published at €535/t ex-works today.

Summary of market activity heard by Argus

• HRC-EU: German trader estimates tradeable value close to €510/t ex-works
• HRC-EU: Benelux-based seller estimates tradeable value close to €530/t ex-works
• HRC-EU: UK-based trader estimates tradeable value of southern EU material at €500/t ex-works
• HRC-EU: Offer for northwest Europe material at €570/t cfr Egypt, according to UK-based trader
• HRC-EU: UK-based trader bought at €520/t ex-works two weeks ago
• HRC-EU: UK-based trader estimates tradeable value of imported HRC at €510/t cnf Antwerp

Tibnor to acquire Sanistål’s steel distribution business

SSAB’s subsidiary Tibnor has agreed to acquire the steel distribution business of the Danish company Sanistål A/S, Denmark’s second largest steel distributor. This supports SSAB’s strategic target to strengthen its Nordic home market position. The steel distribution business now being acquired had sales of around SEK 1.8 billion in 2017. Subject to the approval of the Danish competition authority, the transaction is expected to close in the early part of the second quarter of 2019.

“Acquisition of Sanistål’s steel distribution business will complete Tibnor’s Nordic footprint by increasing our market presence in Denmark, where we currently are not so visible. The product offering of Tibnor and Sanistål complement each other well, and we see substantial synergy potential,” says Mikael Nyquist, President of Tibnor.

A cornerstone of SSAB’s strategy is leadership in the Nordic home market. SSAB’s subsidiary Tibnor plays an important role in maintaining this position. Steel distribution channels today account for more than half of the total Nordic steel market. The acquisition will considerably improve the position of Tibnor in Denmark. For SSAB, a stronger steel distribution channel provides an attractive channel to grow steel sales, and will also improve the ability to manage business cycles.

Based on the acquisition, SSAB and Tibnor expect annual synergies of approximately SEK 50 million to be realized within three years, in addition to strengthening the platform for SSAB’s Nordic steel business and increasing working capital efficiency. Tibnor is acquiring Sanistål’s steel distribution business as an asset deal at net value of approximately SEK 630 million. The acquisition is expected to be earnings and cash flow accretive from closing.

The acquisition includes Sanistål’s modern and highly automated steel distribution center (42,000 m2) in Taulov and three other sales offices in Denmark as well as a sales office in Latvia. As part of the transaction, around 130 employees will transfer to Tibnor.

SSAB boosts SmartSteel with Kemppi cloud-based welding software

SSAB continues to evolve its SmartSteel project, launched in May of this year, the high-strength steel specialist tells Kallanish. The latest development involves using cloud-based platforms to streamline base material handling in welding production. This is being carried out in partnership with Finnish welding specialist Kemppi whose welding management software is being used.

The Swedish steelmaker and Kemppi have integrated their respective SmartSteel and WeldEye cloud-based platforms to streamline the handling of the complex array of information to document the welding process.

Collecting welding documentation is time-consuming, SSAB says. Documents have to be collected from different source systems and documenting the welding process is done manually. WeldEye, Kemppi’s welding management software, strives to make the process smoother. It does this by collecting welding parameters digitally from workstations. and even by adjusting the welding equipment according to digital welding procedure specifications (dWPS). To automate the process one step further, SSAB now offers their SmartSteel data through an interface (API) to be used in the procedure.

“Building cloud-based platforms is a new way of doing business together,” says Niko Korte, senior manager of Digital Business Development at SSAB. “We are working our way towards the Internet of Materials. Every initiative like this takes us one step closer to creating a digital identity for steel and complete traceability. We are excited about the future and look forward to partnering with others to create it.”

Following the successful pilot, SSAB customers who are already using Kemppi’s WeldEye software can get automatic material information from the SmartSteel cloud. New partners are also welcome to contact SSAB in order to start developing new services around SmartSteel, the high-strength steel specialist says.

Sweden’s Tibnor moves to expand distribution in Denmark

Sweden’s SSAB tells Kallanish that its subsidiary Tibnor has agreed to acquire the steel distribution business of the Danish company Sanistål A/S, Denmark’s second largest steel distributor. This supports SSAB’s strategic target to strengthen its Nordic home market position, the steelmaker says.

Sanistål’s steel distribution business had sales of around SEK 1.8 billion ($199m) in 2017 and the transaction is expected to close in the early part of the second quarter of 2019. The deal is subject to the approval of the Danish competition authority, SSAB confirms.

“Acquisition of Sanistål’s steel distribution business will complete Tibnor’s Nordic footprint by increasing our market presence in Denmark, where we currently are not so visible. The product offering of Tibnor and Sanistål complement each other well, and we see substantial synergy potential,” says Tibnor president Mikael Nyquist.

The acquisition will considerably improve the position of Tibnor in Denmark. For SSAB, a stronger steel distribution channel provides an attractive channel to grow steel sales, and will also improve the ability to manage business cycles, the steelmaker says.

Tibnor is acquiring Sanistål’s steel distribution business as an asset deal at net value of approximately SEK 630 million. The acquisition is expected to be earnings and cash flow accretive from closing, SSAB adds. Based on the acquisition, SSAB and Tibnor expect annual synergies of approximately SEK 50 million to be realised within three years.

The acquisition includes Sanistål’s steel distribution centre (42,000m²) in Taulov and three other sales offices in Denmark as well as a sales office in Latvia. As part of the transaction, around 130 employees will transfer to Tibnor.

Polish distributor foresees strong demand following construction growth

Konsorcjum Stali (KS) expects continued strong steel demand in Poland after the country’s nine-month-through-September construction output rose 19.8% on-year. This confirms the Polish Steel Association (HIPH)’s projections of 2-3% annual demand growth in the coming years, the firm says. It will come despite a slowdown in Polish Gdp growth next year to 3.5% from 4.5% in 2018.

EU policy on trade barriers will have a significant impact on the Polish and European steel industries in the upcoming period. “Although quotas are supposed to prevent the growth of imports in the long term, they could temporarily destabilise the market – for example, (EU) imports in the third quarter this year rose 10% on-year,” KS says in a report seen by Kallanish.

KS reported a 20% on-year increase in third-quarter revenue to PLN 484.9 million ($128.1m), while net profit rose 18% to PLN 11.6m. The quarter saw a rising price trend for all products, as well as strong demand thanks to a large number of investments in construction, according to the firm. Moreover, a lack of competitive import offers and the application of EU quotas supported higher prices.

In the nine months through September revenue grew 23% on-year to PLN 1.4 billion and net profit increased 14% to PLN 28.75m.

KS sold over 630,000 tonnes of steel in 2017. It has three reinforcement fabrication plants with a combined capacity of 15,000 t/month. It also has two steel structures plants and a coil service centre. This is in addition to 13 sales offices around Poland.