Tata partners with Czech service centre for decarbonisation
Tata Steel Nederland says it has signed a memorandum of understanding on decarbonisation with Czech steel service centre Steel Center Europe.
Steel Center Europe is a coil processing service centre equally owned by Japan’s Sumitomo Corporation and Spain’s Bamesa. It was established in 2004 by Sumitomo and Toyota Tsusho. Bamesa became co-owner in 2020.
The steelmaker announced the partnership on its LinkedIn account but did not specify what it entails. The note refers to Zeremis, Tata Europe’s emissions-reduced steel brand, which suggests the partnership is about Tata supplying Zeremis to the Czech firm, Kallanish notes.
“To support the green journey of all European mills, a separate department has been established within the Sumitomo Group, demonstrating their strong commitment to sustainability,” the note adds.
Christian Koehl Germany
UK to provide £13.5 mln to support supply chain while Tata Steel transitions to green steelmaking at Port Talbot
The government said the funding was for “immediate release” to support those local businesses that rely on Port Talbot steelworks by helping them turn toward new markets and customers. Details of exactly how to access the funds will be announced soon, the government added.
The money is the first tranche from the Tata Steel/Port Talbot Transition Board fund – a dedicated fund of £100 million to be invested in skills and regeneration programs to support workers directly and indirectly affected by Tata Steel’s plans for Port Talbot. The funding will help them to find new jobs where relevant, provide access to skills training and enable them to gain new qualifications.
Tata Steel Europe’s decarbonization plan for the Port Talbot steelworks includes the construction of a new 3.2 million tpy electric-arc furnace, with the total amount of the investment reaching £1.25 billion, including financial support from the UK government.
The decarbonization plan also includes the gradual closure of the two remaining blast furnaces at the Port Talbot steelworks. BF5 was closed on July 4 and BF4 will be closed by the end of September.
Tata Steel Europe said that it would provide £20 million of the total transition fund, while £80 million will come from the UK government.
A spokesman for Tata Steel Europe told Fastmarkets the company has already started spending some of its £20 million contribution on an employee support scheme – to help workers get formal accreditation for their skills by gaining National Vocational Qualifications (NVQs) and that it will soon appoint an outplacement support agency.
More than 50 companies, including Fintech Wales, The Royal Mint, Cardiff Metropolitan University, RWE Energy, Ledwood Mechanical Engineering, and Pro Steel Engineering, have committed to supporting workers forced to leave their jobs in the steelworks. According to the UK government, support includes guaranteed interviews for anyone made redundant, training and coaching.
On August 1, TV Narendran, chief executive officer of India-headquartered parent company Tata Steel, confirmed the company’s intention to continue with its decarbonization plans for The Port Talbot steelworks.
“In the UK, we have safely ceased operations at one of the blast furnaces (BF5) at Port Talbot and are on track to close the remaining blast furnace by September 2024,” he said at the time.
And a Tata Steel Europe spokesman said that no hot metal will be produced at the site until the new EAF is up and running in 2028.
On August 15, the UK government’s Welsh Secretary, Jo Stevens, chaired the second meeting of the Tata Steel/Port Talbot Transition Board and said that, despite Tata Steel’s management being firm about its schedule for decommissioning, “negotiations with Tata Steel on the future of the site will continue.”
The UK Business & Trade Secretary, Jonathan Reynolds, said: “We’re working in partnership with trade unions and industry to secure a green steel transition that’s right for the economy, [for] our talented workforce and [for] local communities for generations to come.
“Our negotiations with Tata [Steel] remain ongoing.” he added.
And Tata Steel UK’s CEO Rajesh Nair, said: “The transition board [has a] very important role [to play] in supporting the transformation of our business to low-CO2 steelmaking and [in] encouraging regeneration and inward investment to the area, while [at the same time] helping to mitigate the impact those changes may have on our people, our supply chain and our communities.”
Pressure on UK HRC prices
The Port Talbot steelworks produces hot-rolled coil and, according to Tata Steel, the annual output of the new EAF will be equivalent to the combined output of the last two blast furnaces.
But the previous closures and the fact that no steel will be produced at the site from September “has led to an increase in imports consistently exhausting part of the quota for Category 1 steel [which includes hot rolled flat steel products] across four consecutive quarters,” according to the UK Trade Remedy Authority (TRA).
“This in turn has driven up the cost of these products for the UK market,” the TRA said.
To remedy this, the TRA, announced on August 9, that the import quota for flat steel products will be almost tripled due to the “changed circumstances” in the market, with particular reference to the blast furnace shutdowns at Port Talbot.
The current quota of 1 million tonnes per year for Category 1 steel, will be expanded to 2.9 million tpy, by dividing Category 1 into two subcategories – 1A and 1B – to reflect whether the interested parties want to import material for commercial applications (1A) or for downstream processing (1B).
The quota Category 1A – which covers the steel commonly used as a raw material for other types of steel – will be set at 1 million tpy.
The quota for Category 1B – steel that has been subject to further downstream processing – will be set at 1.9 million tpy.
The TRA said that if limits are breached, importers will need to pay a 25% tariff.
UK TRA proposes increasing HRC import quota citing Tata Steel UK production drop
The UK Trade Remedies Authority has proposed an increase to the import quota for hot-rolled flat products as changes in circumstance, including the recent closure of a blast furnace at Tata Steel UK’s Port Talbot works, have decreased domestic production of these products, it said Aug. 9.
Under the proposal, the current quota volumes for steel used for commercial applications will be maintained, while the TRA would create a new quota accessible for downstream processing, it said.
The TRA has proposed that the category for hot-rolled flat products, known as Category 1, be split into two segments, Categories 1A and 1B. The quota for Category 1A, which would be accessible by parties looking to import the products for commercial applications will be retained at current levels, or just over 1 million metric tons/year.
The quota for Category 1B, which would be accessible solely for downstream processing, however, will be set 89% higher than that of Category 1A, to around 1.9 million mt annually. This means the total Category 1 category for hot-rolled flat products will be increased to 2.9 million mt.
The TRA also has proposed for the Category 1B quota to be allocated on a global basis “to allow companies to establish reliable supply chains for domestic processing,” along with a cap in the range of 37%-42% to ensure the quota is not dominated by a single country.
“Our proposal today is designed to deal with the reduction in production of hot-rolled flat steel at Port Talbot,” the TRA said. “These changes have resulted in higher imports and parts of the current quota being exhausted, creating uncertainty and driving up costs for steel users.”
Tata Steel is the UK’s sole HRC producer.
Platts, part of S&P Global Commodity Insights, last assessed UK HRC at GBP575/mt basis DDP West Midlands Aug. 8.
Justine Coyne
Tata Netherlands profitability improves, UK sees stock buildup
Tata Steel Netherlands reported dramatically improved profitability in the June quarter, despite higher raw material cost, while production and deliveries also rose, Kallanish notes.
Deliveries rose 7% on-year and 3% on-quarter to 1.47 million tonnes after the reline of BF6 was completed. Liquid steel output rose 80% from a year earlier and was up 14% on the March quarter to 1.69mt.
Revenue fell 6% from a year earlier but rose 2% on-quarter to INR 14,167 crores ($1.69 billion), while raw material cost was higher on increased coking coal and iron ore consumption cost. Change in inventories was negative on stock build-up during the quarter.
Ebitda was nevertheless at positive INR 453 crores versus losses each a year and quarter earlier, thanks to the stabilisation of operations.
EU steel spot spreads witnessed a decline exceeding 10% during the quarter, Tata Steel says in a presentation. EU steel demand was subdued, with construction and machinery being adversely impacted by high interest rates. Steel imports remained high and led to the European Commission extending safeguards with additional measures.
At Tata Steel UK, deliveries and profitability declined in the June quarter, while raw material cost increased significantly.
Deliveries fell 9% on-year and were flat on-quarter at 680,000t, while liquid steel production slumped 20% from the previous year to 680,000t, but this was up 3% on-quarter.
Revenue fell 12% on-year and was flat on-quarter at INR 6,810 crores ($813 million), while raw material cost surged over 30% in each case due to increased purchases of finished and semi-finished goods. The decline in change in inventories deepened. Ebitda loss more than doubled on-year and on-quarter to INR 955 crores.
Given the planned closure of blast furnaces in the UK, there was a steel stock build-up for the downstream operations which impacted working capital, says Tata Steel chief financial officer Koushik Chatterjee. “We are proceeding as per previously announced timelines for the closure of the [Port Talbot] heavy end,” he adds. “We are working closely with the recently elected UK government on finalisation of grant funding process for the new electric arc furnace project.”
Tata closed blast furnace no.5 at Port Talbot in early July and plans to close BF4 by end-September.
Adam Smith Poland
Tata Steel Nederland adds sampling line
Tata Steel Nederland has expanded its hot strip mill in IJmuiden with a sampling line, Kallanish has learned. The line enables rapid testing of steel properties, as well as the inspection and certification of each steel coil.
According to the company, this shortens lead times in both the development of new steel grades and the delivery of steel to customers. The expansion is the latest in a series of investments and strengthens the company’s position in the market for thicker, stronger and more abrasion-resistant steel, Tata notes.
“Tata Steel is one of the best steel producers in the world, and thanks to our investment programme, we continue to play in the Champions League of the steel industry,” said Tom Eussen, member of the Board of Management of Tata Steel Nederland and Managing Director of Tata Steel IJmuiden. “The new sampling line is a significant investment that allows us to assess the quality of our steel more quickly and deliver to our customers faster.”
“Investments like these enable us to develop new steel grades, such as abrasion-resistant steel, ultra-high-strength steel and linepipe steel,” Eussen continued. “Combined with the opportunity for customers to reduce their scope 3 emissions through Zeremis Carbon Lite and Zeremis Delivered, we continue to strengthen our position in a highly competitive steel market.”
These steels are is used in applications such as trucks and trailers, excavators, cranes, mining, and in pipelines for transporting gas, water and hydrogen.
The sampling line can automatically sample the entire production spectrum, from normal to ultra-high-strength steel, with steel thicknesses of up to 25 millimetres that can be cut. Samples are taken hot, and the capacity of the number of coils that can be sampled has thus substantially increased, Tata says.
Christian Koehl Germany
Tata Steel moves forward with first phase of ‘Green Steel’ plan in the Netherlands
Tata Steel Nederlands said on Monday May 27 that it had awarded contracts for the basic engineering of the EAF and DRI to two Italian companies – equipment supplier Danieli and system solutions specialist Tenova.
Part of the first stage of Tata Steel Nederlands’ “Green Steel” plan, which it expects to be complete by 2030, the EAF will replace the site’s largest blast furnace, BF7, while the DRI plant will replace one of the company’s coke-making plants.
The company did not specify the capacity of the new equipment and did not provide any further details to Fastmarkets’ questions on the issue.
“We cannot share any more information yet about the capacity,” a company spokesperson said, although market participants told Fastmarkets the EAF capacity was likely to be around 3 million tonnes per year.
Tenova said the DRI equipment would refine the liquid metal from the EAF to produce high-quality steel, particularly for the automotive sector.
According to Fastmarkets’ data, at IJmuiden, Tata Steel currently has the capacity to produce 7.5 million tpy of crude steel and produces hot-rolled, cold-rolled, hot-dipped galvanized, and pre-painted coil, along with tin-plated products.
The DRI plant and EAF will cut CO2 emissions by 40%, Tata Steel Nederland said.
In the first stage of its Green Steel plan, the company also aims to further reduce its emissions and particulate matter by using more scrap in steel production, raising its usage from 17% scrap to 30% by 2030.
The steel producer said that it would apply for the necessary permits for the new equipment by the end of 2024.
In the second phase of its transition, Tata Steel Nederlands will close its BF6 and its other coke-making plants, resulting in an 80% reduction in CO2 emissions from 2030 to 2045, by which time the company will be “CO2 neutral.”
Political support concerns
Tata Steel Nederlands decarbonization plans have previously been supported by the Dutch government and, at the end of April, the outgoing Dutch government formally declared that it wanted to Tata Steel’s plan to become more sustainable enacted more quickly, with government representatives starting negotiations with the steelmaker over a legally binding and enforceable tailor-made agreement to do just that.
“Tata Steel’s focus is now entirely on the first phase of its Green Steel plan,” the steelmaker said on Monday. “[And] once the tailor-made agreement with the Dutch government is in place, the company can begin ordering long lead items based on the progressed engineering work, ensuring [that it stays] on track for 2030,” the company said.
But it is not clear how the new Dutch government – a right-wing coalition formed by Dutch nationalist Geert Wilders – will treat such decarbonization projects, with the country’s the most right-wing government for decades likely to deprioritize climate change regulations in favor of more protectionist, nationalistic policies.
Asked to comment on the possible impact of the new government’s future policies on Tata Steel Nederland’s Green Steel plan, the spokesperson for the company said the mandate had been given to the Minister of Economic Affairs & Climate Policy to continue the talks on the tailor-made plan.
“So that is what we do at this moment,” the spokesperson added.
Notably, the new coalition plans to reduce climate change funding by €300 million ($326 million) every year for the next four years – amounting to total cuts of €1.2 billion, according to local media reports.
Sources said the funding cuts will be achieved through cuts in the development of renewable hydrogen.
The Dutch Ministry of Economic Affairs & Climate Policy was approach for comment, but had not responded by the time of publication.
The issue of developing green hydrogen is already a key topic of conversation among European steelmakers.
ArcelorMittal Europe chief executive, Geert van Poelvoorde, told global energy transition information service Hydrogen Insight earlier this year that it could not operate its European plants using green hydrogen, despite billions in EU state funding, because the resulting green steel would not be competitive in international markets.
Using hydrogen with existing DRI modules in Europe is quite expensive, Fastmarkets understands, with hydrogen prices currently around €5-8 per kg, but needing to be closer to “€2.5-3.0 per kg to be commercially viable for steelmaking,” a steel producer in Northern Europe said. To produce 1 tonne of liquid metal in a DRI module, around 80 kg of hydrogen is required, according to industry estimates.
Tata Steel relights BF in IJmuiden
Tata Steel’s BF6 was idled late in March 2023 for maintenance work. The restart, however, was postponed several times because of “technical issues.”
“[The relining of BF6] is a large project and has a number of third-party dependencies in terms of services and equipment,” a Tata Steel spokesperson said on October 23. “As a result of certain delays and delivery issues from third parties, we have had to make changes to the schedule of the project.”
The furnace has now been finally reignited, however.
“A few days ago,” the spokesperson said on January 31, “we began the start-up process on BF6. Step by step, we are working toward a full ramp-up in the production of hot pig iron.”
Several sources familiar with the matter said that the BF in IJmuiden was restarted on January 29.
The IJmuiden steelworks can produce 6 million tonnes per year of pig iron from two BFs. BF6 has capacity for 2.5 million tpy of that total volume.
Tata Steel IJmuiden has capacity for 7.5 million tpy of crude steel, according to Fastmarkets’ company information. The site produces hot-rolled, cold-rolled, hot-dipped galvanized and pre-painted coils as well as tin-plated products.
Market concerns
Market sources were worried that, if more steelmaking capacities were brought back online in the first quarter of 2024, this might hamper the fragile uptrend in the EU flat steel market.
Prices for flat steel in Europe have been picking up in January, primarily driven by reduced supply resulting from output cuts and some limited restocking activity, although end-user demand remained low.
“The acute price rise [in HRC] is entirely supply-driven,” a source in Northern Europe said.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €760.63 ($824.13) per tonne on January 31, up by €3.75 per tonne from €756.88 per tonne on January 30.
The index was also up by €13.96 per tonne week on week and by €65.13 per tonne month on month.
Earlier this month, Salzgitter restarted its BF “A” at Flachstahl in Germany after a four-month outage.
Published by: Julia Bolotova
UK government disadvantages Tata Steel
The UK government is putting Tata Steel at a disadvantage compared with its European peers with the comparatively low level of funding it is providing to help the company decarbonise.
The government has committed to provide Tata with £500mn ($635mn) towards the cost of decarbonising its Port Talbot plant in South Wales, which will have an electric arc furnace with a capacity of about 3mn t. This equates to £166/t worth of assistance.
That level of funding would be insufficient to enable other technologies such as two electric arc furnaces or direct reduced iron. Tata itself is investing £700mn in the move, which has widely been criticised by unions and the Labour opposition as a “bad deal”.
In comparison, the German government is giving Salzgitter more than €525/t ($568.80/t) to facilitate its movement to hydrogen-fed green steel. Germany’s ThyssenKrupp will receive almost €870/t to help it transition to green steel at its flagship Duisburg site.
ArcelorMittal is receiving more than €600/t to help decarbonise its Sestao plant in Spain. At its Dunkerque site in France, it has received funding of €850mn to produce 4mn t of lower-carbon steel, equating to €212/t worth of financial assistance. Therefore, most European competitors are receiving greater state assistance.
To feed its electric arc furnace, Tata will still need to import direct reduced iron, pig iron or other metallics to complement the reservoir of domestic scrap. Sources suggest this could be as much as 1mn t/yr.
Should UK electricity prices remain high compared with Europe, there is a risk Tata’s electric arc furnace will still struggle to compete, although the reduction in fixed costs from job cuts and the ability to adjust output quickly will be financially beneficial.
“This steel plant was losing more than £1mn a day, putting it at risk of closure and threatening 8,000 jobs in South Wales and thousands more in the wider supply chain,” a government spokesperson said.
“The government’s unprecedented £500mn grant as part of the £1.25bn investment by Tata Steel will build a new electric arc furnace that protects thousands of long-term jobs, as well as delivering a much greener way of producing steel, cutting carbon emissions in Wales by 22pc.”
ISTA to meet UK govt on Tata Steel import concerns
ISTA had called for an immediate solution to make it possible for UK buyers to import Indian material. Sources close to the matter told S&P Global Commodity Insights Aug. 3 that the UK government agreed to meet the trade body in September to discuss the matter.
In the July 27 letter seen by S&P Global that was sent to members late-Aug. 3, ISTA claims that the repeated steel orders by Tata Steel UK could be seen as “an unfairly attempt to manipulate the free market.”
“Like all UK steel producers, Tata benefits from the protection of the Safeguard Measures quota system, but it cannot be considered as fair trading practice to then take up that quota thus preventing importers from supplying their own customers,” the letter said.
“Steel already booked and currently on the water to the UK, destined for independent service centres and manufacturing, will not be able to be customs cleared and utilised – a fact Tata Steel know only too well,” ISTA said in the letter, warning that the lack of import opportunities would have a “devastating and immediate effect on steel manufacturing.”
ISTA suggested several options to resolve the matter: to either create a new import category code for Tata Steel’s own domestic use or changing the quota to be utilized for its intended imports and end-user customers. Another possibility would be to increase the quota volume for the other country category, under which Indian material falls.
Tata Steel to receive new order in Sep
Tata Steel has a 22,000 mt order of Indian HRC arriving in September for clearance under the quota period starting Oct. 1. The quota is expected to exceed immediately, sources said. The company is also said to have received a previous order of Indian material in June to support production of its Port Talbot works while it faced production problems.
Although it is understood that Tata has not received material in the current quota period July 1 to Sept. 30, the quota nevertheless is likely to be exhausted soon. There are 1,105 mt left under the other country quota as of Aug. 3, which means it is considered “critical” where a 25% duty deposit has to be paid. The opening balance was 22,837 mt.
Tata Steel UK declined to make an immediate comment on the matter when contacted Aug. 3 after usual office hours.
In an earlier statement July 27 to S&P Global, a spokesperson had said: “Tata Steel, like most other steelmakers, sometimes complements its own production with supplies from other sources to balance its utilisation of downstream businesses.”
The Platts weekly assessment for UK HRC was at GBP615/mt DDP West Midlands Aug 3, stable week on week, according to data from S&P Global.
Author Laura Varriale
