• MetalMiner September Webinar

    Increased steel capacity will certainly play a role in steel price peaks as 2021 comes to an end. But don’t take our word for it — just yet.

  • MetalMiner 2022 Annual Outlook

    Available NOW: the U.S.-centric annual buying guide for informing 2022 metal purchasing strategies.

  • MetalMiner Newsletter

    You want even more intel on current metal prices and news (who wouldn’t?). Look no further than our Gunpowder newsletter.

  • MetalMiner Weekly Emails

    Stay up-to-date with ongoing insights and updates with the MetalMiner weekly email.

  • Allocation Market

    The dreaded ‘A’ word connotes something far worse for many metal buying organizations. Are you struggling to find steel in this market?

Reports in the media that natural gas prices in the U.K. have more than quadrupled over the last year to highs of 180p per therm from around 40p per therm this time last year are making headlines. This is largely because of the impact on small, startup gas suppliers who have been forced out of business over recent weeks.

However, natural gas — and energy prices, broadly — have been rising strongly. This has been the case, not just in the U.K. but across Europe for much of this year.

MetalMiner should-cost models: Give your organization levers to pull for more price transparency, from service centers, producers and part suppliers. Explore the models now.

Power prices on the rise

natural gas tap

PhotocreoBednarek/Adobe Stock

In part, this is weather-related. Exceptionally low winds are failing to generate sufficient renewable energy. However, the situation is also due to the rise of natural gas prices, globally and specifically in Europe.

Demand from China and severe weather in Texas have led to increasing demand and constrained supply. As such, those have created the perfect conditions for speculators to drive prices higher.

Another less talked about contributor is the failure of Russia to supply more than its minimum contractual requirements to the European market for some months. The move is widely seen as the Russian authorities trying to apply pressure on Europe for the approval of the Nord Stream 2 gas pipeline.

According to The Guardian newspaper, around half of the U.K.’s electricity is generated by natural gas-fired power plants.

The situation is exacerbated by unplanned outages of nuclear power plants this year. Furthermore, fire shut down a main power cable importing electricity from France just this month.

Natural gas surge

The U.K. relies heavily on natural gas for both residential and industrial use. The resulting rise in prices has already led to the closure of two major U.K.’s fertilizer plants.

This has had the knock-on effect of crimping CO2 production. Ir is made as a byproduct and is the source of some 80% of the UK’s supply. CO2 is needed for a wide variety of industrial and agricultural applications.

Steel impact

The U.K.’s second-biggest steel producer, British Steel, is quoted by the Financial Times as saying that the U.K.’s power prices are spiraling out of control.

The company is on variable electricity prices. British Steel has warned it could have to close production in the face of unprecedented price increases.

Electricity costs can represent up to 20% of the cost of converting basic raw materials into steel. The company is quoted as saying it is facing a maximum price at peak times of up to £2,500 per MWh.

Meanwhile, it saw an average of £50 per MWh in April.

Spot prices in excess of £1,000 per month MWh are becoming increasingly common this month after wholesale prices in the U.K. rose dramatically.

Nor is the UK well served with reserves of natural gas. It has just 1% of Europe’s total storage after failing to invest in storage facilities over the last 10 years. So, if supplies from Russia do not increase as the winter season approaches, the U.K. is probably the worst-placed of all European markets in having no alternatives to limited supply and rising prices.

While European steel producers are more protected in terms of energy prices by state rules and long-term agreements, producers in Italy are voicing worries. Rising power costs are said to be behind the current price of steel products in southern Europe, which had expected to decrease on falling scrap input costs but were being hampered by record power costs.

With winter approaching, the situation is likely to get much worse before it gets better.

Are you prepared for your annual steel contract negotiations? Be sure to check out our five best practices

This morning in metals news: Nucor Corporation this week said it is evaluating locations for a new 3-million-ton capacity sheet mill; meanwhile, the Department of Commerce announced changes to its anti-dumping and countervailing duty regulations; and, lastly, British Steel warned about surging power prices.

Cut-to-length adders. Width and gauge adders. Coatings. Feel confident in knowing what you should be paying for metal with MetalMiner should-cost models.

Nucor Corporation to build new sheet mill

Nucor logo

Postmodern Studio/Adobe Stock

Nucor Corporation this week said it is evaluating locations for a new sheet mill that will have a capacity of 3 million tons.

The steelmaker said it is looking at possible locations in Ohio, Pennsylvania and West Virginia.

“The new mill will be geographically situated to serve customers in the Midwest and Northeast markets and will have a significantly lower carbon footprint than nearby competitors,” Nucor said.

The steelmaker said the new mill will cost approximately $2.7 billion. The mill will produce hot-rolled sheet products with downstream processing. Furthermore, the facility will also have a tandem cold mill, annealing capabilities and two galvanizing lines.

(more…)

1 2 3 1,745