Tata Steel Europe to introduce surcharge on HRC, CRC sales contracts

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Tata Steel Europe (TSE) plans to enact a carbon surcharge on all new flat–rolled product contracts from July 1, a spokesman for the group said.

hot-rolled coil steel

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The planned surcharge scheme stipulates for now a €12 ($14.30) per metric ton of hot and cold rolled coil from TSE’s plants at Port Talbot (Tata Steel UK) and IJmuiden (Tata Steel Netherlands), the spokesman told MetalMiner.

TSE is a wholly owned subsidiary of Mumbai-headquartered Tata Steel, which has operations in various parts of the world.

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Carbon surcharge

Several factors could see the surcharge amount change. Those include the difference between the sales price on the rolled products and the carbon tax, the TSE spokesman added.

Western European mills were offering HRC in late March at €900 ($1,070) per metric ton ex works for October delivery. Meanwhile, they were seeking €980 ($1,170) for CRC.

The planned scheme will also not carry any sort of discount, such as for volumes purchased.

“There is a certain amount of dipping our toe in the water,” the spokesman added. It is not yet clear how the how the market or other producers are likely to react to the carbon surcharges.

Tata Steel Europe’s current deficit on carbon allotments within the European Union and the United Kingdom prompted the group to introduce the carbon surcharge scheme, the spokesman also said.

Policy changes

The European Union’s Emission Trading Scheme Phase 4 took effect Jan. 1. Implementation of that will also see an annual 2.2% drop on carbon emissions allowances until 2030.

Those decreases exceed TSE’s decarbonizing rate, the spokesman noted, thus prompting the group to pass the costs on to buyers.

TSE is aiming to be zero-carbon emissions in Europe by 2050. The group’s more immediate aim is 30-40% cut in carbon emissions by 2030.

The spokesman declined to indicate what TSE’s total carbon emissions volume are at present.

However, they said it now produces 1.98 metric tons of carbon per every metric ton of crude steel produced.

Uncertain futures

TSE’s total crude steel capacity is approximately 11 million metric tons per year. Port Talbot can produce 4 million metric tons of crude, via two blast furnaces and two convertors, which it casts into slab for further rolling.

Ijmuiden, just outside of the Netherlands’s official capital of Amsterdam, has a crude capacity of 7 million metric tons per year. Its production there comes from two blast furnaces and a convertor shop.

The Dutch site can produce HRC in 1-2mm gauges. The plant can also produce CRC, hot-dipped galvanized coil, pre-painted coil and tin sheet.

Despite those plans, the two integrated works’ respective futures are unclear.

TSE split up IJMuiden from Port Talbot in November. At the same time, Sweden’s SSAB announced that it was in preliminary talks with the group over potential acquisition of the Dutch plant.

Those talks with the Indian group ended in February (after having announced them in November). The Swedish firm cited limited potential scope to integrate the Dutch plant into the Swedish group’s strategic framework.

SSAB wants to produce the world’s first fossil-free steel by 2026 and be completely fossil-free by 2045.

Labor unions at Port Talbot have also expressed concerns about that site’s future. Furthermore, Welsh nationalist and social democratic party Plaid Cymru has called on London to nationalize the plant.

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