Author Archives: Christopher Rivituso

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New passenger automobile registrations in the European Union fell by almost a quarter in 2020, due directly to the COVID-19 pandemic, the European Automobile Manufacturers Association (ACEA) said.

“Indeed, containment measures – including full‐scale lockdowns and other restrictions throughout the year – had an unprecedented impact on car sales across the European Union,” the Brussels-based organization said Jan. 19.

European automobile registrations plunge

Registrations in the 27-member bloc fell to 9.94 million units from January to December. The total marked a 23.7% decline from slightly over 13 million in 2019, the ACEA noted.

The E.U.’s largest economy, Germany, recorded a 19.1% decline in registrations to 2.92 millions from 3.61 million.

Spain, another major auto market in Europe, reported 851,211 automobile registrations. The country’s registrations fell by a third from 1.26 million, ACEA noted.

Meanwhile, Croatia and Bulgaria saw the largest decreases in new automobile registrations over 2020. Registrations in the two countries fell by 42.8% and 36.8%, respectively.

The automotive industry is one of steel’s largest end-users in flat rolled steel products, including cold rolled coil, hot-dipped galvanized sheet as well as painted sheet.

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While Turkey’s finished steel products enjoy local demand, lower costs and the country’s location between Europe and Asia have also made steel exports from there attractive, market watchers told MetalMiner.

Turkey’s trade in steel exports came to 9.4 million mt in the first seven months of 2020. The total is down 12.1% year over year from 10.7 million mt, a report from the Turkish Statistical Institute (TurkStat) indicated.

Domestic steel trade rose 10.8% to 7.2 million mt in the first seven months of 2020, compared with 6.5 million mt over the same time in 2019, TurkStat noted.

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Demand for steel from Turkey

Besides North America and Europe, Turkish steel has also seen demand from emerging economic areas, such as the Middle East, Asia and Africa, the same source said.

Turkey is also among the world’s few steelmaking majors to see gains in crude steel production over 2020. This came despite the economic slowdowns the COVID-19 pandemic caused.

Total crude production by Turkish mills in November rose 11.6% year over year to 3.22 million mt. The total marked an increase from almost 2.9 million mt, the World Steel Association (worldsteel) reported Dec. 22.

The first 11 months of 2020 saw those mills produce over 32.4 million mt. The total reflected a 4.9% rise compared with the same time frame in 2019, worldsteel noted.

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Russia’s Severstal plans to target the United States and Canada as an export market for its large-diameter pipe (LDP) products from the Izhora Pipe Mill (ITZ), an official with the steelmaking group told MetalMiner.

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Severstal looks abroad

Lower consumption and a review of investment plans by major end-users within Russia itself have prompted the move, the source noted.

In addition, many pipeline construction projects within Russia have also ended, a market watcher also said.

“The domestic market has been overloaded for a while,” that source added.

Severstal also announced in November that it had for the first time dispatched 235,000 tonnes of LDP – with a 800.1 mm diameter and a wall thickness of 19.05 mm – to the Port of Houston as a one-time shipment.

The official did not say who the end-user was or the planned application, however, citing confidentiality agreements.

Only a small percentage of Severstal’s LDP production has gone to the export market, mainly to Europe, South Asia as well as to Middle East and North Africa, the official told MetalMiner.

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The U.S. has agreed to refund “a significant portion, plus accrued interest” on an import tariff for slab imports to Russian steelmaking group Novolipetsk Steel’s U.S. subsidiary, the parent group said.

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.

U.S. subsidiary of Russian steelmaking group reaches deal on import tariff refund

The refund is the result of a settlement between NLMK USA and the federal government in a dispute over the refund of duties for slab imports.

However, the government did not admit to any improprieties, the group said in a mid-November statement.

Since 2018, steel imports into the United States are subject to duties imposed under Section 232 of the Trade Expansion Act of 1962. The duties amounted to 25% and 10% on steel and aluminum, respectively, on imports from most countries.

NLMK USA normally sources slab from Novolipetsk Steel’s main plant at Lipetsk, in Russia. The slab is used for rolling at NLMK Indiana, as well as at NLMK Pennsylvania and Sharon Coating.

Costs to produce one metric tonne of steel in the United States are $460-500. Meanwhile, in Russia they are $320-350, industry watchers told MetalMiner.

Case background

NLMK USA originally brought the import tariff lawsuit in February against the government at the United States Court of International Trade. That claim covered 86 exclusions submitted for slab that the steelmaker submitted in 2018.

The U.S. Department of Commerce denied the requests. The department argued other steelmakers in the country claimed they were able to produce adequate supply of slab for rolling.

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HRC mills in Western Europe continue to seek higher prices for hot rolled coil on high local demand and low availability, traders told MetalMiner.

End users are also trying to hedge their positions because November and December are the two months when they build up stocks before year’s end, traders said.

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.

Mills are now offering HRC at €600 ($715) per ton EXW for February/March delivery, up from previous deals of €520-530 ($620-630), sources said.

It’s not clear if any buyers have accepted the latest offers because they are still “swallowing this information,” one of the traders noted.

HRC from Russia, Turkey

The lack of available material on the local market is adding support to the offer prices, one trader added.

“The mills can wait,” the trader said about market acceptance, noting that even availability of imported HRC is becoming scarcer.

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Interest in the Central European steel sector came not only from the West, but also from further East.

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Interest in Central European steel assets

Ukrainian group Industrial Union of Donbass (ISD) acquired Hungarian integrated flats producer Dunaferr in 2004. The group also acquired Polish integrated plate producer Huta Czestochowa in 2005.

The Polish plant entered bankruptcy in 2019, however, amid what it called increasing difficulties in the European steel market.

Liberty Steel subsidiary Sunningwell leased in 2019 the plant from Czestochowa’s bankruptcy trustee. In 2020, it won a tender to purchase the plant. Polish media noted in October, however, that the plant would remain leased until mid-2021.

Czestochowa is now operating, an administrator for the plant confirmed to MetalMiner. However, she declined to indicate what shops were operating or at what percentage of capacity.

Steel situation in Ukraine

One difficulty Czestochowa faced was reportedly due to the armed conflict in 2014 between Ukrainian forces and Russian-backed rebels in eastern Ukraine, resulting in creation of the breakaway Luhansk People’s Republic and the Donetsk People’s Republic, a November 2014 report in Polish media stated.

ISD subsequently lost control of its slab producer at its Alchevsk plant, which is in Luhansk People’s Republic, and from which it sourced slabs for rolling at Czestochowa.

Donetsk region, once Ukraine’s industrial heart and the location for the majority of steelmaking and rolling assets, is now the within the breakaway and unrecognized Donetsk People’s Republic. The republic contains Donetsk Steel, integrated metal and mining group Metinvest’s Yenakievo and Makeyevo plants and the Khartzysk pipe plant.

Reports of low operating percentages against capacities, industrial action by workers over unpaid back salaries and out-of-date equipment are also coming out of steelmakers in the Donetsk People’s Republic, sources told MetalMiner.

“Nobody knows what’s going on there,” a second analyst said.

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(Editor’s Note: This is the first of a two-part review of the European steel sector.)

While steelmakers east of Berlin are working to meet rising demand, others are facing myriad technical and regulatory challenges.

Those challenges include a global pandemic that has severely impacted economies, industry watchers and market participants told MetalMiner.

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European steel faces higher costs, environmental restrictions

Steel plants in Central and Eastern European states that are members of the European Union face not only higher costs, but also environmental restrictions that could eventually mean an additional $30-40 per tonne to make steel.

China’s recovery from the coronavirus pandemic has led to increases there in steel production and cheaper imports.

As a result, China’s rebound has further impacted European steelmakers in Central and Eastern Europe.

‘Shifting east’

Foreign metals and mining groups started to acquire plants in Central and Eastern Europe in the late 1990s to early 2000s. Governments in those regions sought to privatize what in many cases were previously state-owned assets.

“The view was that the market was shifting east in terms of manufacturing bases,” as Western European automakers and white goods producers were setting up shop in those countries, one analyst said.

Some of the acquired assets also have either captive raw materials sources or easier access to them. This solved potential supply chain questions and allowed the acquiring groups to redistribute material elsewhere within their own network.

Many of the newer member states that joined from 2004 were also receiving subsidies from Brussels for infrastructure improvements. Those improvements would, in many cases, require steel, the analyst added.

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As we noted yesterday, flats and specialty steels producer SSAB is in talks with Tata Steel over potential acquisition of the Indian group’s IJmuiden integrated plant in the Netherlands, the Swedish group confirmed.

“SSAB has participated in several different discussions concerning consolidations in the European steel industry. The discussions with Tata are on-going but no decisions have been made,” SSAB said Nov. 13.

“There can be no certainty that any transaction will materialize, nor as to the terms of any such potential transaction. Further announcement will be made in due course,” the Swedish group added.

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SSAB profile

SSAB’s product assortment includes plates, tubes and special steels. The group’s Luleå plant in northern Sweden produces steel and casts slab for rolling and coating at its Borlänge plant further south in the country.

The company also produces specialty steels at its Oxelösund integrated plant, south of capital city Stockholm, where it also rolls them into finished products.

SSAB acquired Finnish steelmaker Ruukki in 2014. In addition, the group produces plates and hot-rolled coil in the United States via one electric arc furnace at Alabama and at Iowa with a total capacity of 2.4 million tons per year.

SSAB’s IJmuiden interest

SSAB has eyed IJmuiden for at least a year, one analyst familiar with the situation told MetalMiner.

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Prices for hot-rolled coil in Western Europe have continued their upward trend in October and November. Mills report solid bookings well into 2021, market participants said.

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Hot-rolled coil deals

Offers and transactions over the previous week on hot-rolled coil produced within Western Europe for January delivery occurred at €520-530 ($595-615), a rise from previous deals of €490 ($560), traders said Nov. 2.

“Getting a hold of a competitive offer is tricky right now,” one U.K. trader commented to MetalMiner.

Demand mainly from the construction and auto sectors have helped to maintain a strong market for the flat-rolled product, traders noted.

ArcelorMittal also announced late last week that it would seek €550 ($640) on hot-rolled coil for February production from its Gijon plant in Spain, a second trader said.

Officials at the Luxembourg-headquartered group were unavailable for comment, however, despite several attempts.

Many producers had notably reduced production and took their hot ends off stream earlier in the year as the World Health Organization declared the COVD-19 virus a global pandemic and infections of the virus rose strongly throughout Europe.

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Global steel production for the first nine months of 2020 fell by 3.2% year over year to 1.35 billion tonnes, the World Steel Association (worldsteel) stated on October 23.

Production over the same time in 2019 was slightly over 1.39 billion tonnes, the Brussels-based organization stated.

Do you use cost breakdowns in your steel negotiations? See other tips in negotiating with mills and service centers. 

Global steel production falls, but China’s rises

China, the world’s largest steelmaking nation by volume, offset the total decrease with a 4.5% rise in its crude production to almost 782 million tonnes from slightly over 748 million tonnes, worldsteel figures indicated.

September alone saw China pour over 92.5 million tonnes of crude steel. That figure is up 10.9% from the 83.4 million tonnes China poured in September 2019.

Elsewhere in Asia

Vietnam saw the largest increase over nine months in Asia at 14.8% year over year. Total production reached 17.7 million tonnes from the 15.4 million tonnes produced in the first nine months of 2019.

Asia’s total crude production was almost unchanged at just over 1 billion tonnes from 999 million tonnes.

Japan had the largest drop in the region at 19.1% to 70.2 million tonnes from 84 million tonnes.

“The more interesting trend the data shows is the evolution of steel making in SE Asia,” MetalMiner’s Stuart Burns explained. “Japan is suffering but capacity in markets like Vietnam is rising rapidly, in part to meet domestic and regional demand but additionally as Chinese manufacturers offshore to circumvent tariff barriers they are facing in North America and Europe.

“Although much of the production from these new producers is currently flowing into local Asian markets, the quality is sufficiently high to give them access in time into Europe, Japan and elsewhere. The Asian steel story is not confined to China.”

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