Author Archives: Christopher Rivituso

decarbonizing steel

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German flats producer Salzgitter-Flachstahl, part of the Salzgitter group, and Anglo American have signed a memorandum of understanding (MoU) to cooperate on decarbonizing steel production, the London-headquartered company announced.

The work will include methods to reduce carbon emissions by researching iron ore pellets and lump ores that would be suitable for use in direct reduction steelmaking, Anglo American said in an Aug. 4 announcement.

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ArcelorMittal plans to invest C$1.77 billion ($1.42 billion) into installation of new technology at its Dofasco plant in Ontario. The investments will cut carbon emissions by 60%, or 3 million metric tons, over the next seven years, the steelmaker said.

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ArcelorMittal aims to slash emissions

ArcelorMittal logo

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ArcelorMittal Dofasco will transition to steelmaking via Direct Reduced Iron (DRI) and electric arc furnace (EAF) route. They will carry a lower carbon footprint and respective capacities of 2 million metric tons per year and 2.4 million metric tons per year. They are tentatively scheduled to go on stream before the end of 2028, the Luxembourg-headquartered group announced on July 30 with the Canadian federal government.

ArcelorMittal CEO Aditya Mittal and ArcelorMittal Dofasco President and CEO Ron Bedard made the announcement with several federal government officials, the group noted.

“The investment is contingent on support from the governments of Canada and Ontario. Today the Government of Canada announced it will invest C$400 million [$321 million] in the project. The company is in discussions with the Government of Ontario regarding its support,” ArcelorMittal stated.

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Tata Steel Europe (TSE) plans to raise from Sept. 1 its carbon surcharge on new contracts concluded for flat rolled steel products, an official with the company said.

“The surcharge is in line with the [European Union’s] Emissions Trading Scheme” for carbon regulation, the official told MetalMiner late last week.

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Tata Steel Europe raises carbon surcharge

carbon footprint

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As charges relating to the ETS scheme move up or down, TSE’s pricing department determines how to adjust it, the official added. He noted that reports from other publications of a one-third increase from €12 ($14.25) per metric ton to €16 ($19) were correct.

The carbon surcharge will also come under review from the start of each calendar quarter, and the company will decide then how much to adjust it and by when to enact any changes, the official noted.

Hot rolled coil in Western Europe is now about €1,200 ($1,425) per metric ton exw. Meanwhile, cold rolled coil is an estimated €1,300-1,320 ($1,545-1,570).

TSE, which is part of Tata Steel, initially introduced its carbon surcharge for flat rolled products on contracts from July 1, as the company was in deficit on its carbon allotments within the E.U. as well as in the United Kingdom.

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Prices for hot rolled coil in Western Europe have started to slow on subdued demand, due to the summer season and competitive import offers, market participants told MetalMiner.

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Hot rolled coil prices slow

hot-rolled coil steel

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The flat rolled product has transacted in the past week at closer to €1,200 ($1,415) per metric ton exw for November delivery. That compares with a price range of €1,150-1,200 in late June, sources said.

Producers sought to push HRC prices up to €1,250 ($1,475), one trading source told MetalMiner. End users, however, did not accept the increase.

Severe flooding late last week in the Netherlands, Belgium and Germany’s North Rhine-Westphalia state, however, have created logistics disruptions in those areas. This prompted ThyssenKrupp Steel to declare on Friday a force majeure on its deliveries, a spokeswoman for the German group told MetalMiner.

“That doesn’t help the supply for sure” as it could tighten the market and mitigate any price declines, the analyst warned.

Higher temperatures in the European summer as well as workers and businesses taking holidays in July and August, resulting in lower activity, are now putting pressure on prices for the flat rolled products.

The import market is also adding pressure to local prices, however, sources noted.

Offers on HRC from mills in Japan, Indonesia and Taiwan are about $1,170-1,200 per ton CFR European ports for September/October delivery.

“I think that it is fair to say that import activity will pick up,” one analyst said.

Lead times on the domestic market are in some cases as far out as Q1 of 2022, he added.

Uncertainty over imports

The analyst warned, however, that it is for now uncertain what kind of impact Russia’s planned introduction of a 15% export tax from Aug. 1 on all steel products – semis and finished – would have on import markets into Europe.

China is also weighing the introduction of an export tax on its steel exports in order to cool its domestic market, one source said, after canceling in May the export rebate on the 13% value-added tax failed to bring the desired effect, sources noted.

Meanwhile, the European Commission, the European Union’s executive arm, opened up an antidumping investigation in June on hot dipped galvanized coil imports from Russia and Turkey. That prompted producers in those two countries to increase offer volumes, the trader said.

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Novolipetsk Steel (NLMK) reported a 10.8% increase year over year in its crude production for H1 2021. The steelmaker benefited from stronger demand, as economies in Russia and abroad restarted economic activity, the group said.

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NLMK ramps up production

Postmodern Studio/Adobe StockTotal crude production across all NLMK’s steelmaking assets came to 8.94 million metric tons, compared with 8.07 million tons over the same time in 2020, the group said in its July 13 operational results.

Rebuilding work on the converter shop at NLMK’s main site in Lipetsk also helped to raise production, the group added. Its capacity percentage averaged to 95.5%, up from 93% over the first six months of 2020.

NLMK has a crude steel capacity of 17 million metric tons per year. The majority of that volume comes from Lipetsk, which can pour up to 12.4 million metric tons per year. The crude steel is then cast into slab for rolling hot and cold rolled coil transformer and dynamo steel, as well as pre-painted.

Lipetsk also supplies its slabs to assets in Europe and the United States for further rolling into coils or plate.

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Russia’s plan to introduce from Aug. 1 a temporary export duty on metal exports has brought varied reactions from European industry watchers and market participants.

“It’s about showing the strength of the Russian metals industry,” one analyst told MetalMiner.

Russia’s planned tariff may also be a retaliatory measure against Europe and its proposed carbon tax on metals imports from high-carbon producers, of which Russia is one, the analyst added.

“It feels like it is a broadside shot,” the analyst said.

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Russia export duty to cover steel, base metals

tariff

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The Russian Federal Government’s Decree No. 988 of June 25 stipulates a 15% export duty from Aug. 1 to Dec. 31 on all steel – semi-finished and finished – as well as on copper nickel, and low-grade aluminum leaving the country and the wider Eurasian Economic Union (EAEU).

Member states of the EAEU include Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. In addition, Cuba, Moldova and Uzbekistan are observer states.

One of the more likely beneficiaries in Europe from the duty is the steel sector, sources told MetalMiner.

“Everybody loves this,” one analyst said about Russia’s tentative export duty, as it could further push up already-high prices for steel products in Europe.

Domestically produced hot rolled coil for Q4 production within Western Europe is now €1,170-€1,200 ($1,390-1,420) per ton exw, traders said. That marks an increase from the €1,120-1,130 ($1,370-1,385) reported earlier in June.

Planned shutdowns of rolling equipment or banking of hot ends for maintenance over Europe’s summer months could also further push up prices in the face of high demand throughout Western Europe, the analyst stated.

One steel trader voiced a similar opinion.

“This is great for everybody” the trader noted, as the decree will push up steel prices on both the domestic and import markets.

“Who’s gonna wait until the end of the year to acquire steel if Russia is out of the market?” the trader rhetorically asked.

Ukraine’s Metinvest is likely to also benefit from this. The group is a major supplier of long products into the E.U. Resulting higher prices will also mean more revenue.

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The government of Belgium’s Walloon Region plans to provide a loan to Liberty Steel’s Liberty Liège-Dudelange (LLD) rolling and coating asset while seeking a new buyer for it. The move follows the March collapse of the steelmaking group’s main creditor, Greensill Capital.

“In this context, the company LLD is in the process of judicial reorganization by ‘collective agreement’ (since May 11) and there is a significant risk in the short term that it will not be able to continue its activities,” Walloon Region Vice President Willy Borsus said in a June 3 statement.

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Liberty Steel lifeline in Belgium?

Belgium map

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The Walloon government thus plans to propose that the regional investment fund Sogepa issue a loan for the plant so that it can continue operating.

“This proposal from the region is subject to strict conditions which aim in particular to guarantee the full repayment of this loan and to the organization of a sale procedure with which Sogepa must be closely associated. By respecting the conditions set by the Region, the bankruptcy of the company can be avoided,” Borsus’ statement read.

The regional government is also in contacts with members of the Luxembourg government over this issue, Borsus added.

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German integrated flats producer Salzgitter-Flachstahl has warned its customers of potential delays to deliveries after a lightning strike at the plant impacted steelmaking and rolling operations, a company official told MetalMiner.

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Lightning strike impacts Salzgitter-Flachstahl operations

Salzgitter AG

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The company sent a letter to its customers on June 9, explaining that a lightning strike at the weekend at a substation on site caused its blast furnace and convertor shops — as well as its hot strip mills — to operate at lower levels, the source said.

The incident completely halted all production for only one hour. However, the aftereffects caused various disruptions that continue to impact operations. Furthermore, the stoppage impacted in digital controls, electrical cable feeds and motors on production lines. In turn, that caused the plant to operate at lower levels, the source said.

He did not say, however, either at what capacity percentage Salzgitter-Flachstahl is now operating or in what areas. He also did not indicate what previous production levels were before the incident.

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ArcelorMittal is eyeing the potential acquisition of Liberty Steel France, which includes a steelmaking plant at Ascoval and rail rolling mill at Hayange, a source within the Luxembourg-headquartered company told MetalMiner.

“We were interested last year, when they were available,” the source said.

ArcelorMittal logo

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Bids are due for assessment likely in July, the source added.

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ArcelorMittal strategy

One analyst expressed his surprise on ArcelorMittal’s interest in those plants. In February, the steelmaker announced financial results for 2020, stating that its strategy would be to focus on organic growth.

ArcelorMittal also rolls rails in Europe at Gijón in Spain and Luxembourg’s Rodange mill. It also does so in Poland at the Dąbrowa Górnicza and Królewska sites.

The financial difficulties that Liberty’s parent company GFG Alliance now faces could possibly allow ArcelorMittal to acquire the assets at lower prices, the analyst added.

Rothschild & Co (Paris) is managing sale of the assets on Liberty’s behalf, a spokesman for the steelmaking group told MetalMiner in an email.

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Hot rolled coil prices in Western Europe have not slowed their upward trek over the past month. Demand continues to outstrip supply for the flat-rolled product, industry watchers said June 1.

“It has everything to do with high demand in Europe and the United States,” one trader told MetalMiner.

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Rising hot rolled coil prices

hot-rolled coil steel

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Sources confirmed prices for hot rolled coil at €1,120-1,130 ($1,370-1,385) per metric ton exw for rolling and delivery into Q4. That compares with hot rolled coil prices of €1,000-1,020 ($1,225-1,250) in May.

Cold rolled coil is now carrying a premium of €125 ($150) per ton over HRC, sources indicated.

The auto and construction sectors are behind the high demand, one source said.

New registrations for passenger vehicles within the European Union rose by 218.6% year over year in April to approximately 862,226 units from 270,651 units, the European Automobile Manufacturers’ Association (ACEA) stated on May 19.

Restrictions from the COVID-19 pandemic in April 2020 were the main reason behind the increase, however, the association noted.

“Indeed, despite this big percentage increase, last month’s sales volume was almost 300,000 units lower than that recorded in April 2019,” ACEA added.

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