ArcelorMittal Mexico plans to complete the construction of a new hot strip mill with a 2.5 million metric ton capacity at its steelmaking site in Lazaro Cardenas by the end of 2021, the Luxembourg-headquartered group said.
The new mill would produce HRC for the non-auto, domestic and industrial use sectors. The mill is part of a $1 billion upgrade project that the parent group announced in 2017 for the Lazaro Cardenas site.
Up until now, the plant has produced only slab via a direct reduced iron plant and four electric arc furnaces with a crude steel capacity of 4 million metric tons per year.
Long products are also a part of ArcelorMittal Mexico’s rolling capacity. Lazaro Cardenas can roll 1.3 million metric tons per annum of long products via one blast furnace and a basic oxygen converter to produce 1.35 million metric tons of crude steel for casting into billets.
Hot rolled coil from European mills have transacted in the past two weeks for €1,000-€1,020 ($1,200-$1,225) per metric ton exw for rolling and delivery as far ahead as Q4, sources said. Cold rolled coil for the same production and delivery times transacted for about €1,100 ($1,320).
Prices for hot rolled coil in late March reached about €900 ($1,140-1,200). Meanwhile, CRC reached approximately €980 ($1,180).
Deals on imports of HRC over May from India and Turkey concluded at about $1,100 per ton cost and freight (CFR) European ports for delivery in June and July, a second trader stated. That marked an increase from $900-$910 in late March.
A Russian steelmaker also let some steel go into Europe at prices lower than the imports from Asia, another European trading source reported, though no other sources told MetalMiner about this.
The Russians only concluded those transactions in the run-up to Russia’s May holidays. This year, the holidays last 10 days and include May Day on May 1 and Victory Day on May 9, the European trading source warned.
A construction boom in the country has also made Russia’s domestic market the end-user for its rolled product, the source added.
The group tapped 4.37 million metric tons of liquid steel in Q1 2021. Meanwhile, it tapped just over 4.21 million metric tons in Q1 2020, NLMK said.
Crude production rose 12.1% quarter on quarter, however, from 3.9 million metric tons.
Average capacity utilization across all of NLMK’s hot ends in Russia, Italy and the United States averaged 94.5% in Q1. The figure is unchanged from the previous quarter and year over year, the group indicated.
NLMK can produce 17 million metric tons per year of crude steel. That comes mainly from its main integrated site at Lipetsk, about 465 kilometers southeast of capital city Moscow. That asset also casts slab for further rolling at the plant or for export to subsidiary rolling mills in Europe and the United States.
The group also has electric arc furnaces in Russia at NLMK Kaluga, NLMK Ural, at its Italian site NLMK Verona and at NLMK Indiana in the United States.
Indiana can produce 770,000 metric tons per year of crude via one electric arc furnace. Estimated crude capacity from the 68-tonne EAF at Verona is about 500,000 metric tons per year.
NLMK’s consolidated sales, including semi-finished and finished products, fell 3% on the year to 3.91 million metric tons from 4.5 million metric tons.
Quarter-over-quarter sales were 14% lower from 4.22 million metric tons, the group said.
A decrease in commercial pig iron sales due to repairs to blast furnace operations at Lipetsk, plus an increase in intragroup slab sales, impacted sales results, NLMK said.
The group’s consolidated flat sales rose by 2% in Q1, however, to about 2.06 million metric tons from 2.02 million metric tons in Q4 2020. Those sales are down 7% from the more than 2.21 million metric tons the group sold in Q1 2020.
NLMK Russia Long Products, the only segment of the group that produces finished and longs, saw the highest increases in consolidated quarter on quarter at 635,000 metric tons, up 8% from 587,000 metric tons.
Year over year, the increase rises to 18% from 539,000 metric tons.
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.
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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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.
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.
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.
The European steel industry faces three major challenges, following the impacts of the COVID-19 global and the 2008-09 financial crisis, management consultancy McKinsey & Company stated.
“European steel producers should consider making a series of short-term operational and medium- to long- term strategic moves to ensure economic and environmental sustainability going forward,”
McKinsey said in its March 15 report, “The future of the European steel industry.”
“These strategic moves could encompass restructuring steps aimed at capacity reduction, steps toward strengthening the position of steel companies by diversifying their capabilities and sustainability moves toward low- and no-carbon steel,” McKinsey added.
The first move the sector needs to address is the increase in structural overcapacity. That is particularly true after a demand loss of between 5 million and 10 million metric tons demand loss as a result of the pandemic, the group stated.
“European steel players need to adjust overcapacity to be in sync with next normal steel demand,” McKinsey said.
Adjusting for a greener future
Steelmakers also need a short-term response to compensate for higher costs with profitability improvements and incremental measures that will reduce CO2 emissions. For example, they can do so by increasing the scrap rate, the report added.
Meanwhile, producers need to make investments with a view to medium- and long-term decarbonizing of the steel industry. In short, they should tailor long-term plans and technology choices towards CO2 neutrality, McKinsey noted.
Some producers’ offer prices from late last week are now at least €900 ($1,060) per metric ton exw. Meanwhile, delivery times extend as far out as October, market participants said.
Cold rolled coil is on offer for €980 ($1,155), they added.
“It’s impossible to get anything before June,” one trader said.
Hot rolled coil offers in mid March reached €850-900 ($1,000-1,060) for May rolling and June delivery. However, traders warned then that the price and lead times were not certain and could rise further.
Import offers for hot rolled coil are now $900-910 cost and freight (CFR) for European ports. That is up from $890-900 transacted earlier in March for material from India and Japan, respectively for May and June delivery, sources also noted.
Import prices could also face more increases, a second trader warned.
Offers for the flat rolled product from Western European mills are now €850-900 ($1,015-$1,070) per tonne ex works for May rolling and June delivery, traders told MetalMiner. That moved up by an average one-third from the €750 ($894) that producers were offering in early February.
Production cuts by Western European mills could, however, make it difficult to secure finished product at those times and prices.
“You cannot buy a single tonne,” one trader said about acquiring hot rolled coil from Western European mills at present.
Rises in raw material prices and reported difficulties in securing ferrous scrap are also pushing up prices, a second trader said.
Hot rolled coil is used in construction applications. The flat rolled product is also used as feedstock for welded pipe production. It’s also used for rolling cold rolled coil and and to produce further downstream.
Anti-dumping measures, Chinese demand
Also supporting prices on the Western European domestic market are EU anti-dumping measures on HRC from Turkey and China. In addition, high demand for finished product from China has offered support, sources said.
“The Chinese [economy] is doing very well,” the first trader said.
High hot rolled coil demand in Southeast Asia for building and infrastructure projects is also supporting Western European prices, sources noted.
ArcelorMittal has strong prospects in the United States.
This is even after the group sold in 2020 almost 14 million tons of integrated crude capacity to Cleveland-Cliffs.
“It is one of the major steel markets, even though many steel plants in the United States have shut down in the past 10 years,” one analyst said.
ArcelorMittal completed the sale of its US division to Cleveland-Cliffs in December. That came after concluding a $1.4 billion agreement earlier in September to sell six steelmaking plants to the Ohio-based company.
However, the Luxembourg-headquartered group did retain several sites in the country.
“They kept the top-quality assets,” a second source said of ArcelorMittal.
Chief among those assets in the United States is the AM/NS Calvert flats rolling plant in Alabama. The plant is a 50/50 joint venture between ArcelorMittal and Japan’s Nippon Steel. The two groups acquired the plant from ThyssenKrupp in 2013 for $1.55 billion.
The plant can roll 5.3 million metric tons per year of hot and cold rolled coil, information from its website stated. Further downstream, AM/NS Calvert can produce 1.5 million metric tons per year of coated products, including hot dipped galvanized coil and aluminized sheet.
Finished products from the site go for use in white goods, HVAC, automotive, construction as well as the pipe and tube sectors, the site said.
“We opened the door for negotiations, but in the end our ideas about the corporate value and the structure of the transaction were far apart,” ThyssenKrupp Chief Financial Officer Dr. Klaus Keysberg said.
Keysberg added ThyssenKrupp regrets the decision because it perceived Liberty Steel “as a serious partner in the process.”
“There was a close exchange between ThyssenKrupp and Liberty Steel on a number of complex topics. As a result, however, no common solution could be found for key requirements addressed by ThyssenKrupp,” the group also stated.
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ThyssenKrupp, Liberty talks end
ThyssenKrupp had sought approximately €1.5 billion ($1.8 billion) for its steel assets. Liberty, however, wanted either to acquire it for nothing or receive extra payment with it, one industry watcher in Germany said.
Liberty Steel officials were also unavailable for comment. A ThyssenKrupp spokeswoman declined to comment beyond the group’s original statement.
Impacts from the COVID pandemic and asset sales saw ArcelorMittal report a 20.4% decline in its crude steel production in 2020.
“The countries worst affected by COVID were the ones that saw drops in their production,” one industry watcher added about lower production at the group’s assets in Europe, Brazil and the United States.
ArcelorMittal output down 20.5%
ArcelorMitttal poured a total 71.5 million metric tons of liquid steel in the 12 months of 2020. Meanwhile, it poured almost 90 million metric tons in 2019, the group noted Feb. 11.
Shipments for the year came to 69.1 million metric tons, down 18.2% year on year from 84.5 million metric tons, ArcelorMittal added.
The Europe segment recorded a decline of 22.6% to 34 million metric tons from almost 44 million metric tons. Meanwhile, shipments in that segment fell to 32.8 million metric tons. That total marked a decline of 22.5% from 42.3 million metric tons.
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Improved demand from the automotive and manufacturing sectors pushed up crude production in the last quarter of 2020. Q4 2020 production rose by over 15% to 9.11 million metric tons from the 7.9 million metric tons produced in Q3.
Overhaul of a blast furnace in Belgium, however, offset that increase.
“Although the company has restarted capacity, some steel-making capacity during [Q4] remained idled, including a blast furnace at Ghent, Belgium, that is due to restart mid-February 2021 following a planned major reline,” the group said.
Higher flats demand also helped to boost quarter-on-quarter shipments 4.7% to 8.6 million metric tons from 8.2 million metric tons, ArcelorMittal added.
The December sale of ArcelorMittal USA to Cleveland Cliffs pushed down crude production in North America 18.7% to 17.8 million metric tons from almost 22 million metric tons, the group said.
Shipments for the year were down to 9.41 million metric tons, the group noted, reflecting a 15.9% decline from almost 11.2 million metric tons.