steel imports

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U.S. steel imports totaled 1.4 million metric tons in October, up from 1.1 million metric tons the previous month, the Census Bureau reported.

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U.S. steel imports pick up

Although U.S. steel imports are down for the year, October imports picked up.

U.S. steel imports jumped approximately 27% from the preliminary September total to the preliminary October figure.

For the year through September, the U.S. imported 16.1 million metric tons. Meanwhile, for the same period in 2019, the U.S. imported 20.5 million metric tons.

Rebar, cold-rolled sheets and blooms, billets and slabs pace increase

Per the Census Bureau data, the U.S. saw significant jumps in imports in three categories: rebar; cold-rolled sheets; and blooms, billets and slabs.

From September to October, imports of blooms, billets and slabs jumped from 80,154 metric tons to 233,798 metric tons, an approximately 192% increase.

Rebar imports nearly doubled, jumping from 39,080 metric tons to 76,347 metric tons.

Cold-rolled sheet imports jumped from 67,173 metric tons to 94,863 metric tons, a 41% increase.

On the other hand, imports of sheets and strips, tin plates, and hot-rolled sheets declined from September to October.

OCG down

In U.S. steel imports news relevant to the oil sector, imports of oil country goods (OCG) for the year to date declined.

Imports during the nine-month period totaled 831,459 metric tons. That total marked a 54% year-over-year decline.

However, the oil price has picked up of late. The WTI crude oil price closed Nov. 24 at $44.91 per barrel, up $3.48 per barrel from the previous week, per the Energy Information Administration.

Furthermore, from September to October, imports of OCG rose 126% to 47,526 metric tons.

Oil demand remains depressed amid the pandemic, with many foregoing car trips (or vacations altogether) and a significant percentage of the U.S. workforce transitioning to remote work setups. However, recent announcements regarding the efficacy of potential COVID-19 vaccines could serve as a shot of support to demand for various steel products, including OCG, as Americans become more comfortable with returning to the previously normal rhythms of life.

Of course, when mass rollout for such vaccines will occur is still up in the air.

U.S. steel imports surge from Mexico, Turkey

Viewed through the lens of imports by country, the U.S. saw an increase from Mexico. The U.S. imported 252,348 metric tons of steel from Mexico in October, up 34% from the previous month. While perhaps a niche consideration for the steel market at large, the United States Trade Representative recently announced a preemptive exemption for Mexico from a potential future Section 232 tariff on grain-oriented electrical steel.

Meanwhile, imports from Canada were about flat from September to October.

On the other hand, imports from Taiwan, South Africa and the U.K. declined, per the Census Bureau.

In year to date, increases came from Turkey, Brazil and Singapore. Imports from Turkey jumped from just 5,941 metric tons in September to 61,948 metric tons the following month. For the year to date, U.S. steel imports from Turkey jumped 65% to 387,608 metric tons in the January-September 2020 period.

Meanwhile, U.S. steel imports from Russia declined.

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Central Europe and Eastern Europe

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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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European Union flag

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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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hot rolled steel

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This morning in metals news: the U.S.’s steel capacity utilization rate reached 71.4% for the week ended Nov. 14; a survey by INVERTO took a look at procurement trends during the COVID-19 pandemic; and steel prices continue to rise.

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Capacity utilization rises to 71.4%

The U.S. steel sector’s capacity utilization rate for the week ended Nov. 14 reached 71.4%, the American Iron and Steel Institute (AISI) reported.

The rate marked an increase from 71.1% the previous week. However, the rate fell from 78.8% during the same time frame in 2019.

Steel production during the week ended Nov. 14, 2020, totaled 1.58 million net tons. The production total marked a 0.4% increase from the previous week but a 13.3% year-over-year decline.

INVERTO releases Raw Materials Study 2020

A survey conducted as part of INVERTO’s Raw Materials Study 2020 delved into the impact of the COVID-19 pandemic on procurement and ways buyers have tried to adapt to the challenges of 2020.

Among its key findings, INVERTO noted of the survey respondents that “supply security is underestimated,” with few expressing concern about raw materials supply in the future.

Furthermore, INVERTO concluded few companies had taken “structured, profound and long-term countermeasures” in response to the pandemic.

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We wrote last month how China’s rapid recovery from the COVID-19 pandemic resulted in the country importing semi-finished products for which it previously had been self-reliant or even a net exporter for the last decade.

Some steel products and primary aluminum swung into becoming significant net inflows for the economy during the summer months.

But as we cautioned at the time, this was only expected to be a temporary phenomenon.

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China’s steel flows recalibrate

Sure enough, although volumes are still down on this time last year, exports have picked up and imports have fallen.

In a recent post, Argus Media reported China’s steel exports in October rose by 5.2% from September to 4.04 million tons. Chinese mills shifted supplies to overseas markets, enabled — or forced, depending on your point of view — by falling domestic prices.

Summertime exports rose as domestic prices fell

Falling domestic prices in the summer aided Chinese steel mills’ ability to export so aggressively.

Domestic inventory levels rose and domestic crude steel production hit record levels of 3.09 million tons a day in September, in large part to meet domestic demand. Weakness in domestic steel prices suggests overoptimism by the steel mills, inevitably resulting in excess production leaking into export markets looking for a home.

Domestic Chinese steel prices have recovered since the summer as global steel prices have risen and imports have fallen.

As the global recovery has lifted demand and prices, mills in India and elsewhere have not felt the need to distress sell metal into China. In addition, the arbitrage window has narrowed.

Imports have therefore appeared less attractive to Chinese buyers and exports more attractive to mills. That is a trend we expect to continue through Q4.

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The Raw Steels Monthly Metals Index (MMI) increased by 5.4% this month, as U.S. steel prices continued to rise last month.

November 2020 Raw Steels MMI chart

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U.S. and Chinese prices relation

U.S. steel prices continued to increase in October for the third consecutive month.

HRC, CRC, HDG and plate prices increased by 15.4%, 10.0%, 9.0% and 5.3%, respectively. As demand recovers, so have prices.

Wire rod, however, was the only form of steel that did not increase in price this month, as it instead remained flat.

In contrast, Chinese HRC, CRC and plate prices increased around 2% in October. Meanwhile, HDG prices remained flat throughout the month. For the second month,

U.S. prices surpassed Chinese HRC, CRC and HDG prices. No price arbitrage existed for Chinese buyers, as local prices were lower than imported prices. Chinese prices had a four-month uptrend before prices flattened. On the other hand, U.S. prices started their uptrend approximately 2.5 months ago.

For the past two years, Chinese prices have led U.S. prices. Will that relationship mean U.S. prices will flatten within the next month and half?

Domestic demand increases, supports U.S. steel prices

Steel demand in the U.S. seems to be getting stronger.

As we have reported for a few months now, U.S. automotive production is on the rise.

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mergers and acquisitions

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This morning in metals news: Nucor Corporation has reached an agreement to acquire the Precoat Metals Corporation’s paint line facility in Armorel, Arkansas; Constellium recently released its Q3 financial results; and the U.S. HRC price continues to rise.

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Nucor to buy Arkansas paint line facility

Nucor plans to acquire the Precoat Metals Corporation paint line facility in Armorel, Arkansas, the steelmaker announced recently.

“The paint line facility, located near the Nucor Steel Arkansas sheet mill campus, has a capacity of approximately 250,000 tons per year,” Nucor said in a release. “Nucor considered building a greenfield paint line before deciding to acquire the Precoat Metals facility.”

Constellium reports Q3 financial results

Aluminum product manufacturer Constellium reported Q3 net income of €20 million (U.S. $23.7 million) compared to net income of €1 million ($1.2 million) in Q3 2019.

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Continuing the theme of the last few months, the U.S. steel sector continued to make gains in capacity utilization last week.

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Steel capacity utilization rises to 69.7%

Per the American Iron and Steel Institute, U.S. steel mills recorded a capacity utilization rate of 69.7% during the week ending Oct. 24.

Raw steel production during the week totaled 1.54 million net tons. Meanwhile, production during the week ending Oct. 24, 2019, totaled 1.81 million net tons, at a capacity utilization rate of 78.0%.

On a year-over-year basis, last week’s output marked a 14.6% decline.

Meanwhile, production for the week ending Oct. 24, 2020, ticked up 0.5% from the previous week.  Production during the week ending Oct. 17, 2020, totaled 1.54 million net tons at a capacity utilization rate of 69.4%.

YTD output down 19.3%

In the year to date through Oct. 24, U.S. mills produced 64 million net tons of steel, down 19.3% year over year.

Output during the same period in 2019 totaled 79.4 million net tons at a capacity utilization rate of 80.1%.

Regional output

Broken down by region, output during the week ending Oct. 24, 2020, totaled:

  • Northeast: 135,000 net tons
  • Great Lakes: 563,000 net tons
  • Midwest: 171,000 net tons
  • Southern: 600,000 net tons
  • Western: 73,000 net tons

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U.S. steel imports dipped 8.3% from August to September, according to U.S. Census Bureau data released Monday.

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U.S. steel imports in September

In September 2020, the U.S. imported 1.1 million metric tons on steel products, down from 1.2 million metric tons the previous month.

Meanwhile, for the year to date (through August), the U.S. imported 14.9 million metric tons of steel products, down 20.7% year over year.

During the same period last year, the U.S. imported 18.8 million metric tons.

During the year-to-date period, the largest commodity decrease came for oil country goods, according the Census Bureau.

“Increases occurred primarily in tin free steel, used rails, and light shaped bars,” the Bureau reported. “The largest country decreases occurred with Russia. Increases occurred primarily with Turkey, Brazil, and Mexico.”

Hot-dipped galvanized sheet, strip imports gain

The largest import category, hot-dipped galvanized sheet and strip, checked in at 173,010 metric tons in September.

The September figure marked a rise from the 157,503 metric tons imported in August. Furthermore, the U.S. imported 177,943 metric tons in the category in September 2019.

Meanwhile, in the No. 2 category, hot-rolled sheet imports reached 137,497 metric tons in September, up from 97,334 metric tons in August. However, the September 2020 total marked a decline from September 2019’s 151,330 metric tons.

U.S. representatives: no to Section 232 electrical steel tariffs

Finally, U.S. imports of electrical sheet and strip totaled 1,764 metric tons in September — not exactly the largest share of the import total.

Furthermore, the total marked a decline from the 2,758 metric tons imported in August.

Nonetheless, several Congressmen recently sent a letter to Secretary of Commerce Wilbur Ross asking the Trump administration not to impose Section 232 tariffs on imports of electrical steel.

Rep. Denver Riggleman (R-VA) sent the letter, which Reps. Bruce Westerman (AR-04), Ben Cline (VA-06), Morgan Griffith (VA-09), and Dan Bishop (NC-09) cosigned.

“The manufacturing industry employs millions of Americans, and there is no reason to impose unnecessary tariffs that would put over 15,000 transformer industry jobs at risk,” Riggleman said in a release. “Access to affordable electricity is a pillar of American life and commerce. We must keep American workers at the forefront of progress as the U.S. continues to dominate the global energy sphere.”

Meanwhile, back in May, the Department of Commerce launched a Section 232 investigation into laminations and wound cores for incorporation into transformers, electrical transformers, and transformer regulators. 

Under Section 232, the secretary of commerce has 270 days from the launch of an investigation to provide a report with findings and recommendations to the president, which sets up for a late January deadline.

Meanwhile, as for domestic options for electrical steel buyers, AK Steel is the only U.S. producer of grain-oriented electrical steel (GOES). ATI exited the U.S. GOES production market in 2016.

Not all contracting indexes are created equal. In a steel price spike scenario, finished product indexes can be detrimental to your strategy. Learn when you should use what kind of contracting mechanisms.

West European steelmakers are likely to see improvements in production and demand for their rolled products in 2021, following the adverse economic effects due to COVID-19 in 2020, industry watchers predicted.

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Better 2021 for Western European steelmakers

“Next year should be better if you take the view that this year was diabolical,” one analyst said about 2020. Steelmakers in France, Spain, Italy, Germany and Benelux saw aggressive production cutbacks in crude steel and rolled products as governments undertook containment measures and economies slowed.

“COVID-19 practically destroyed demand,” the analyst added.

Localized lockdowns — rather than the national ones that occurred earlier in the year around Europe, when it was the epicenter of the virus — will also help to boost activity, the analyst said.

“If people are out of their homes, then there is economic activity,” he noted.

The World Steel Association (worldsteel) also predicted in its Oct. 15 short-range outlook that crude steel production within the European Union would improve by almost 11% to 149 million tonnes in 2021. Meanwhile, the Brussels-based organization predicted 134 million tonnes of production for 2020.

The latter forecast reflected a 15.2% decrease from the over 158 million tonnes of crude steel poured in 2019, worldsteel noted.

“On the positive side, health systems are in a much better shape to tackle the pandemic now due to the lessons learnt from the first wave,” worldsteel noted.

Furthermore, there is a careful balance between “containing the virus and maintaining the viability of economies,” worldsteel added.

COVID uncertainty

However, worldsteel offered a caveat in its outlook.

“Added to this in the northern hemisphere there is uncertainty over how COVID-19 will evolve during the upcoming flu season which may have a serious impact on the outlook for 2021. The risk is tilted toward the downside. A W-shaped recovery cannot be ruled out and a full recovery in 2021 is unlikely,” the organization warned.

While worldsteel’s outlook did not break down the figures by country, it indicated in its September figures that West European steelmakers’ crude production for the first eight months of 2020 fell by 19.7% year over year to 59.1 million tonnes. Meanwhile, production totaled 73.5 million tonnes from Jan. 1-Aug. 31 in 2019.

Those same West European producers are now operating at below 60% of their crude production capacity, which is approximately 16 million metric tonnes per month, a second analyst said.

Western European steelmakers’ profits decline

Two major steelmakers with assets in Western Europe also reported notable drops in their production and in their financial results.

ThyssenKrupp’s Steel Europe subsidiary recorded a €706 million ($835 million) EBITDA loss for the first nine months of its 2020 fiscal year ending June 30. Meanwhile, it reported a €77 million gain ($91.1 million) over the same time in 2019.

Net sales were down 20% year over year to approximately €5.5 billion ($6.5 billion) from €6.3 billion ($7.5 billion), the report indicated.

Steel shipments by the German group saw a 12.8% decline in its steel shipments to 6.83 million tonnes from 7.82 million tonnes for the same time, the German group noted.

ArcelorMittal produces longs and flats at several locations in Western Europe. The steelmaker announced closures in March as part of its COVID containment measures in Italy, France, Spain, Germany, Belgium. Those closures continued in the second quarter of 2020, the Luxembourg-headquartered group said in its H1 report.

Total crude steel production in that group’s Europe segment for the first six months of 2020 fell to 16.1 million metric tonnes, down 30.5% year over year from 23.4 million metric tonnes.

European steel prices slide

Average steel selling prices in Europe were also down 11.2% to $636 per metric tonne from $716, ArcelorMittal said.

Prices for hot and cold rolled coil have already started rising since mid-2020, however, sources said.

“Restocking is happening, especially in the auto sector. This is pushing up prices, though it remains to be seen what happens,” the second analyst said.

Producers’ lower production levels will also strike a balance between supply and demand, the first analyst said.

Prices for hot rolled coil in West Europe now average about €491 ($581) per metric tonne EXW, up from lows of €433 ($512) in March.

The analysts questioned for how long any price increases would be sustainable. Many stockists were replenishing their lower volumes in the face of some renewed activity.

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