Month: October 2014

NORDIC STEEL MARKET ROUNDUP FROM MEPS

Mills in northern Europe continue to have difficulty implementing advances for strip mill products according to the latest report by MEPS. Hot rolled coil sales activity has slowed since the end of September. Market participants believe that business in the final quarter may be more subdued.

Business is fair in the cold rolled coil market but there are few big orders. Local producers are trying to lift their selling values but they cannot succeed while iron ore costs are falling and demand is weak. Many automotive and other manufacturers are buying large tonnages of galvanised coil from the mills. There is little threat from imports as the price differential is not enough to make up for the longer shipping times.

Commodity plate prices were unchanged month-on-month. Manufacturers of agricultural equipment report losing sales to customers in Russia and Ukraine because of the unrest there. Demand from truck makers is fair, in Sweden. However, other heavy industries have slowed significantly. Project activity is fluctuating, in Norway. Sales to offshore applications are at a low level compared with recent years.

Wire rod consumption picked up a little, immediately after the summer break, but has now returned to the previous level. No change in activity is anticipated in the short term, although a small seasonal downturn is likely during the final months of 2014. The conflict in the Ukraine has had some negative effect on sales. Producers proposed a small increase, in October, for structural sections but were unsuccessful. Sales volumes and transaction values are stable. Building activity is fair. No great change is foreseen during the final quarter.

Activity in the rebar market has shown some improvement of late. However, there is a risk that scrap costs and consequently, steel prices, will follow the downward path of iron ore values. Furthermore, demand will diminish if there is a severe winter. Day-to-day business for merchant bar is subdued and there are few enquiries. Orders for farm machinery have been adversely affected by the unrest in the Ukraine. Local suppliers are struggling to lift selling figures due to the generally depressed market in Western Europe.

Source: European Steel Review Supplement ?– October Edition

voestalpine expands in China with a new plant in the special steel segment

The technology and capital goods group voestalpine is again driving forward its activities in the promising Asian market. The Special Steel Division, the Group’s special steel sector, yesterday signed a Letter of Intent to cooperate with Chinese foundry Kocel Machinery Co., LTD. Over the next few years voestalpine will invest around EUR 140 million, constructing a new plant which will produce premium special steel products for the Chinese market. Construction is scheduled to start in 2015, and the new company will create 400 jobs.

The voestalpine Group is expanding its special steel activities in the promising Chinese market, targeting the Chinese premium market with its EUR 140 million investment in Yinchuan (Ningxia province). Working together with local company Kocel Machinery Co., LTD, the new special steel plant is scheduled for completion by the end of 2017. It will produce highest-quality tool steels and forged materials for the automotive, consumer goods, and mechanical engineering industries. “This investment is another important step in fulfilling our internationalization strategy. We can set new standards in China with our know-how, particularly in the premium special steel segment, and extend our leadership position in the high-alloyed tool steel sector further,” explains Franz Rotter, Member of the Management Board of voestalpine AG and Head of the Special Steel Division.

In future, the new Chinese plant will produce between 50,000 and 70,000 tons of high-quality special steel products each year when operating at full capacity. voestalpine partner Kocel Machinery Co., LTD, is part of the international Kocel Group, and with a staff of 1,000 employees it generates annual revenue of around EUR 55 million in China, the USA, and Europe. The company is specialized in iron and steel casting for the mining and power generation machine sectors, and has been a production partner in China to voestalpine Gie?erei Linz GmbH, for many years.
China as a growth market: around 15 new voestalpine plants by 2020
In the business year 2013/14, the voestalpine Group generated around EUR 750 million (7% of Group revenue) in Asia. It is intended to almost triple revenue by the end of 2020, to around EUR 2 billion annually. voestalpine plans to invest between EUR 400 and 500 million in the region. The major customer segments are mobility (railway infrastructure & turnout technology, automotive components) and energy (turbines and components for power plants). The Group has 22 locations and companies in China alone, employing a staff of almost 2,200. It plans to build around 15 new plants in the People’s Republic between 2013 and 2020.

Special Steel Division
The voestalpine Special Steel Division is focused on technologically sophisticated materials and customer-specific services. It is a global market leader for tool steel and one of the leading providers of high-speed steel and special forgings. The most important customer segments are the automotive, energy (both production and oil/natural gas exploration), and mechanical engineering industries as well as the consumer goods and aerospace industries. In the business year 2013/14, the division reported revenue of more than EUR 2.6 billion, of which around 40% was generated outside of Europe, and an operating result (EBITDA) of EUR 360 million. It has around 12,900 employees worldwide.

Source: voestalpine

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Metalloinvest begins construction of world’s largest HBI plant

Metalloinvest has entered the active phase of construction and installation works for the third hot briquetted iron plant (HBI-3 Plant) at Lebedinsky GOK in Gubkin, Belgorod region. The plant will have an annual production capacity of 1.8 million tonnes and will be the largest HBI production facility in the world.A consortium comprising Siemens VAI and Midrex is the main equipment supplier and will also complete the necessary automation of the first and second level. City institution for designing metallurgical plants LLC (part of Metalloinvest) is also involved in the project implementation.

The total investment in the project amounts to approximately $850 million (based on 2013 prices and rouble currency rates). The construction of the new plant will allow the Company to strengthen its position on the global high added-value iron ore resources market.

Metallisation degree of more than 90% and density exceeding 5.0 g/cm3 make HBI the ideal material for steel production both in electric-arc furnaces and converters. Due to low share of fines in the shipped products structure, briquettes are convenient for transportation by rail or sea. HBI production is twice as energy-efficient as pig iron production, giving it significant competitive advantages. As such, HBI is a more eco-friendly product: during production, greenhouse gas emissions are almost twice as low as the traditional blast furnace method.

Source: Metalloinvest

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GERMAN STEEL PRICE ROUNDUP FROM MEPS INTERNATIONAL LTD

According to MEPS, general demand in the German hot rolled coil market is flat, although the pipemakers are enjoying satisfactory order books. Steelmakers have failed to lift fourth quarter basis values. Most big users have now finalised their business for the October/December period

Hot rolled plate stock levels are stable, where distributors’ sales are climbing. The general business outlook is mixed, partly due to the Ukrainian problem and, therefore, investors are holding back. Nevertheless, commodity plate values have advanced a little since our last report.

Domestic suppliers have not implemented their proposed final quarter hike, for cold rolled coil, as there has been no revival in demand since the summer vacation. Construction-related sales of hot dipped galvanised coil are static. In the general market, basis numbers have not recovered due to oversupply. The German vehicle manufacturers continue to try to reduce their steel costs wherever possible, as they struggle with declining export sales.

After six months of level pricing, low carbon wire rod mills have conceded a small discount during recent negotiations. There is little activity in the recoil market, where values are, again, unchanged although there is negative pressure from declining scrap costs.

There is strong competition amidst subdued purchasing activity in the structural sections market. Suppliers have been forced to trim prices to try to stimulate buying interest.

Rebar demand is subdued and there was renewed negative pressure as scrap costs continued to tumble. Producers have lost half the increase secured in September.

The mills have failed to resist customers’ demands for merchant bar basis cuts. Purchasing activity remains cautious as buyers are still unsure of future price movements. There has been no improvement in business levels.

Source: MEPS – European Steel Review – October Issue

WEAK MARKET CONDITIONS KEEP MEPS – EU AVERAGE STEEL PRICES STABLE

European flat products purchasing activity has been slow over the last month. Consumption in mainland Europe is stagnating. Most fourth quarter deals have now been concluded at the levels prevailing in the third trimester. Producers have been unable to implement their proposed increases due to lacklustre demand and the declining costs of inputs such as scrap, iron ore and coking coal. On the other hand, the strong US dollar is keeping third country imports at bay and supply from Italy is restricted.

German market sentiment is poor at present due to concerns about a recent drop in industrial production. End-users are cautious. They are only purchasing for their immediate needs. Competition in the stockholding sector is tough. Overall, demand is stable but not at a high level.

The French market is quiet with modest demand. Participants are concerned that the situation is static. End-users still have short order books and are fighting for the small amount of business available. Ex-mill flat product prices have generally been stable over the last month, whilst distributors’ resale values have deteriorated. However, there is a feeling that steelmakers may try to lift prices in the first quarter next year. The current euro/US dollar exchange rate is keeping third country imports at a normal level.

As the recession in the Italian economy continues to bite, steel producers are still attempting to impose basis rises. They were, briefly, successful in late September but, since then, prices have dropped back to the level reported in our last issue. The initiative was sparked by a fluctuation in the exchange rate when the euro weakened against the dollar. This was expected to make imported material less attractive. However, Chinese prices were unchanged, despite the currency movements. There is no pressure from Turkish supply, which is currently too expensive. A lack of demand is widespread across all consuming sectors. There are fears that prices may weaken further.

UK service centres report brisk sales in October, with many being even busier than in the previous month. However, resale values are being slightly negatively affected by a degree of destocking at some companies and, reportedly, aggressive selling by Tata’s distribution outlets. Otherwise, they are fairly steady. Stockholders’ buying prices remain the same as a month ago. The proposed rise was not implemented as there was no support from raw material costs. Inventories remain on the low side because of a lack of confidence in future price movements.

There have been no real changes in either basis figures or activity levels in the Belgian market. The economic situation is poor, so steel demand is slow as many end-users have depleted order books. Service centres are battling for every sale, even over small quantities. Their margins are very low. There are few third country import offers and prices are not attractive.

The Spanish economy is slowly getting back on track with more government investment promised for 2015. However, any success in ramping up steel prices was shortlived because of slack demand. It was thought that a fluctuation in the exchange rate would help sustain a rise but this was not the case. Basis numbers remain firm. Third country offers are very close to European figures. A number of distributors report slightly improved sales volumes but activity is inconsistent. Many customers are purchasing on a weekly basis.

Source: MEPS European Steel Review

Tata Steel’s European business signs Memorandum of Understanding regarding its Long Products Europe business

Tata Steel has today announced the signing of a Memorandum of Understanding with Klesch Group to undertake detailed due diligence and negotiations for the potential sale of its Long Products Europe business and associated distribution activities.

The memorandum covers several UK-based assets including Tata Steel’s Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a design consultancy in York, as well as other operations in France and Germany [see to Notes to editors for list of sites]. About 6,500 people are employed at Long Products Europe and its distribution facilities. Tata Steel employs 30,500 people across Europe, including 17,500 in the UK.

Karl Koehler, Chief Executive of Tata Steel’s European operations, said: “We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome. We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.”

Explaining the context and rationale for this decision, Mr Koehler said: “We are making huge strides on our strategic journey to become a premium, customer-centred steel company thanks to investment in equipment, technology and customers, together with the substantial contributions from our employees.

“We’ve improved the competitiveness of Tata Steel’s European operations, including Long Products Europe which now supplies more of the innovative steel rail, rod, plate, sections and special profile products demanded by customers.

“Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise.

“We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies.

“We want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that.”

The European steel industry is emerging from one of the most challenging economic periods in its history. Tata Steel has invested ￡1.2 billion in its UK operations and trained 1,200 UK apprentices and graduates since acquiring Corus in 2007.

Source: Tata Steel

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