FALLING RAW MATERIAL COSTS DEPRESS STAINLESS STEEL PRICES IN 2015

The past year has been another difficult period for stainless steel producers, distributors and traders, in all parts of the world, according to MEPS.

In December’s issue of the Stainless Steel Review, MEPS reports that consumption has failed to grow by any substantial degree and selling prices have plummeted, driven by falling raw material costs.

The major factor in the reduction in input expenditure has been the decline in nickel values. During the past twelve months, the price of nickel, in common with those of most other traded commodities, has described a generally downward curve. The LME cash figure for the metal has dropped from over US$15500 per tonne, one year ago, to US$8650 per tonne, in recent days. This represents a decrease of around 44 percent.

The nickel price has been undermined, in part, by the unprecedentedly high level of LME inventory. The official daily figure rose from 410,000 tonnes in December 2014 to reach a peak of over 470,000 tonnes in June of this year. Stocks steadily reduced thereafter, reaching a low of around 393,000 tonnes, earlier this month. However, a recent influx of material took the total over 438,000 tonnes, a few days ago.

The costs of the other major raw materials have also fallen. The price paid by US mills for chromium has decreased by around 10 percent in the past twelve months, while the cost of scrap, used in the American producers’ alloy surcharge calculations, has dropped by 56 percent.

As a result, the December 2015 alloy surcharge for grade 304 flat products, in the United States, is 46 percent lower than the figure one year earlier. This contributes to a transaction value for 304 cold rolled coil that is around 37 percent less than last December’s price.

The mill selling figures for the same product, in US dollar terms, have fallen by 32 percent, in China, and by nearly 25 percent, in the EU, compared with twelve months ago.

The persistent negative trend in stainless steel selling values has created very troublesome business conditions for all participants in the supply chain – producers, distributors, stockholders, service centres and traders.

The winners have been the multiplicity of OEMs that incorporate items which require corrosion- or heat-resisting properties.

Source: MEPS – Stainless Steel Review – December Issue

Nucor Nebraska selects Primetals Technologies to upgrade coil handling system

  • Replacement system to improve quality of bar-in-coil products
  • New product applications to expand markets for combination mill
  • Contract includes mechanical and electrical engineering innovations

The combination bar-in-coil and rod mill at Nucor Nebraska will have upgraded coil handling equipment designed and installed by Primetals Technologies in September 2016. The plant, located in Norfolk, Nebraska, annually produces 900,000 tons of long products for several markets such as agriculture, heavy equipment, industrial machinery, construction, oil and gas, rail and automotive. The new equipment will improve the cooling process to produce higher quality steel rods for expanded Nucor customer markets.

The contract scope includes the supply of a continuously rotating shear, coil receiving equipment with a coil plate, pallet system conveyor, transfer and cooling equipment, automation for all new equipment and an updated automation system for Nucor’s existing pallet system and compactor, and installation and commissioning supervision. Nucor has been a longstanding customer of Primetals Technologies, which most recently upgraded a pinch roll, laying head and reform tub in the Norfolk mill’s rod outlet.

A Fortune 500 company, Nucor is the largest manufacturer of steel products in North America, with approximately 200 operating facilities, including wholly owned subsidiaries Harris Steel, The David J. Joseph Company, and Skyline Steel, producing more than 21.1 million tons per year. Products include: carbon and alloy steel — in bars, beams, sheet and plate; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metals building systems; steel grating and expanded metal; and wire and wire mesh. Nucor is North America’s largest recycler.

Source: Primetals Technologies
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Primetals Technologies receives final acceptance for wire rod mill upgrade from OneSteel in Australia

  • Water cooling line and laying head improvements increase mill utilization, reduce maintenance, improve product qualityRolling speed for smaller diameters increased by more than 10%
  • Reduced coil height and better compacted coil shape
  • Pipe support design incorporates new SR Series laying head pipe technology

Primetals Technologies has received the final acceptance certificate from OneSteel Market Mills in Australia for installed upgrades at its Laverton Wire Rod Mill. Improvements to the water cooling line and laying head have already resulted in higher finishing speeds on small diameter products. Overall effects of the upgrade are expected to boost the single-strand rod mill’s competitive position in the market.

The water cooling line was upgraded with a Morgan Water Box system, which included three traversing boxes, with split water box nozzles and a header design that ensured alignment of the pass line. A set of skid-mounted valves for each water box incorporated high-speed divert valves to minimize uncooled rings. An Enhanced Temperature Control System (ETCS) with recipes and closed-loop temperature control was installed to control the cooling process. Provisions were made in the layout of the water cooling line for an additional cooling box to meet future needs. The laying head was upgraded with a new design pipe support that incorporates the SR Series laying head pipe technology.

After only four weeks of shutdown time, both the new water boxes and the laying head upgrade were installed and running. As production resumed, mill operators immediately saw performance improvements. More efficient water box cooling has resulted in lower laying head temperatures which improved scale conditions on finished rod, decreasing downstream scale losses by 35 percent on average. Nozzle replacement cycles went from four sizes to two. The ETCS has improved overall yield by reducing uncooled front ends and providing consistent temperature throughout the coil.

The mill can now roll faster on small sizes, with speeds increasing from 90 m/s to 102 m/s on 5.5 mm rod and from 90 m/s to 100 m/s on 6.0 mm rod. There has been significant improvement in ring pattern consistency on the cooling conveyor. The post-upgrade coil package has seen coil height reductions of 50 to 100 mm and a better compacted shape.

OneSteel is Australia’s premier manufacturer of steel long products and is a leading metals distribution company in Australia and New Zealand. It has a significant presence in Australian steel as an integrated manufacturer of steel and finished steel products. The company manufactures and distributes a wide range of steel products including hot rolled structural sections, rail, rod, bar, wire and structural pipe and RHS products, and distributes sheet and coil, plate and aluminum products.

SR Series is a registered trademark of Primetals Technologies in certain countries.

Source: Primetals Technologies

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Ampco-Pittsburgh to acquire Åkers AB – Altor becomes shareholder of Ampco-Pittsburgh

Ampco-Pittsburgh Corporation (Ampco-Pittsburgh) announced yesterday that it entered into a definitive agreement to acquire Åkers AB and certain of its affiliates (Åkers).  Altor Fund II (Altor) will become a significant shareholder of Ampco-Pittsburgh following the closing of the transaction. The combined group is expected to become a world leader within the rolls industry with respect to size, breadth of product and service offering.

Åkers is a world-leading producer of high quality steel rolls and one of Sweden’s oldest companies, founded in 1580. Today, Åkers is one of the largest roll manufacturers outside of China with manufacturing sites in Europe, China and North America. The French subsidiary has been separated from Åkers and will not be acquired as part of the transaction.

We believe that Åkers has a bright future within the Ampco-Pittsburgh group and we look forward to being part of this next exciting journey in the long history of Åkers, says Fredrik Strömholm, Partner at Altor Equity Partners and Member of the Board of Åkers AB.  Following a reorganization, continuous cost improvement programs and a concerted effort to develop the sales organization, Åkers is now a stronger company on the path to recovery.

We look forward to having Åkers as part of the Ampco-Pittsburgh family, says John Stanik, CEO of Ampco-Pittsburgh. Just like Ampco-Pittsburgh and its operating subsidiary Union Electric Steel Corporation, Åkers has an impressive history and heritage holding a strong position within high quality technology rolls. The combined group will have a strong platform to drive both growth and performance globally.

The difficult conditions in the steel industry since 2008 have made the operating environment challenging for the rolls industry. The dedication and commitment from our employees and Altor have made Åkers stronger and more resilient. We are now ready for this next step and we look forward to forming a strong industry leader together with Ampco-Pittsburgh, says Claes Ahrengart, CEO of Åkers AB.

Closing of the transaction is subject to customary regulatory requirements and approvals.

Source: Akers Group
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INTERNATIONAL STEEL MARKET ROUNDUP FROM MEPS

World steel prices have plummeted by 28 percent in the past twelve months, according to MEPS.

In November’s release of the International Steel Review, MEPS reports that international market activity for both flat and long products is weak as the influx of Chinese material continues to put downward pressure on global steel prices.

We have noted that Chinese export prices are at record lows. This, along with falling raw material costs, has enabled buyers in Taiwan and South Korea to secure reductions in their local market.

There is growing evidence that European steel mills are looking to fill spare capacity but activity is slow amid market uncertainty in the energy and construction sectors.

In the US, short lead times are being offered by producers as buyers delay purchasing decisions due to falling steel prices. Customers are prioritising their year-end stock positions.

Furthermore, buyers worldwide are expecting further steel price falls with little sign of a market pickup heading into the new year.

Source: MEPS – International Steel Review

ARE THE WORLD TRADE ORGANISATION’S CURRENT RULES FIT FOR PURPOSE?

The global steel industry is in crisis. It has to be said that the principal reason for the predicament is the collapse in steel prices in all parts of the world. The drop in selling values has been brought about by oversupply in the market.

Much of the excess has been created by over investment in steelmaking capacity in China, to levChina-exportsels way beyond internal demand. This oversupply was translated into significant quantities of the excess material being exported, in recent years, at highly competitive prices. As a result, the MEPS world average, US dollar denominated, steel price has declined by 28 percent over the past twelve months.

In the current climate, with very few exceptions, the steelmakers across the globe are in a lossmaking situation. Many of them have already closed and more will follow in the near term. For most carbon grades, the Chinese export landed price has become the benchmark selling figure in many domestic markets around the world. Such selling values are not tenable in the long term for any steel manufacturer.

The dynamics of global steel trade has changed dramatically over the past ten years. In 2005, China’s exports and imports were in equilibrium. In 2010, the country’s positive balance of trade was approximately 25 million tonnes. In 2015, this figure will have expanded to, in excess of, 100 million tonnes. This equates to 12 percent of estimated total steel consumption in the rest of the world.

It is clear that China’s steel industry has developed a dominant position in the global market. Despite numerous complaints, the World Trade Organisation (WTO) has not been in a position to influence the situation. China’s dominance could not have been achieved so easily if the industry had not been, mainly, state controlled.

It is well documented that, in the first nine months of this year, total losses by the Chinese steel sector were US$4400 million – equivalent to US$7.5 per tonne of output. The deficit for export sales would be, at least, at the same level per tonne.

The Chinese authorities have revised the previously established definitions of alloy steels to enable their steel producers to claim VAT rebates on those exports. This has given the mills better opportunities for exporting.

Had the majority of the Chinese steel industry not been state-owned, it is likely that it would have been unable to withstand the current lossmaking situation. Moreover, it is questionable whether, predominantly state-owned, industries should be afforded the same protection as privately-owned ones when issues of trade are considered by the WTO.

MEPS view is that industries, such as steel and others, which are predominantly state-owned, should be excluded from any new agreement on market status within the WTO.

Source: MEPS – China Steel Review