Archives July 2016

Strip mill product basis prices began to stabilise in southern Europe, in April, whilst small downward corrections were noted in the north. Overall demand, in the region, is subdued. Sentiment is poor – badly affected by the ongoing reduction in orders from the automotive sector. Moreover, in many countries, concern exists about Brexit, especially if a ‘no deal’ scenario is the outcome. The general weakness of a number of key European economies, together with local and European elections, in May, are exacerbating the feeling of uncertainty.

The substantial import tonnages that arrived at the start of the year will take time to work through the supply chain. The availability of this material allows buyers to adopt a ‘wait and see’ attitude towards ordering from domestic sources. 

In Germany, steel demand remains relatively low, due to the marked slowdown in the auto sector. The typical first quarter restocking process failed to materialise, this year. In the distribution sector, severe competition has developed, as companies try to generate cash by reducing stock levels. Pressure from end-users is forcing them to reject the steelmakers’ price hike proposals, because their margins are already being squeezed. The differential between domestic and import prices is quite narrow.

In France, buyers negotiated limited discounts on their purchases of strip mill products. Business activity is lacklustre, amidst relatively high inventories. Customers note that a number of domestic mills are selling quite aggressively in order to try to fill their production schedules. They anticipate further price declines. Those local service centres dealing primarily with the auto industry are now experiencing a slowdown in volumes. Forecasts suggest a drop of 5 percent, year-on-year, for tonnages sold to the carmakers. Import offers are uncompetitive, currently.

Italian manufacturing business conditions continued to worsen, in March. A rapid downturn in orders led to reduced output. This badly affected the steel market. The recent uptick in strip mill product prices came to a halt, with basis values stabilising or developing marginal weakness. Downstream steel demand is dismal. Service centres are under pressure from end-users, who are reluctant to pay increased resale prices. Buyers are purchasing with extreme caution. Downgraded economic growth forecasts, plus the impending European elections, in May, provide additional uncertainties.

Mainland European mills have plenty of material to sell into the UK market. For the moment, strip mill product selling values have been maintained. Distributors report that demand, with the exception of auto-related sectors, is holding up, despite the uncertainties associated with Brexit. Distributors’ resale margins are tighter than of late but still acceptable.

A lack of activity is noticeable in the Belgian market, in April. Demand from end-users, both large and small, is weak. A number of major service centres are offering promotional resale prices, in order to reduce their inventories. As a result of this negative scenario, the steelmakers, whose order books are poor, have discounted basis values of strip mill products by around €10 per tonne. MEPS notes little influence from imports, which are similarly priced to material from European sources.

Spain’s manufacturing sector returned to growth, during March, albeit only marginally. The steel market is relatively stable, with regional variations between the north and south of the country. Nevertheless, market sentiment is negative, due to the impact that the approaching summer vacation period will have on demand and the unwillingness of end-users to pay increased prices. New import quotations are very similar to those from domestic suppliers. Although service centre sales volumes are better than earlier in the year, resale values do not reflect replacement costs.

Source: MEPS European Steel Review

As part of its development strategy, PAO “MMK” (Magnitogorsk, Chelyabinsk region, Russia) will conduct a complete overhaul of its No. 2 blast furnace in 2020. After fundamental renewal and modernisation, the blast furnace will appear as a structure without a lintel ring. In this project, Paul Wurth will help MMK define the profile of the modernised furnace by considering the raw materials base and process conditions of the customer. Detail engineering will be provided for the high-heat loaded bosh and belly areas, cooling elements and primary cooling system. Paul Wurth will also supply horizontally arranged copper cooling plates, highly conductive graphite refractory bricks and ramming mass. A complete set of EIC equipment for the dedicated pump house with heat exchangers and the related cooling circuit will be part of the deliverables. On-site supervision will be performed during pre-shutdown and shutdown periods until commissioning.

Paul Wurth received this order as a result of a tender which was explicitly calling for a system with horizontal cooling elements. The supply contract between Paul Wurth and MMK became effective in the beginning of the current year. A challenging schedule foresees fulfilment of the contract obligations within fifteen months.

At present, MMK’s BF No. 2 is a typical furnace developed by AO “Magnitogorskiy Gipromez” with an inner volume of 1 380 cubic meters, two tapholes and a daily production of 3 800 tons of hot metal. In March 2010, it was equipped with a compact-type BLT^®, developed by Paul Wurth. In total, six original Paul Wurth Bell Less Top^® charging systems are being operated at MMK’s ironmaking facilities.

Source: Paul Wurth

• Resource-efficient spiral pipe production

AMERICAN SpiralWeld Pipe Company LLC. has awarded SMS group an order covering the supply of a new Online Spiral Pipe Mill, to be installed in a new greenfield plant (“Plant 3”) at Paris, Texas, U.S.A.

SMS group will be responsible for the engineering, supply and supervision of erection and commissioning of a coil preparation stand and a spiral pipe machine with submerged-arc welding (PERFECT arc^®). SMS group’s PERFECT arc^® technology enables energy savings of up to 30 percent compared to competitor plants.

The new spiral-pipe production facility is scheduled to start producing in 2020. Material grades up to X-70 can be processed. The pipes will mainly be produced as water pipes according to AWWA (American Water Works Association) standards. The new line will be designed to make pipes of more than 16 meters (55 feet) length with an outside diameter ranging from 610 to 3,658 millimeters (24 to 144 inches). The maximum wall thickness will be 25.4 millimeters (1.0 inch). The mill will operate in the so-called one-step (“online”) process with submerged-arc welding from the inside and outside taking place directly after spiral pipe forming.

Often the productivity of spiral pipe welding systems is restricted by the welding speeds of submerged arc welding. PERFECT arc^® power sources allow an increase in productivity of up to 20 percent, while process stability remains constant. The systems operate with IGBT (Insulated-Gate Bipolar Transistor) power electronics with fully digital welding current control. No transformers are required. As a result, the welding machines can attain an efficiency rate of over 90 percent. Compared to older welding techniques, significant energy savings (up to 30 percent) are possible, depending on the operating point.

This new plant will enable AMERICAN SpiralWeld Pipe to expand its production by a very high tonnage of spiral-welded steel pipes for the municipal water and wastewater transmission markets, industrial, hydroelectric and power markets including large diameter fabrication for treatment plants and pump stations.

Source: SMS Group

Rising raw material costs have combined with traditional, seasonal factors to provide expectations for a strong recovery in stainless steel prices during the second trimester of 2019. LME nickel costs followed an upward trend from the beginning of January until early March.

Market participants, correctly, predicted a rise in the European ferrochrome contract, in the second quarter. Consequently, suppliers were encouraged to push for an uplift in nominal basis prices. In February, most ex-mill transaction values, for 300-series coils, rose by more than the hike in alloy extras. This introduced the hope, among producers, that basis figures would begin to recover to a level that would represent profitable operations, for the mills. 

In March 2019, European alloy surcharges, for austenitic flat products, increased, substantially, after falling consistently since the last peak figure, in July 2018. Regional mills proposed further increments to nominal basis values. However, in a climate of moderate demand, buyers consider that the latest rise in alloy extras is as much as the market could withstand. 

Nickel values softened, after reaching a high point in early March. As a result, the recently published alloy surcharges for April represent a less dramatic increase than was recorded in the previous month. In this environment, European mills will continue to seek increased nominal basis prices. MEPS believes that they will achieve modest success, in this endeavour.

In the United States, the leading producer, North American Stainless, announced basis price hikes for austenitic hot rolled plate and round bars, effective from April 1. Given the producer’s powerful position in the market, these proposals are receiving little resistance. Conversely, in the hot and cold rolled coil sector, steep rises in alloy surcharges were offset by mediocre demand. As a consequence, basis values softened, in March. With further increases to alloy extras published for April – and forecast for May – US producers are likely to find difficulties in lifting basis prices, in the near term.

In the Far East, small rises were recorded, for 300-series coil values. The growing raw material costs were tempered by subdued demand, high inventory levels and excess production capacity. The Tsingshan plant, in Indonesia, continues to expand material availability, and apply downward pressure to prices, in the region. MEPS predicts further marginal increases in Asian selling figures, in the coming months. 

Source: MEPS Stainless Steel Review

In Brazil, steel buyers are reluctant to conclude deals in the current difficult market conditions. Several purchasers of flat products indicate that the latest upward price initiative is unwarranted and does not reflect real demand. However, the Instituto Nacional dos Distribuidores de Aço (Inda) reports that, in February 2019, domestic flat rolled finished steel sales totalled 309,800 tonnes – up 19.3 percent, compared with the corresponding figure in the previous year. Nonetheless, the association is projecting that distributor and service centre sales fell by nearly 5 percent, this month.

The trading environment is slow, in the Russian Federation. Distributors found it difficult to pass on this month’s upward price adjustment to their domestic customers. Many end-user groups are adopting “wait and see” positions, anticipating that more attractive transaction values will be available, in the near future. Meanwhile, domestic steel producers, Evraz and NLMK, are reported to be planning to manufacture more high value-added finished steel products, this year. 

Escalating input expenditure is exerting upward pressure on flat rolled product prices, in India. However, procurement activity was slightly weaker than forecast in the period following the Holi festival. MEPS detects a reluctance on the part of end-users to commit to forward orders. Purchasing activity amongst construction firms is tepid, at present. Local steelmakers are seeking to expand their overseas business opportunities, as a result.

The outlook for the Ukrainian market is unchanged. Domestic steelmakers are forecasting that the second quarter will be a challenging trading period. The likelihood of improvement is limited. Traditionally, the construction season commences in mid-April. Overseas sales are still very competitive. Exporters are looking to increase shipments to alternative destinations. 

Turkish distributors and traders retain a cautious outlook for the second quarter, with many wary of carrying too much inventory over the next two months. They fear a price correction. Exporters are focusing on the Asian market, owing to increased competition, from Chinese, Russian, Ukrainian and Indian suppliers, in the Middle East and North African regions. 

Demand for construction steel in the United Arab Emirates is tepid. The distribution network is in a ‘wait and see’ mode, noting that underlying demand is insufficient to support the rising transaction values. Importers are also hesitant about booking forward orders, with the month of Ramadan (commencing May 5) and summer season looming. During this period, business traditionally slackens in the finished steel segment. 

The South African market is quiet, with little improvement in activity noted. Bearish local stockists are forecasting that sales volumes will stay muted in the second quarter of 2019 – highlighting that end-user groups are purchasing material only for immediate needs. 

The trading environment is lethargic, in Mexico. Nevertheless, local steel producers are attempting to implement further price advances, in order to recoup their escalating outlay on raw materials. Meanwhile, the national chamber of iron and steel industry, CANACERO, has welcomed the Ministry of Economy’s decision to renew the import measures (valid from March 26). The legislation will expand to cover 186 steel related products – previously, 97 items were incorporated. The tariffs of 15 percent on imports of hot rolled coil, cold rolled coil and wire rod expired on January 31, this year. 

Source: MEPS Developing Markets Steel Review

MEPS research, in March, indicates that a number of parallels have developed between the North American and European flat product steel markets. Due to rising mill input expenditure and a projected pickup in activity, steelmakers are targeting higher prices. The mills’ measures are having limited success, to date – although they have halted further price deterioration.

MEPS predicts that North American and European selling figures are close to the bottom of the current pricing cycle. However, the steel manufacturers are unlikely to secure the full extent of their proposed increases. This is because demand fundamentals are not strong enough to warrant the scale of the hikes proposed. Relatively short delivery lead times and above average inventory levels are projected to curb the mills’ pricing aspirations.

North American and European steelmakers have a small window of opportunity in which to push through their list price proposals. Reduced demand, during the traditionally slower summer period, is expected to exert downward pressure on steel figures. Consequently, MEPS predicts that any upturn in transaction values is expected to be modest and short-lived. 

Source: MEPS International Steel Review – March 2019