MILL INPUT COST INCREASES DRIVE GLOBAL STEEL PRICES UPWARDS

Global steel selling figures have been on an upward trend throughout 2016. MEPS’ world steel price soared by more than a third, in December, year-on-year, mainly because of a rapid rise in flat product values.

Further, strong gains are likely in the first quarter of 2017, as a result of escalating mill raw material expenditure. In recent months, spot coking coal prices more than tripled, to top US$300 per tonne, while iron ore values are fluctuating in the US$70-80 per tonne range. Steelmakers, keen to stay ahead of higher input costs, announced a series of price hikes, in November/December.

Despite a stable trading environment, we believe that most producers have been successful in recouping, at least, part of their higher outlay on raw materials. In December, the MEPS world all products composite steel price increased by 6.9 percent, month-on-month.

Trade actions and a shortage of competitively-priced imports supported mills’ efforts, in the US and Europe, to lift selling values. Amid tight supply conditions, steel buyers are likely to accept the higher prices tabled by their local steel producers, in order to secure sufficient material.

We believe that global transaction values will strengthen, further, in the coming months. A slight uptick in worldwide steel demand is expected in the first trimester, as customers replenish their inventories following the year-end. However, MEPS predicts that a prolonged recovery in world steel prices is unlikely unless a significant change in market fundamentals develops.

Source: MEPS International Steel Review – December 2016 Issue

STEEL PRICE RISE IN EMERGING MARKETS DESPITE LOW SEASONAL TRADING

According to MEPS, Brazilian stockists remain adamant that any move by domestic suppliers to pursue price growth would be counterproductive and stifle what little buying interest exists. Most consignments are small bundles. Strict lending conditions and shrinking credit facilities are negatively affecting trade.

The outlook for demand in the Russian Federation is unchanged. Underlying consumption for finished steel products fell short of industry projections – particularly, from construction firms and pipe fabricators. The situation has been exacerbated by the aggressive pricing positions adopted by domestic steelmakers. Despite this, distributors plans to persevere with conservative inventory levels over the winter trading period.

Activity remained subdued, in India, in early December. Traders intend to tightly control inventory levels due to limited buying activity. Construction firms continue to be hampered by working capital problems – a consequence of the government’s currency demonetisation policy. However, this has not deterred local producers from lifting their domestic finished steel offers. Third country imports are in short supply.

Purchasing activity continues to be limited in Ukraine. Distributors report that trading remains light for both the number of bookings and volumes transacted. Tight lending conditions have squeezed investment in construction and infrastructure projects.

The Turkish finished steel market shows no signs of a substantial improvement amid weak demand. Producers, operating EAF steelmaking facilities, responded to the escalating cost of ferrous scrap with caution. They highlight the volatile nature of the global scrap markets – with peaks, quickly followed by significant drops.

The business climate remains tough in the United Arab Emirates. Local construction firms are unwilling to purchase more steel than they need to meet their near-term requirements. Emirati rolling mills opted to raise their selling figures to offset higher production costs.

Procurement activity in South Africa is forecast to deteriorate further, ahead of the festive holidays. Local distributors plan to persevere with conservative inventory levels in the short term.

The trading environment remains challenging in Mexico. Flat product dealers are holding off purchasing until January to see how demand develops, citing both tepid end-user consumption and the strength of the US dollar against the Mexican peso.

Source: MEPS – Developing Markets Steel Review – December Edition

Tata Steel IJmuiden orders new continuous slab caster from Primetals Technologies

  • Technology packages ensure high interior and surface qualityProduction capacity is 2.7 million metric tons of slabs per annum
  • Slabs further processed to make steel products for the automotive industry
  • The IJmuiden plant will be the most modern of its kind

Tata Steel IJmuiden BV, a Dutch steel producer, has awarded Primetals Technologies an order to supply a new continuous slab caster. The plant will be constructed on a “process turnkey” basis. It is designed to produce around 2.7 million metric tons of slabs per annum and will cast high-quality grades for end applications in the automotive industry, for example. A number of technology packages will ensure that the slabs have high interior and surface quality making the caster the currently most modern plant of its kind. The plant is scheduled for commissioning in March 2019.

Tata Steel IJmuiden BV is part of Tata Steel Europe and, with an output of seven million metric tons of steel per annum, is Tata Steel’s largest production site in Europe. IJmuiden produces steels for a large number of applications, but mainly for the automotive, construction and packaging industries. The steel products are also used in batteries, tubes, industrial vehicles and domestic appliances. Primetals Technologies will handle the basic and detailed engineering of the new continuous slab caster and will manufacture core components. The scope of supply and services also includes the complete basic and process automation, the water treatment plant and the erection.

The caster has a machine radius of 9.5 meters and a metallurgical length of around 32.7 meters. It has the possibility to cast slabs with thicknesses between 180 and 305 millimeters in widths ranging from 900 to 2,150 millimeters. The machine processes a wide range of carbon steels, peritectic grades, structural steel and HSLA (high strength low alloy) . The machine is equipped with a straight Smart Mold with electromagnetic stirrers and a number of technology packages. These include LevCon mold level control, a Mold Expert breakout detection system with fiber-optical based temperature measurement, and DynaWidth for setting the width of the slabs during the casting operation. DynaFlex is used as the mold oscillator.

High-temperature-casting (DynaTac)-compatible EcoStar Spiral rollers are used in the segments of the strand-guiding system. The Dynacs 3D process model is used for the secondary cooling system. It dynamically calculates a three-dimensional temperature profile along the whole length of the strand. This enables the setpoints of the secondary cooling and thus the final strand solidification to be determined precisely as functions of the casting speed, slab format and steel grade. DynaGap Soft Reduction 3D improves the interior quality of slabs used to produce high-quality heavy plate. The roller taper is dynamically adjusted during the final solidification in line with the setpoints calculated by Dynacs 3D. The 3D Sprays system has movable nozzles in the segments to ensure uniform, optimal cooling of the slabs over their entire width.

Source: Primetals Technologies

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DOUBLE DIGIT STEEL PRICE INCREASES FORECAST FOR NORDIC FLAT PRODUCTS – MEPS

According to MEPS, steel producers across the Nordic region have managed to push through substantial price rises for cold rolled coil, in December. Advances were supported by growing raw material outlay and strong demand.

Sales tonnages for hot rolled plate are satisfactory. Increased prices are being justified by rising mill input costs. Substantial hikes are predicted for quarterly contracts, effective from January 2017.

Despite the imposition of antidumping duties, import offers for cold rolled coil are now viable in Western Europe. Business activity is buoyant for the time of year.

Supply of galvanised coil remains tight. Market participants expect shortages to develop after the demands of the carmakers are met. Restricted availability, together with rising raw material costs, is supporting the price increases.

Moderate rises in wire rod selling figures were agreed. Further significant increases are in the pipeline. Demand is quite strong and some regional mills will close for two weeks, around the Christmas period, thereby restricting supply.

Limited supply, of steel beams, is helping to support price hikes – driven by rising raw material costs. Business activity levels are reasonable.

Rebar selling values increased, in December as a result of soaring raw material costs, despite typically low winter consumption.

Source: European Steel Review Supplement – December Edition

Qingdao Iron and Steel awards FAC to SMS group for SBQ mill

The Chinese company Qingdao Iron and Steel from Qingdao, Shandong Province, has awarded SMS Group  the FAC for the supplied SBQ (Special Bar Quality) mill.After a short ramp-up phase, the new special mill is now producing a wide range of steel grades with very good mechanical properties and optimized microstructure with tolerances of better than 1/6 DIN. The mill is designed for an annual capacity of around 700,000 tons of bar steel.

The close tolerances are achieved by the 3-roll “PSM® 380/5” (Precision Sizing Mill) sizing block in conjunction with a MEERgauge® cross-section measuring system and monitor control technology. Practically any desired finished sizes in diameters between 16 and 100 millimeters can be rolled.

A large number of different cooling strategies were considered during the design of the mill in order to achieve the very good mechanical properties and the optimized microstructure. These strategies are based on eight movable water boxes and long equalizing sections.

Together with the CCT® program (Controlled Cooling Technology), optimum temperature control in the rolling mill is ensured during production for every dimension and every steel grade.

With the installation of the SBQ mill, the Qingdao Iron and Steel Group has strengthened its position on the market and extended its product portfolio by now being able to also roll high-grade special steels.

The SMS group is a group of companies internationally active in plant construction and mechanical engineering for the steel and nonferrous metals industry. Its 14,000 employees generate sales of over EUR 3.3 bn.

Source: SMS Group

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EU STEEL PRICES EXPAND AS MILL INPUT COSTS INCREASE

European strip mill product prices continued to escalate, in December, driven by a sharp rise in raw material costs. Moreover, third country import volumes were restricted, due to trade defence measures, on both hot and cold rolled coil, and by Chinese cuts in supply. The threat of an antidumping investigation into galvanised steel imports from China also significantly slowed the placement of new orders with Chinese producers.

Domestic mill order books are healthy and delivery lead times remain extended. Steelmakers, keen to stay ahead of raw material cost developments, announced further price hikes in late November. Buyers expect the mills’ new targets to be achieved shortly and further initiatives cannot be ruled out in the first trimester of 2017.

Strip mill product prices continue to advance, in Germany, as a result of restricted supply, extended delivery lead times and the surging cost of production at the mills. Steel buyers are keen to secure quantities ahead of further rises. They state that a number of producers are controlling volume flow on quarterly contracts. Further price hikes are anticipated.

French steel demand is reasonable going into the last month of 2016. Buyers are pre-empting their future requirements, following the rapid price increases. Mills plan to build on this momentum and continue to lift basis values for deliveries into the beginning of next year. Buyers comment that quotations are only valid for a week to ten days, then revised upwards. Imports are still very limited.

General steel demand, in Italy, is quite flat, with the major exception of the auto industry, which continues to flourish. The mechanical engineering sector is improving. Construction activity continues to stagnate and, following the recent referendum, a new phase of political instability is envisaged, which does not bode well for future investment prospects. Strip mill product basis figures soared in December, as a result of a dearth of imported material, together with higher input costs at the steelmakers. A significant amount of uncertainty exists in the market. Many buyers fear that prices may go down again, as quickly as they have risen. Service centres complain that their profitability is at risk as resale customers are not yet willing to pay more. Consequently, distributors purchase as little as possible.

Several continental European steelmakers are not supplying the UK market, at present. Therefore, customers’ options are limited, leaving them no choice but to pay the substantially higher prices demanded by the domestic mills. They have been told to expect material to be more expensive when April deliveries are negotiated. Service centres are busy and resale values are moving up, enabling them to preserve their profit margins. Distributors complain of a lack of supply from the Far East. At times, deals were put together, only to be subsequently withdrawn, to the frustration of potential buyers.

Belgian demand is relatively brisk. The increased cost of raw materials forced ex-mill steel prices upwards. Very little competition exists from overseas suppliers. European producers are confident that further advances can be secured. A number of buyers have limited the quantities they order because prices are so high.

Spanish manufacturing output continues to grow strongly. Steel demand is satisfactory and forecast to increase a little in the first quarter of 2017. The installation of a new government is expected to create a more positive economic environment. Service centre steel inventories are kept as low as possible for fear of stock losses – should the new, higher prices not stick. Distributors encountered difficulties with passing on the mill hikes to the marketplace. Ongoing constrained supply led to much higher basis numbers, in December.

Source: MEPS – European Steel Review – December 2016 Issue