Business Confidence Deteriorates in Several Emerging Steel Markets

Turkey

Business sentiment is deteriorating, in Turkey. Domestic steelmakers pushed for price increases, this month, to offset the depreciation of the local currency against the US dollar. However, steel-consuming engineering and manufacturing firms are reluctant to increase production capacity in the absence of sustainable end-user demand. Sales to the construction sector is subdued.

Brazil

Procurement activity in Brazil is lethargic. MEPS detects little evidence of an imminent upturn in end-user demand. New public works contracts are scarce. Bearish local traders stress that sales volumes are forecast to be stable, at best, in the short term. Consequently, they are unwilling to build inventories, at present.

Russia

Challenging trading conditions persist, in the Russian Federation. Local steelmakers indicated to their customers that further upward price adjustments are likely if input costs continue to rise. The situation is exacerbated by the weakness of the local currency. Several bearish trading houses are now destocking, using the current high transaction values, to boost profit margins.

India

The business environment is improving, in India, owing to the imminent end of the monsoon season. Nonetheless, buyers remark that the recent upward trend in domestic mill transaction values is unsustainable and does not reflect real demand. As the month progressed, the gap between domestic offers and bids made it difficult for any new transactions to be concluded. Traditionally, sales volumes begin to improve from mid-October onwards.

Ukraine

The trading climate remains challenging in Ukraine. Stockists are highly critical of the pricing strategies being employed by their flat product suppliers. Support from offshore buyers is restricted.

UAE

The trading environment remains challenging, in the United Arab Emirates. Local trading houses are in little hurry to replenish their stocks. They are uncertain about the future prospects for industrial activity and construction work, in October. Export opportunities remain limited outside the GCC region.

South Africa

South African distributors are booking for only immediate requirements, citing deteriorating economic fundamentals. They contend that the latest price initiative undertaken by ArcelorMittal South Africa (AMSA), for October deliveries, would escalate import tonnages.

Mexico

The prognosis for the Mexican market is unchanged. Domestic stockists are optimistic that trading volumes of finished long products will increase in November. Heavy rainfall slowed down construction activity, this month. Buyers contend that current price levels are unsustainable and that a correction is inevitable.

US Steel Mills Benefit from Elevated Prices, as End-Users Face Rising Costs

The threat and subsequent imposition of a 25 percent tariff on imports of steel into the United States has benefited just a small proportion of the country’s population.

Domestic steel selling values for flat rolled products increased by almost 35 percent, in the first half of this year. A modest reduction developed in the second half, but current prices are substantially above the figures recorded in January 2018.

The main beneficiaries of the steel price hikes have been the local steel mills. The losers have been the numerous producers of manufactured goods and those companies engaged in the construction sector. These have seen their steel costs rise by 30 percent, in the past nine months.

Will the steel producers be able to maintain their current elevated prices in the long term? Probably not! Steel mill selling values are already slipping, as local buyers suffer a reduction in orders for their manufactured goods.

Source: MEPS International Steel Review – September 2018

US Hot and Cold Rolled Coil Prices Slip, Plate Values Firm

The downward momentum of US hot rolled coil prices continued, for the second successive month, in September. Amid a seasonal slowdown in activity, domestic mills are being forced to lower prices, in an attempt to secure bookings, for the fourth trimester. Many US buyers report that they are delaying purchases, in anticipation of further price reductions, owing to reduced raw material costs and greater spot availability, in particular from scrap-based producers. A number of planned mill outages, for scheduled maintenance, and a decline in imported volumes, notably from Canada and Turkey, are likely to minimise the extent of further price erosion, in the coming months. Small quantities of Serbian and South African material are being offered in the US market, at competitive prices.

Weakening demand conditions contributed to the modest decline in US cold rolled coil figures, this month. Several US buyers report that local mills are struggling to halt the negative price pressure, amid poor order intake, particularly from the automotive sector. Price deterioration should be minimised, in the coming months, owing to tightening supply, domestically, and from foreign outlets. Offshore volumes, into the US, declined by 31.7 percent, in July, year-on-year. MEPS’ research suggests a sharp decline in Canadian and Mexican imports, due to ongoing trade legislation.

US hot rolled plate values increased slightly during the past four weeks. Strong activity from a range of plate-consuming sectors contributed to the modest price rise. Many US steel market participants note that domestic plate selling values are bucking the trend of their strip products counterparts. This is due to significant supply-side shortfalls – with mill availability extremely restricted. It is reported that the majority of US plate customers remain on allocated supply tonnages. A decrease in competitively priced imports, notably from Canada, has given the US mills the opportunity to retain their, already elevated, price levels with little resistance from buyers. Local producers will be confident of maintaining the status quo, in the coming months, due to firm demand projections for the remainder of the year and tight supply created by mill outages.

Source: MEPS International Steel Review – September 2018

Primetals Technologies to modernize electric steel plant for Gerdau Special Steel North America in Monroe, USA

  • Modernization of the existing electric arc furnace
  • New twin ladle furnace and new material handling system
  • Capacity scheduled to rise by 160,000 metric tons per annum
  • Overall plant to be optimized by a high degree of automation and the use of LiquiRob systems
  • Robot systems will further improve occupational safety

Primetals Technologies has received an order from Gerdau Special Steel North America to modernize its electric steel plant in Monroe, Michigan, USA. The project involves modernizing the existing electric arc furnace. The electric steel plant will also be equipped with a new twin ladle furnace and a new material handling system. The aim is to increase the plant’s annual production capacity by 160,000 metric tons of rolled end products. End-to-end automation and the use of LiquiRob robot systems will increase productivity and reliability, optimize workflows in the steelworks, and reduce operating costs. At the same time, robot systems will make work safer. The ladle furnace and material handling system are scheduled to come into operation at the end of 2019, the modernized electric arc furnace in the middle of 2020.

Gerdau Special Steel North America is a leading manufacturer of special bars steels, which are mainly used in the automotive industry. The order awarded to Primetals Technologies is part of an investment package totaling around 80 million US dollars. Primetals Technologies will be responsible for the engineering and supplying the process equipment for the electric arc furnace, the 110-metric-ton twin ladle furnace, the material handling system and the structural steel work, and will also supervise the construction and commissioning of all the installations. The scope of delivery also includes the associated electrical installations and automation, the power supply – including transformers – and the complete, end-to-end process automation. Three LiquiRob systems will handle potentially dangerous tasks, such as taking temperatures and samples. Solutions such as the automatic sand refilling, a weighing system and the automated tap hole manipulator will optimize operation of the electric arc furnace.

Steel Plant
Electric arc furnace operated by Gerdau Special Steel North America at the company’s electric steel plant in Monroe, Michigan, USA. Primetals Technologies will modernize the electric arc furnace and supply a new twin ladle furnace and new material handling system (photo: Gerdau Special Steel North America).

 

Source: Primetals Technologies

Safeguard Measures Embolden EU Steel Mills to Lift Prices

British Steel to upgrade wire rod mill with new Primetals Technologies rod line outlet

In a move to improve the quality and range of wire rod produced in the United Kingdom, British Steel selected Primetals Technologies to design, manufacture and install a new wire rod line and upgrade long rolling equipment in the company’s existing rod mill in Scunthorpe, UK. The expanded size range will enable British Steel to serve new markets. Mechatronic packages and smart sensor systems mark the first step towards Industry 4.0. for this rolling mill.

The project will replace two of the four strands of the existing wire rod mill with a new high production and high-speed rod outlet, plus two prefinishing mill bypass lines that will enable rods to enter a reducing/sizing mill to produce a wider range of sizes.

The contract’s scope of supply includes modifications to the existing mill train, prefinishing mills and high-speed trim shears, with a new 230 Vee prefinishing mill, shear arrangement, a four-stand quick change Morgan Reducing/Sizing Mill, Morgan traversing water boxes and covered troughs, pinch roll and laying head arrangement with a quick change robot, a 10-zone Morgan Stelmor conveyor, the patented stepless reform station for coil forming, and vertical stem pallet system for coil handling. In addition, British Steel has contracted for mechatronic packages for section gauges and a laser gauge speed monitoring system with smart sensors, the first step towards Industry 4.0 digitalization of the rolling mill.

Once commissioned, the upgraded mill will produce 700,000 tons of wire rod per year, with tighter tolerances, better surface quality and microstructures, in sizes up to 28 mm in diameter. The contract also includes site supervision. Designed for a guaranteed maximum speed of 110 meters per second, the mill will run at 153 tons per hour.

The wire rod mill opened in Scunthorpe in 1976 as part of an integrated steelmaking site. The mill produces wire products for the automotive, construction, engineering and consumer goods markets.

British Steel Mill
Morgan Reducing/Sizing Mill

The original British Steel was founded in 1967 by the UK government from the country’s 14 main steel producing companies whose operations dated back to the 19th century. Privatized in 1987, the company merged with Koninklijke Hoogovens in 1999 to form Corus, which Tata Steel purchased in 2007 and renamed Tata Steel. In June 2016, Greybull Capital purchased the European long products business and renamed the new business British Steel. It produces sections, special profiles and wire rod manufacturing across the UK and rail manufacturing in the UK and France, with a network of metal centers and service centers in the UK and Ireland.

 

Stelmor is a registered trademark of Primetals Technologies, Limited in certain countries.

Source: Primetals Technologies

Safeguard Measures Embolden EU Steel Mills to Lift Prices

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Safeguard Measures Embolden EU Steel Mills to Lift Prices

EU steel coil prices moved upwards, during late July, as customers booked tonnage to replenish stocks for supply after the summer vacation. The increases, in Northern Europe, were quite modest, whereas they were more pronounced in Italy and Spain.

Market Activity Resumes Following European Holidays

The market was relatively quiet during August, due to the prolonged summer holiday period. Activity remains subdued, in early September. As delivery lead times at the EU steel mills are quite extended, buyers are considering placing orders for supply in December 2018/January 2019. They are approaching these discussions against a backdrop of price rise announcements from the steelmakers. MEPS notes resistance to this new initiative, particularly from service centres, due to their inability to fully pass on previous increases to their customers. As current inventories are at a high level, the majority of buyers are delaying order placement. Quite high volumes of imported material, purchased earlier in the year, are expected to arrive over the next two months. Underlying demand, overall, is healthy.

Germany

German consumption of strip mill products remains buoyant. Order intake at the domestic mills is higher than normal for the fourth quarter. A modest price rise was implemented at the end of July. The steelmakers continue to try to secure further increases. Third country import offers show little, or no, price advantage over domestically produced steel.

France

As EU steel mills are pushing for more hikes, the price trend is generally upwards in the French market. Increases are limited, for now, but buyers anticipate that they will be forced to pay more for strip mill products in the fourth trimester. Activity was slow to resume at the beginning of September. However, expectations are that it will pick up to the levels of before the holidays, in the coming weeks.

Italy

In Italy, the price upturn, reported in July, extended into September. Local and regional mills continue to lift list prices for forward deals. Their order books are strong. However, service centres report difficulty selling to their customers at the current high figures because most end-user sectors are performing poorly. Moreover, distributors have relatively high inventories so are in no hurry to replenish their stock levels.

United Kingdom

A number of UK service centres reported busier than normal activity in August. However, although their resale prices continue to recover, they are not at the required level. Basis values, quoted by EU steel producers, are above those reported, in July, for delivery in October/November. Buyers believe that the producers will demand another £20 per tonne for December/January business. For a brief period, during the summer, favourable currency exchange rates led to attractive deals being concluded with Turkish suppliers.

Belgium

Strip mill product basis values strengthened, in Belgium, in September. Steelmakers wish to boost prices by a further €20 per tonne, in the near future. They claim a lack of raw materials and limited imports, due to political and economic uncertainty. Service centres note low levels of activity since the summer holidays. Their resale values are difficult to maintain as end-users refuse to pay more. Overcapacity in the distribution sector, together with low demand, has resulted in downward pressure.

Spain

In Spain, domestic steelmakers secured increases of around €20 per tonne for November deliveries. This was due to the uncertainty of the safeguard measures and the expected replenishment of inventories, following the extended summer vacation. Buyers are faced with the prospect of a further rise for December business. However, high stock levels at the service centres and relatively weak demand are creating some resistance.

Source: MEPS European Steel Review – September 2018 Issue