Stainless Steel Coil Suppliers Hope for Recovery in 2019

Stainless steel prices – in particular, those for strip mill products – demonstrated diverse trends, in the traditional steelmaking regions, in 2018.

In the United States, the implementation of Section 232 quotas and tariffs, early in 2018, had an immediate inflationary effect on stainless steel coil selling figures. Basis values for grade 304 cold rolled coils declined during the latter part of the year – as did alloy surcharges. However, they remain slightly higher than they were at the beginning of 2018. Furthermore, North American transaction prices will finish the year above the values recorded in January, while those in Europe and Asia, generally, are down.

In Europe, as alloy surcharges soared, between February and July, transaction values failed to keep pace. Buyers were reluctant to pay the full extent of the increases. The majority of business, consequently, was carried out using “effective prices,” rather than the established “basis plus alloy surcharge” mechanism. During this period, nominal basis figures, i.e., transaction value minus alloy surcharge, dropped to unfamiliar and, almost certainly, unsustainable levels. 

The widespread belief was that, when alloy surcharges receded, effective prices would decline less steeply, and that nominal basis values would, therefore climb back towards “normal” figures. In fact, during the second half of 2018, transaction values have fallen by more than the decrease in alloy extras. Nominal basis numbers are, now, several hundred euros below the widely accepted breakeven figure for cold rolled coil production. European producers will be hoping for a substantial recovery in stainless steel flat products prices, to return their operations towards profitability.

Asian prices have been much less volatile, this year, than those elsewhere in the world. Typically, fluctuations in their selling figures are driven by variations in raw material costs. Recently, producers attempted to maintain stability in their local markets by minimising price alterations. In Japan, especially, only moderate changes in market values, for 300-series cold rolled coils, were recorded, in 2018.

Source: MEPS Stainless Steel Review – December 2018 Issue

Trade Legislation Fails to Halt Slide in North American Steel Prices

During the last few months of 2018, North American flat product steelmakers have lost a vast proportion of the pricing gains they obtained in the early part of the year. The rapid rise of regional steel prices was, largely, a consequence of the implementation of the Section 232 measures. This gave domestic producers the opportunity to escalate prices – with little resistance from buyers.

With hot rolled coil values approaching US$1000 per short ton, in the mid-part of 2018, US steel manufacturers took steps to restart idled capacity. Furthermore, a number of new plants were opened. Year-to-date capacity utilisation, in the US, is 78.2 percent, which is an increase of 6 percent, year-on-year. Despite the existing trade legislation, imports continue to be a key feature of the domestic steel scene. Significant quantities of foreign material are still entering the country. 

With concerns about supply eased and a marked slowdown in activity, in recent months, US steel producers are struggling to minimise the extent of the recent price deterioration. December’s hot rolled coil selling figures are 18 percent down from their July highs. Subsequently, many US steel market participants are questioning the long-term viability of the Section 232 measures, in propping up domestic steel prices. One US purchasing manager remarks that he expects the trade legislation to “die with a whimper – not a bang”. He noted that import protection has had “unintended consequences”. Many US steel users are finding it increasingly difficult to compete in the international arena while having to contend with greater competition from foreign companies, due to their access to cheaper raw materials. 

MEPS’ research indicates that the Section 232 tariffs will continue to support local selling figures at relatively high levels, whilst they remain in effect. This should enable North American mills to maintain healthy profit margins, in the medium/long term. Nonetheless, the high cost of steel will continue to negatively affect steel consumers. 

Source: MEPS International Steel Review – December 2018 issue

World Largest HDRI/CDRI Plant Completes Construction in Algeria

Bethioua (Oran), ALGERIA – Dr. Suhat Korkmaz, CEO of Tosyali Holding, recently announced completion of the state-of-the-art direct reduction ironmaking plant capable of simultaneous production of hot and cold direct reduced iron (HDRI and CDRI), which will feed the electric arc furnace (EAF) melt shop of a new Tosyali Algeria iron and steel facility. The announcement followed a site visit by Youcef Yousfi, Algeria Minister of Industry and Mining, hosted by Fuat Tosyali, Chairman of Tosyali Holding.

The 2.5 million tons/per year plant was supplied by Midrex Technologies, Inc. and its consortium partner, Paul Wurth.

“The MIDREX® DRI combination plant provides Tosyali Algeria greater flexibility in producing high quality steel products,” Dr. Suhat said, “and will eliminate the need to purchase imported scrap.”

Commissioning of the plant began in July 2018, and production of cold DRI (CDRI) started in late November 2018. Hot DRI (HDRI) production is expected to begin in February 2019, which also is the scheduled official plant start-up.

History of Tosyali Holding

Founded in Iskenderun, Turkey, in 1952, Tosyali Holding now has a total of 18 facilities on three continents in six different regions along with 12 affiliates. Tosyali Holding includes three production companies – Tosçelik Profil ve Sac Endüstrisi A.Ş., Tosyali Demir Çelik Sanayi A. Ş., and Tosçelik Granul San, A. Ş. – all of which are leaders in their sectors, and Tosyali Diş Ticaret A. Ş., which conducts foreign trade for the group.

For more information, please visit en.tosyaliholding.com.tr

About Midrex Technologies, Inc.

For more than 45 years, Midrex Technologies, Inc. has been the leading innovator and supplier of direct reduction ironmaking technology. Plants based on the MIDREX NG™ Process each year produce more than 60% of the entire world’s supply of DRI and more than 80% of DRI produced by shaft furnace technologies. MIDREX NG™ Plants are known for their reliability, flexibility, and hours of continuous operation, often well beyond industry standards. Several MIDREX® Plants built almost 50 years ago exceeded their original design capacities and product quality specifications in 2017. MIDREX® Plants can be turned down with no significant economic impact during difficult market conditions and returned to full production quickly and efficiently.

For more information, please visit www.midrex.com.

About Paul Wurth

Headquartered in Luxembourg since its creation in 1870, Paul Wurth has developed over the course of its history into an international engineering company. Because of its considerable know-how and effective policy of innovation, Paul Wurth Group is today one of the world leaders in the design and supply of the full-range of technological solutions for the primary stage of integrated steelmaking.With about 1600 employees worldwide, Paul Wurth Group operates international entities and affiliated companies in the main iron and steelmaking regions of the world. Since December 2012, Paul Wurth has been a member of SMS group.

For more information, please visit www.paulwurth.com.

Source: Paul Wurth

Steel Price Reductions in China Unnerve the Emerging Steel Market

Brazilian Steel Market

The situation in the Brazilian steel market is virtually unchanged, from that reported in November. Business confidence is low. Domestic demand is weak, with few transactions being concluded. Traders are carrying stock that is surplus to current requirements – much of which was purchased at prices higher than those pertaining today. Meanwhile, local producers expect that the tough business conditions will spill over into, at least, the first quarter of 2019.

Chinese Steel Market

With winter approaching, Chinese steelmakers have started to redirect material to the country’s eastern and southern provinces, to counter the slowdown in the northern regions. Restocking is expected to pick up after the Lunar New Year holidays (from February 4 to 10), at the earliest, assuming no unforeseen procurement surge beforehand.

Russian Steel Market

The business environment, in the Russian Federation, is slow. Distributors are allowing inventories to run down, in order to free working capital and minimise potential losses, as current demand reduces ahead of the eight-day New Year/Orthodox Christmas break. Construction demand is tepid, and is forecast to decrease with the onset of inhospitable winter weather conditions.

Indian Steel Market

The Indian trading climate is subdued. Steel usage is weak for seasonal reasons. Domestic steelmakers are considering a price rise in January, but buyers believe that their expectations are unrealistic. Local construction firms are reluctant to purchase more steel than they need to meet their near-term requirements. Third country flat product import offers are available, but buyers show little interest.

Ukraine Steel Market

Purchasing activity is limited, in Ukraine. Stockists are reluctant to place new orders, at present, due to the onset of the winter trading period. Despite this, domestic steelmakers are keen to lift selling figures to protect margins, citing rising steelmaking raw material costs. The local association of metal producers, Metallurgprom, reported that finished steel production, in November 2018, totalled 1.47 million tonnes – down 3.3 percent, month-on-month.

Turkish Steel Market

In Turkey, business is slow in the steel market and local distributors’ margins are being squeezed. The majority of these firms plan to persevere with conservative inventory levels over the January-February trading period. Meanwhile, end-user groups plan to closely monitor the price premium charged by the local mills, relative to the cost of imports, before deciding where to buy. Export business opportunities are poor, at present.

UAE Steel Market

Price volatility is undermining market sentiment, in the United Arab Emirates. Minimal trade was conducted during the period surveyed. Competition between service centres is fierce for the available business. End-users are still waiting for evidence of price stability.

South African Steel Market

The outlook for the South African steel market is unchanged. Service centres are keeping inventories steady and only buying for orders already on their books. Sales activity is sluggish to many steel consuming segments. The construction sector continues to operate with limited public and private finance.

Mexican Steel Market

Trading conditions in Mexico are quite slow. Service centres are delaying purchases until January to assess how demand develops. MEPS notes little appetite for buying steel, at present. Construction activity in the public sector is at a standstill, currently, as the market awaits government decisions on proposed new investments.

Source: MEPS Developing Markets Steel Review – December Issue

Třinecké Železárny Awards Final Acceptance Certificate to SMS Group for New Blooming Mill Stand

Following the commissioning of its new blooming mill stand, the Czech steel company Třinecké železárny has awarded the final acceptance certificate (FAC) to SMS group.

The objectives of the upgrade were to maintain and ensure the operational reliability and plant availability, to create the necessary process stability and to improve quality, tolerances and yield. Due to the advanced age of the plant this upgrade was an essential investment into the future of Třinecké železárny.

Třinecké železárny Steel Mill

Třinecké železárny is part of the Moravia Steel Group and has a broad product portfolio: rails, wire rod, bar steel including SBQ, seamless tubes, and drawn steel.

The scope of the upgrade included a new ultra-rigid two-high reversing blooming mill stand with shifting unit and hook-type tilter. The blooming mill is used for the preshaping of intermediates – also of high-alloy steels – made from continuously cast material up to 525 millimeters in diameter and ingots up to a weight of 5.3 tons. Moreover, it is also providing the feedstock material for the existing rail, bar and wire rod production at Třinecké železárny, which shows the importance of this critical modernization project. Another core element of this order is the new hydraulic bloom shear with a shear force of around 1,000 tons. The shear is driven by an innovative and energy-efficient variable-speed pump (VSP).

SMS group is a group of companies internationally active in plant construction and mechanical engineering for the steel and nonferrous metals industry. It has some 14,000 employees who generate worldwide sales of about EUR 3 billion. The sole owner of the holding company SMS GmbH is the Familie Weiss Foundation.

Source: SMS Group

EU Steel Prices Remain Under Negative Pressure

European strip mill product prices continued to erode, in December. Domestic steelmakers are prepared to offer concessions in order to secure production volumes. Despite the tendency of most steel mills to try to increase basis values, the reality is that they are struggling to hold on to current figures. Material, in the general market, is plentiful. This is partly due to the significant reduction in demand from the auto sector. Mill delivery lead times continue to contract. Competitively priced imports are available.

Steel Tariffs and Quotas

Meanwhile, customers are reluctant to book forward orders, expecting further downward price movements. They are beset with uncertainties. These include the lowering of European manufacturing output, the EC safeguard quota system, political problems in Europe and other parts of the world, plus the threat that tariffs may be imposed on car sales to the USA. Moreover, inventories, particularly at the service centres, are, currently, sufficient. This enables buyers to postpone purchasing decisions until the future pricing trend becomes more clear.

German Steel

The German manufacturing sector lost further momentum, in November. Strip mill product prices declined in December, owing to reduced demand, from all steel-consuming sectors. Many customers are minimising their inventories, ahead of the year-end. The decrease in activity appears to be a symptom of seasonality and a fall in consumption, especially by the auto sector. Steelmakers are not fully booked, with short-term availability for standard grades. Pressure exists from third country imports from sources in Turkey and Asia.

French Steel

Activity on the French market is, generally, at a good level, in December, although strip mill product prices remain under slight downward pressure. Negotiations for annual and half-year contracts with OEMs are still underway. In the general market, selling figures declined further, in December.

Italian Steel

The downturn in the Italian manufacturing sector continued, in November. The political problems between the Italian government and the EU are negatively affecting investment. This is reflected in the steel business, with buyers lacking the confidence to place forward orders. Prices continue to trend downwards. Companies are destocking for the year-end and adopting a ‘wait and see’ attitude as they anticipate further price erosion in the near-term. Distributors’ resale margins are extremely low as end-users insist on discounts. Strong import pressure is noted, from Turkey, South Korea and Russia.

UK Steel

Basis values steadied, in the UK, in December, after falling, in the previous month. Demand is low, for seasonal reasons. Moreover, the country’s impending EU exit is causing great concern in business circles. Companies are destocking. Service centres supplying the auto market are suffering because of a lack of orders from that sector. Overall, distributors are managing to maintain their resale margins.

Belgian Steel

Belgian strip mill product values remain under negative pressure, in December. Inventories are sufficient for today’s needs, so buyers are only purchasing replacement material, on a month-by-month basis. European suppliers still claim increases for the first trimester of 2019. Imports are available at competitive rates. Service centres report slightly reduced sales volumes. Competition between distributors is fierce.

Spanish Steel

Spain’s manufacturing sector strengthened again during November. In the steel market, EU producers continued to adjust basis values downwards, for January 2019 deliveries. The move was driven by the continuing decline in import prices for shipments into the early part of next year. Demand has slowed over the last two months. The decrease is primarily apparent in the auto sector. Many service centres have sufficient material, either in stock or already on order, as they expected better sales.

Source: MEPS European Steel Review – December 2018