Global Stainless Steel Price Upturn Anticipated

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

Rising Raw Material Costs Drive Steel Prices Upwards in Emerging Markets

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

Steelmakers Struggling to Implement Price Hikes

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

Changbao Orders World’s Most Advanced Seamless Tube Plant

Jiangsu ChangBao Precision Steel Tube Co., Ltd based in Changzhou in Jiangsu Province, China, has awarded SMS group the contract to supply a new, state-of-the-art PQF® (Premium Quality Finishing) seamless tube plant and related automation. Particular highlights of the scope of supply include various performance modules and a KR I 35/45 CNC groove dressing machine. This highly automated plant will enable ChangBao to meet the growing demand for precise, high-strength tubes on the local market.

The PQF® ordered will be used to produce tubes within a diameter range of up to 6 5/8 inches and wall thicknesses of between 4 and 20 millimeters. Its annual capacity is 300,000 tons of tubes. These are used in oil and gas production (OCTG tubes) and must satisfy very high quality and tolerance requirements in accordance with API standards.

With the BCO-type PQF® plant (Bilateral Change-Over), the stands are changed at both sides of the mill. The compact, easily accessible construction enhances the user-friendliness of the plant. The drive is simpler in design and is easier to service. In addition, the hydraulic capsules (hydraulic adjustment) are positively connected to the mill frame. This ensures the rolling forces are distributed symmetrically over the mill, resulting in a further significant improvement in wall thickness variations. This increases both the efficiency and flexibility of the mill.

World Steel Prices

The order also includes the full automation of the machinery and plant sections, as well as state-of-the-art laser technology for measuring the wall thicknesses downstream of the PQF®and the stretch reducing mill (SRM). What’s more, the CaliView® measuring system developed by SMS group allows for fast, inline calibration of all rolling mills, and so guarantees the perfect alignment of the mill line over a period of time. A networked, CNC-based groove dressing machine (KR) for high-precision machining of the SRM stands will also be supplied.

The use of LASUS® technology means the otherwise commonly applied radioactive isotope measuring technique can be replaced by a safe laser technology, which is extremely environmentally friendly to operate and ensures monitor control with the PQF®-SecControl-Technology® as well as front and tail end sharpening in real time with the FTS system.

Any yield losses are minimized using the latest modules in the CARTANEO technology system. The well-known functions CEC (Crop End Control for reducing thick ends), WTCA (Wall Thickness Control, Average), and WTCL (Wall Thickness Control, Local) have been significantly improved thanks to self-learning algorithms (Artificial Intelligence, or AI).

With this investment ChangBao is banking on ultra-modern, highly stable tube production. The lower material stress allows the product range to be extended to include even thinner-walled dimensions and higher-alloy steel grades. The high level of digitalization of all equipment was what convinced the customer to be well equipped for the future.

The new seamless tube plant is scheduled to be commissioned in the first quarter of 2020.

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

Erdemir Relies on Danieli Technology for New Slab Inspection and Grinding Plant

Erdemir, part of Oyak Group, awarded the turnkey supply contract to Danieli Centro Maskin for a complete inspection and conditioning plant, to be installed at Zonguldak, Turkey.

It will process approximately 400,000 tpy of slabs in ultra-low, low- and medium-carbon and alloy steel grades.

The grinding plant consists of a SuperGrinder and a lateral unit for edge and corner grinding, featuring HiGrind digital system for control of grinding depth and safety functions, the E-Cube system for grinding at variable, stepless angles, and the Cast-t-Grind system for processing hot slabs up to 800 °C.

Based on acquisition and rendering of 3D images, the IntelliGrind system will ensure automatic detection and classification of surface defects by artificial intelligence and training of the neural network.

Source: Danieli Group

Poor Demand Restricts Steel Price Rises as Raw Material Costs Increase

Raw material costs put upward pressure on prices, in northern Europe, in March, but demand was insufficient to support proposed hikes. Flat products selling values, were, for the most part, unchanged, in euro equivalent terms. Regional mills have spare production capacity and delivery lead times remain short. Supply chain inventories are at a high level. Asian import offers are, in most cases, not sufficiently cheap to be attractive.

Danish domestic selling values for hot rolled coil were rolled over, from the previous month. Swedish industrial output is at a lower level than last year. Prices are quite stable. Construction activity has decreased in Finland, in recent months. Prices are unchanged, in the Netherlands, amidst customer uncertainty and subdued demand. Business activity is flat, in Norway.

Hot rolled plate consumption is steady in Austria, Sweden and Norway. Market activity is subdued, in Denmark. EU safeguard quotas are adding to buyers’ reluctance to place import orders. Finnish domestic sales are weak, and selling values slipped. Delivery lead times, from European suppliers, are very short. Buyers, in the Netherlands, note an increasingly firm stance, on prices.

European-produced cold rolled coil is plentiful and substantial shipments from Asia are expected. Selling values are unchanged, in Denmark, this month, despite the regional mills’ wishes for increases. Finnish service centres are well stocked. End-users are resistant to price increases. Austrian stockists believe that prices are at the bottom of the current cycle. Norwegian buyers are, increasingly, sourcing from third country suppliers. With no application of EU tariffs, offers from these sellers are very attractive.

Weak demand for coated sheet and coil from the automotive sector persists. Galvanised material is abundant, in Denmark, and regional mills are operating below full capacity. Market observers believe that the peak for Swedish manufacturing activity has passed. Orders from the auto supply chain remain depressed, in Finland. Buying activity, by industrial consumers, is weak, in Austria. Norwegian domestic demand is subdued.

Sales of wire rod to Swedish manufacturers are declining. Prices are unchanged from those of last month, in euro equivalent terms. Finnish consumption is fair, but pricing is tentative. Ex-mill prices rose by around €10 per tonne, in the Netherlands, this month, despite mediocre demand.

The Danish domestic market for medium sections and beams is quite stable, although supply chain participants report that significant rebates may be achieved, for large orders. The declining building sector has been a major factor in the downturn in Swedish industry, during the past year. A modest increase in Finnish domestic selling figures was agreed, this month, as a result of rising raw material costs. Construction industry participants, in the Netherlands, report a positive outlook, but current demand is subdued. Mills issued increased list prices, in March, but only small increments were agreed with purchasers.

Soaring mill input costs supported rising reinforcing bar values, in Sweden, in March. However, the effects, on the market, of the Vale mine disaster, in Brazil, are expected to subside, soon. Buyers, in the Netherlands, report offers of small parcels of Ukrainian material. Rising raw material costs led to modest increases in rebar values, in Austria. Local producers pressed for price hikes in Norway but purchasers resisted.

Many EU buyers are refraining from placing orders on UK producers of merchant bars. They are wary of the possibility of imminent post-Brexit tariffs being applied. This has the effect of tightening supply, in the region.

MEPS International Ltd is a Steel Market Analyst, tacking prices of steel products around the globe. Publishing monthly steel reviews as well as online steel price data. to find out more about MEPS visit www.meps.co.uk

Source: MEPS International – European Steel Review Supplement – March 2019