Archives May 2019

steel coil being made

MEPS Forecasts Global Steel Production Growth to Slow Down

MEPS forecasts global crude steel production at 1.82 billion tonnes, in 2019. This equates to an increase of 0.8 percent, compared with the figure recorded in the previous year. A slowdown in steel demand growth is expected, as economic conditions soften, worldwide. A number of factors are adversely affecting steel consumption, including political uncertainty, rising trade tensions and moderating business confidence.

MEPS predicts that growth in global steel production and demand will slow in the long term, compared with the rapid expansion witnessed since the turn of the millennium. The steel industry is entering a mature phase of development. The sector faces many structural challenges, such as steel plants running at below optimal levels of capacity utilisation and government subsidies for inefficient steel mills. Nevertheless, cause for optimism about the future of the steel industry is apparent. The global population will continue to rise and demand for housing, infrastructure, machinery and consumer goods will persist. Furthermore, with its high degree of recyclability, steel will play a key role in the “circular economy”, which aims to minimise waste and make the most efficient use of resources.

China

China overtook Japan as the world’s largest crude steel producing country, in 1996. At that time, Chinese steel output was just 13 percent of the world total. The country’s share of global production had increased gradually through the 1980s and 1990s, but then it surged in the 2000s. Rapid capacity expansion was undertaken to feed growing domestic requirements for steel. By 2010, Chinese output accounted for 45 percent of the world total. China’s crude steel production had climbed fivefold, from 127 million tonnes in 2000 to 639 million tonnes in 2010. Growth in China’s capacity, production and consumption slowed, in the 2010s, compared with the previous decade but, nonetheless, remained substantial.

In the past few years, the Chinese government has put an increasing emphasis on addressing the problems of excess steelmaking capacity and high pollution levels. In the first half of 2017, hundreds of induction furnaces, with a combined annual production potential of approximately 120 million tonnes, were closed. Subsequently, the national authorities are now able to capture a more accurate figure for the country’s total steel output, for inclusion in the official statistics. MEPS had previously highlighted irregular finished steel output tonnages from the reported crude steel production figures. A number of electric arc furnaces were installed to replace the obsolete induction furnaces. In the long term, increased domestic scrap availability and environmental concerns should increase the attractiveness of the EAF steelmaking route. Nonetheless, the BOF route is likely to remain the main source of steel supply as a result of recent investments in blast furnaces.

India

India surpassed Japan as the world’s second largest steel producing nation, in 2018. The government has set a target of raising annual steelmaking capacity to 300 million tonnes, with an eighty-five percent plant utilisation rate, by the 2030/2031 fiscal year. Current levels of growth in steel demand and supply make this aim difficult to achieve. Amongst the many obstacles are the availability of infrastructure, land and raw materials, along with the substantial capital expenditure required by the, already indebted, domestic steelmakers. Nonetheless, MEPS expects the increases in Indian steel production and consumption to be the highest in the world, over the long term.

Japan

Between 2000 and 2017, Japan was the world’s second largest steel producing country. It was surpassed by India in 2018. In the period from 2019 to 2023, crude steel output is forecast to be recorded in a range between 103 and 105 million tonnes. Structural factors are expected to keep steel consumption substantially below the levels witnessed in the 2000s. The country will remain a key global steel exporter. External sales are likely to continue to account for more than 40 percent of production.

USA

The United States was the third largest steel producing nation, between 2000 and 2014, with the exception of 2009 amidst the Great Recession. Fiscal stimulus and Section 232 import measures have provided a boost to US steel demand and production, in the past couple of years. However, the long-term outlook is relatively pessimistic. Economic activity is forecast to slow. A rising risk of recession, over the forecast period to 2023, is apparent.

South Korea

South Korea became an established top ten steel producing country in the late 1980s. The country’s crude steel capacity increased by around 70 percent between 2000 and 2013. Output is forecast at around 72 million tonnes per year, over the forecast period. Despite the expectation of minimal output growth, in the coming years, plant utilisation is likely to remain at a relatively high level.

Russia

Following the breakup of the USSR, Russia became the world’s fourth largest steel producing nation for much of the 1990s and 2000s. Since 2010, the country has been vying with South Korea for the fifth spot. Crude steel production is predicted to average 71.6 million tonnes over the period forecast – a similar outturn to that recorded in 2018.

Germany

Germany was the fifth largest steel producing nation for much of the 1980s and 1990s. Since 2005, it has been the seventh largest. MEPS predicts that Germany will maintain that position in the coming years. Production is forecast to remain at around 42 million tonnes per annum – the country’s long-term historical average. Capacity utilisation is expected to be maintained at a relatively high level.

Turkey

Turkish crude steelmaking capacity and production increased by a factor of 2.5 since 2000. More than two-thirds of the expansion was attributed to the electric arc furnace steel manufacturing route. Economic and political difficulties adversely affected steel output and demand in 2018 and 2019. A moderate revival is anticipated over the forecast period.

Brazil

Since 1983, Brazil has been amongst the world’s ten largest steel producing countries. A recession in 2015 and 2016 had a substantial negative impact on steel output and demand. A modest recovery is anticipated over the forecast period. Growth in gross domestic product is predicted to average more than 2 percent in the 2019-2023 period.

Iran

Iran is likely to feature in the world’s top ten steelmaking nations, for the first time, in 2019. The authorities target steelmaking capacity of 55 million tonnes per year by 2025. The country benefits from substantial reserves of natural gas and iron ore. However, MEPS predicts that the long-term goal will not be achievable, due to the substantial levels of finance and infrastructure required. Nonetheless, considerable growth in steel output is envisaged. New electric arc furnace steelmaking and direct reduced ironmaking capacity is being brought on-stream.

Vietnam

Vietnam should establish itself inside the world’s top fifteen largest steelmaking nations, in 2019. It is forecast to be the third main contributing country, after India and Iran, to global crude steel production growth, in the period to 2023. A substantial amount of new steelmaking capacity is scheduled for installation. MEPS’ predictions account for the possibility that not all the plans will come to fruition, due to financing issues and import competition.

Source: MEPS World Steel Outlook (Q2-2019)


Thin, precise and green – the DMS 20Hi EcoMill wins another customer

Ningbo Baoxin Stainless Steel Co., Ltd., China ordered a new cold rolling mill DMS 20Hi EcoMill to process precision stainless steel for high-end applications. This will be the company’s first cold rolling mill to produce precision steel, but the fifth ordered from Fives over the last 20 years.

(free steel price data)

The new DMS 20Hi EcoMill will be able to roll strip down to 0.03 mm (30 microns) over the width of 1,040 mm. The mill will have an annual production capacity of 50,000 tons of steel (30,000 tons of the final products) for automotive, electronics and photovoltaic panels applications. A large portion of equipment for the mill will be manufactured locally under the supervision of Fives’ subsidiary in China. The mill is scheduled to begin production by the end of 2020.

The order follows the successful commissioning last year of the first DMS 20Hi EcoMill installed at Shanghai STAL Precision Stainless Steel in China. The mill installed at Shanghai STAL is able to roll strip down at 40 microns at the full width of 1,250mm to produce ultra-thin stainless steels for automotive, chemical and medical industries, and electronic products. 

(more from Fives)

Cold rolling mill improved features 

The latest developments for the DMS 20Hi EcoMill include increased rolling speed, new design of strip and work roll spraying, new strip wipers, improvements for fume exhaust, and a cutting-edge concept for flatness actuators and mandrel greasing. As a result, the steelmakers will benefit from reduced operating costs thanks to:

  • Less energy consumption
  • Production improvements
  • Faster maintenance
  • Improved design of mechanical parts

Additional benefits also include the ease of operation, increased cleanliness and overall reduced environmental impact.

The new order reinforces Fives’ position as a global leader in design and supply of cold rolling mills for precision steel.

Source: Fives Group


Three Stainless Steel Coils

Excess Production Capacity Undermines Stainless Steel Prices

Stainless steel prices continue to show few signs of recovery. Selling values, in Europe, have been below producers’ breakeven levels since a collapse in transaction figures, and the widespread adoption of effective pricing, in the summer of 2018.

Moderate increases, in excess of rises in alloy surcharges, were reported in the early months of this year. Now, the prospect of falling raw material costs, in combination with mediocre demand, is applying negative pressure to nominal basis figures.

Transaction values are also softening in the Far East, where activity is subdued, while production capacity continues to expand.

Section 232 action, in the United States, led to an immediate rise in domestic stainless steel prices, when first introduced. Since then, however, transaction values have fallen back to a level that is more in line with international markets.

(World Stainless Steel Prices)

The European Commission’s safeguarding measures were planned to prevent a flood of imports, in the wake of the US government’s actions, and have had little, if any, effect in boosting local prices, in the EU.

Market participants might expect a pricing boost from the value of one of stainless steel’s key raw materials, nickel. LME nickel stocks are at their lowest point in more than six years. Furthermore, with demand for nickel growing, due to expected consumption in the manufacture of batteries for electric cars, a deficit in supply of the metal is predicted, in the coming years.

Commodity prices, however, are influenced by a complex range of factors, beyond the market fundamentals for the particular material. It is in this context that nickel values are, currently, quite becalmed.

The main negative factor affecting stainless steel selling values remains production overcapacity. Producers in the established steelmaking regions have struggled to fill their schedules, in recent years. Now, with substantial new production capability coming on stream in countries including India, China, and Indonesia, it is difficult for sellers to make the case for increasing prices.

Source: MEPS Stainless Steel Review


National Holidays and General Elections Stifle End-User Demand in Emerging Markets

In Brazil, the level of activity varies considerably, depending on region and sector. The Instituto Nacional dos Distribuidores de Aço (Inda) reports that, in April 2019, domestic flat rolled finished steel sales totalled 266,000 tonnes – up 18.1 percent, compared with the corresponding figure in the previous year. However, the association is forecasting that, both sales and purchases of flat steel products, will decline by 5 percent, month-on-month, in May. 

Market sentiment in the Russian Federation is, generally, positive. Demand is solid yet unspectacular. Purchase volumes from the automotive industry are better than anticipated. Nonetheless, distributors are wary and only order for their immediate requirements, apprehensive of a downward price correction, in June and July.

In India, service centres are keeping inventories on the low side. Domestic sales are tepid. A number of large investment decisions have been postponed until after the general election. Traditionally, during this period, government infrastructure spending is on hold and end-users defer forward orders. 

The outlook for the Ukrainian market is unchanged. MEPS’ research reveals that the scale and longevity of any pricing revival will be modest – with political and economic uncertainty expected to continue to undermine market sentiment. The local association of metal producers, Metallurgprom, reports that finished steel production, in April 2019, totalled 1.665 million tonnes – down 1.7 percent, month-on-month.

The trading environment is challenging, in Turkey. Local end-user consumption is subdued. Buyers at stockists are hesitant about carrying too much inventory during the next two months. The automotive sector is underperforming, along with poor demand from general industry. Traditionally, the business climate exhibits signs of improvement in the last week of Ramadan (ending June 5). 

Turkish exporters are still focused on developing new business ties in Europe and Southeast Asia. The US authorities recently cut the import tariff on Turkish steel from 50 percent to 25 percent. Nonetheless, Turkish exporters are expected to face increased competition from their Canadian and Mexican counterparts, as Section 232 measures have been removed from those two countries.

Procurement activity is slow, in the United Arab Emirates. Business confidence is lukewarm, deflated by quiet conditions during Ramadan and the approaching summer holiday season. Day-to-day sales, at the distributors, are low. No upturn in market activity is foreseen until the end of the summer, at the earliest. Export opportunities are limited outside the GCC region.

The outlook is unchanged in South African steel market. Domestic consumption is relatively weak. Little improvement is envisaged for construction and mining investment, in the near term. Service centre buyers are receiving competitively priced offers from third country sources.

Business sentiment is lethargic, in Mexico. Service centres are cautious, maintaining a “wait and see” attitude, shaped by poor underlying demand and hesitant end-user buying activity. The construction sector continues to underperform, with few major projects in the pipeline. Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) is lobbying the government to do more to revive the economy, stressing the need for a strong industrial policy.

Source: Extract from MEPS Developing Markets Steel Review – May 2019


Primetals Technologies to install Automated Tapping systems at two BOF converters of Jiangsu Shagang

  • First commercial implementation of Primetals Technologies’ Automated Tapping system
  • Reduced tapping time
  • Minimal slag carry-over will improve phosphorous refining
  • Optimal tapping performance independent of individual operators
  • Improvement of working safety

Chinese steel producer Jiangsu Shagang Group Company Limited (Jiangsu Shagang) placed an order with Primetals Technologies to install automatic tapping system on two BOF converters in its converter steelworks in Zhangjiagang in Jiangsu Province. This modernization project marks the first commercial implementation of Primetals Technologies´ Automated Tapping system in a steelworks. The package will reduce tapping time and minimize slag carry-over, improving subsequent phosphorous refining. Automated tapping sequences will optimize tapping performance and make it independent from the operator’s experience. In addition, working safety will be largely improved. Start-up of the new Automated Tapping systems is expected for the third quarter of 2019.

Jiangsu Shagang is the largest private steel producer in China. Its annual production capacity is 31.9 million tons of iron, 39.2 million tons of steel and 37.2 million tons of rolled products. The range of products includes heavy plates, hot-rolled coils, steel wire, ribbed steel and special round steels. Steel is produced by means of BOF converters.

The upgrade of BOF operation by Primetals Technologies encompasses the hardware and sensor system for Automated Tapping, the safety system to prevent ladle overfilling, the implementation of Automated Tapping sequences, the installation of additional features for safety tapping as well as the integration of the existing slag stopper system.

The Automated Tapping system developed and installed by Primetals Technologies acts as a “Digital Assistant” and allows for a safe and fully automatic converter tapping procedure, including the control of vessel position, ladle car movement during tapping, as well as the positioning of the chute for ladle alloying. In combination with an installed slag identification system, e.g. optical or magnetic slag detection and a slag stopper system, there is minimal carry-over of converter slag in the teeming ladle.

At the end of converter treatment, the operator initiates the Automated Tapping procedure by just pressing one button. The converter is automatically tilted to the initial tapping angle and a fully automatic tapping procedure is executed. During the tapping procedure, all of the equipment involved is coordinated simultaneously. The primary task of the operator is to monitor tapping progress. The position of the vessel and the ladle car, the ladle alloying system, the installations for slag detection and the slag stopper are controlled by the software module. Multiple safety functions such as maximum tilting speed, online weight monitoring, and ladle fill level detection are included with Automated Tapping. There is always the possibility for the operator to intervene at any time, either to meet special requirements resulting from exceptional tapping situations or to maintain operational safety. Automated Tapping is available for all converter types and for slag pouring at the end of the tapping procedure.

The understanding of a fully automated converter operation is to execute the entire sequence of all required process steps for converter steelmaking charging – blowing – tapping and alloying in an autonomous manner. Thus Automatic Tapping is one cornerstone in achieving a fully digital, i.e. smart steel plant.

Tapping of a BOF converter. The newly developed Automated Tapping system from Primetals Technologies improves productivity and work safety. The first commercial implementation of this type will be installed at Jiangsu Shagang in the Zhangjiagang steelworks.

Source: Primetals Technologies


US authorities Relax Section 232 Measures

Steel selling values, in the United States, continue to be among the highest in the world. Nevertheless, local steel manufacturers are struggling to minimise the extent of recent price erosion, across flat and long products. Falling scrap expenditure, weak purchasing activity and an uptick in domestic production contributed to the latest price decline, this month. Hot rolled coil prices are, currently, hovering just above the US$600 per short ton mark. However, the reduced impact of Section 232 legislation has the potential to exacerbate the negative pricing situation further, in the near term.

In mid-May, the US government agreed to eliminate the tariffs on Canada and Mexico – with these countries dropping the reciprocal measures against US-made steel. The introduction of trade barriers had a negative effect on cross-border deals between the countries. This led to a widening price differential between US and Canadian steel values – in particular those for hot rolled coil – with Canadian figures falling at a faster rate than their US counterparts. 

Canadian steel producers, who are heavily reliant on sales to the US market, were finding their access increasingly restricted, due to the trade legislation. In an attempt to plug significant gaps in their production schedules, mills were forced to slash their local offers, to secure orders. The Canadian hot rolled coil market quickly became saturated. Domestic delivery lead times declined to one week, at one stage. 

It is widely anticipated that the removal of the Section 232 tariffs should provide Canadian producers some much-needed breathing space, by giving them the opportunity to close the pricing gap on their US neighbours. The US authorities also relaxed their stance on Turkish imports, by halving the tariff from 50 percent. It is likely that Turkish mills may redirect export volumes, from Europe, to the more lucrative US steel market, as a result.

Many European steel market participants remark that Turkish shipments of hot rolled coil to the continent, increased by more than 50 percent, in the first quarter of 2019, compared with the figure in the preceding year. High import penetration continues, despite existing EC safeguarding measures. Economic growth is stalling in a number of European countries and volatile raw material costs have put a strain on the profitability of regional steelmakers. 

In order to stem further price erosion, ArcelorMittal announced its intention to reduce supply from several of its Central and Eastern European steelmaking facilities. Moreover, we have reports that the company has raised its list price offers by between €30/40 per tonne. The consensus view of the majority of attendees at the recent ‘Made in Steel’ event in Milan, was that the pricing initiative, led by ArcelorMittal and followed by other mills, is likely to minimise the extent of further price deterioration within the region. 

MEPS expects downward movements in global selling figures to continue. However, values are likely to be approaching the bottom of the current cycle. Due to rising mill input costs, MEPS predicts a modest price recovery in late summer/early autumn. Nonetheless, the recent escalation of trade tensions involving the US and China, and continued Brexit uncertainty, will do little to boost consumer confidence, around the world. 

Source: MEPS International Steel Review