Primetals Technologies receives FAC for automation upgrades at Gerdau Ouro Branco and conducts Industry 4.0 study

In late March, Primetals Technologies received the Final Acceptance Certificates (FACs) for automation upgrades conducted on a third-party 6-strand billet caster and two blast furnaces of Gerdau Ouro Branco in Minas Gerais, Brazil. The caster project included the upgrade of outdated level 1 and level 2 systems, resulting in quality improvements, reduced maintenance requirements and operating cost savings. Blast furnaces #1 and #2 were outfitted with a new level 2 process optimization system with a short payback period of several months. On the one hand the solution saves fuel and reducing agents, and on the other hand it improves the hot metal quality. In addition, Gerdau contracted Primetals Technologies to assess two of their facilities regarding their digital maturity level within the scope of an Industry 4.0 study, and to provide a roadmap towards a smart steel production.

The level 2 system installed at a 6-strand billet caster encompass basic functionalities like material tracking, heat pacing, cutting schedule and process set-point generation as well as the implementation of the Equipment Expert, which is a preventive maintenance tool for the caster equipment. Advanced process models for the caster include the DynaSpeed secondary cooling model, Quality Expert Express Edition used for product quality rating, a billet cut-length optimization and the Intermix model for calculation of the heat volume concentration and incompatible strand portions along the strand.

In the course of upgrading the billet caster´s level 1 system, Primetals Technologies undertook the migration of an obsolete third-party platform to the latest state-of-the-art controllers, using a special migration kit in order to reduce risk and consequently shortening the shutdown period. Existing frequency converters were replaced by new components. A new HMI(Human Machine Interface) system, using a virtual server concept was also supplied. In addition, the existing low performance field networks were replaced by Ethernet IP, and the operation desks and panels were modernized.

The level 2 systems for the two blast furnaces #1 and #2 enables all optimization functions to work within a virtualized server concept, allowing for high-availability hardware redundancy. The system offers data recording, data visualization and long term data archiving functionality. Control of blast furnace raw material supply and material distribution within the shaft is model based, as is the optimized control of the hot stoves system. Also, expert systems for automatic operation of blast furnace in closed-loop mode, and for preparing the blast furnaces for intermediate maintenance shut-downs were introduced. Finally, a recently developed slag optimization model was included in the level 2 system.

The Industry 4.0 Study conducted by Primetals Technologies consisted of the assessment of an integrated process route from blast furnace to continuous casting and the assessment of an EAF route from scrap handling to long rolled products. The assessments were performed in a holistic manner, including an investigation of metallurgical models and tools for better and more repeatable process execution, automation and system requirements, production planning and digital assistance systems, all with regards to product quality, traceability and consistency. Based on the results of this assessment a roadmap was provided by Primetals Technologies, which will assist Gerdau to further transform its production site in Ouro Branco to meet their goal of becoming a smart steel production. 

Gerdau S.A., headquartered in São Paulo,  is the largest Brazilian steel producer and one of the major suppliers of long steel in the Americas and of special steel in the world and possesses an installed capacity of 21.7 million tons of steel per year. The company is present in 10 countries in the Americas. Gerdau Ouro Branco, located in the Brazilian state of Minas Gerais, is Gerdau’s largest steel mill. Its product mix includes billets, slabs, blooms, beam-blanks, wire-rod, carbochemicals, hot coils and plates. The installed capacity of the Ouro Branco plant is 4.5 million metric tons per year.

The new level 1 and level 2 systems from Primetals Technologies for the billet caster of Gerdau Ouro Branco in Brazil improve the quality, reduce maintenance efforts and operating costs.

Source: Primetals Technologies

Indonesia to Lose European Commission Safeguard Exemption

The European Commission recently completed its review of the safeguard measures, which were introduced to prevent the redirection of material previously destined for the United States. The Commission has recommended changes, to the list of products from developing nations, that are currently excluded from the quota system. It has made the proposed amendments based on the latest full year’s import statistics, instead of the ones used in the previous definitive measures.

Brazil and India were removed from the list for stainless steel hot rolled sheets and strip. These countries will become exempt from the quotas for this product. Turkey has obtained an exemption from the safeguard measures for stainless steel hot rolled quarto plates. This could result in increased imports, into the EU, from these countries.

In the proposal, Indonesia will lose its developing nation exclusion for both stainless steel hot and cold rolled sheets and strip. Imports, in these categories, will be subject to the quota and tariff system. Tonnages, from this country, have been arriving in the EU at a growing rate, since mid-2018.

Hot rolled stainless steel, from Indonesia, increased to over 25 percent of the total imports into the EU, in the first quarter of 2019. China still accounts for more than half of the foreign sales into Europe. The safeguard measures have done little to stop the rise in stainless steel imports, from all countries, since they were introduced in July 2018.

The volume of Indonesian cold rolled stainless steel, arriving into the EU, increased to approximately 8 percent of total imports, in the first three months of this year. However, production of cold rolled material, in the country, is limited. Taiwan remains the largest supplier, of cold rolled sheets and strip, to Europe.

Crucially, imports of hot and cold rolled sheets and strip, from Indonesia in 2018, exceeded the World Trade Organisation’s 3 percent threshold, at which developing nation exemption is lost. This is the year that was used in the recent review by the European Commission.

Prior to the announcement of the proposed changes to the safeguard measures, Eurofer submitted an antidumping complaint to the European Commission. This covered hot rolled stainless steel sheet and coil from China, Indonesia and Taiwan. This investigation, combined with the application of quotas for Indonesia, is expected to result in a reduction in imports of hot rolled stainless steel products, in the remainder of 2019.

The proposed changes, if agreed by the member states, will come into effect on October 1, 2019.

Raw Materials

Nickel prices have increased significantly, since early July. The threat of bringing forward a ban on ore exports from Indonesia, before the originally planned 2022 date, is the main cause of this dramatic rise. Further price advances could be recorded, if the date of the ban is confirmed. However, the current prices suggest that the market have already factored in a large part of the impact that this would have. Consequently, any additional price gains are likely to be modest and short-lived.

Inventories, held in LME warehouses, moved back above 150,000 tonnes. Cancelled warrants have also fallen, of late. This could signal that traders are getting nervous about the level that nickel prices have reached. Consequently, a downward correction in nickel values is predicted, later in the year.

Spot chromium prices moved upwards, in August. A modest increase is expected to contract prices in the fourth quarter, in the EU and US. Molybdenum costs moved upwards, this month. Values are likely to soften, in the near term, due to weak demand in the global market.

Stainless Steel Price Forecast

Rising raw material costs are expected to push global stainless steel transaction values upwards, in September and October. Ongoing trade disputes and antidumping measures, being implemented in nations on all continents, may restrict the availability of foreign material in many countries. This could encourage more customers to purchase from their domestic suppliers, in the coming months. Consequently, the traditional price downturn, usually observed in the final quarter, is expected to be muted, this year.

Source: MEPS International Ltd.MEPS Stainless Steel Review

US Steel Prices Rebound in August

US flat product steelmakers are bucking the seasonal price trend, by pressing for a rise in local values, despite the summer lull in activity. Domestic suppliers, in an attempt to stave off the threat of further losses, introduced a series of list price hikes, during the July/August period. Local mills had little option but to implement such measures, as they aimed to recoup rising input costs.

Initially, buyers resisted the mills’ price hike initiatives. However, the US steel producers’ proposals helped to prevent further price deterioration. Subsequently, selling figures started to move up, despite US steel demand remaining steady, yet unspectacular. Automotive and construction activity is below last year’s numbers. The pipe and tube sector is healthy – although this product is exposed to high import penetration. Energy-related consumption is growing, albeit from low levels.

Domestic capacity utilisation, in the US, is approximately 81 percent, year-to-date. Mill delivery lead times remain relatively short, despite the impact of the summer outages for scheduled maintenance. Finished steel import volumes rose markedly, in July, partly due to the removal of Section 232 tariffs on neighbouring Canada and Mexico.

Consequently, many US buyers speculate that the recent pricing revival is likely to be short-lived. It is widely acknowledged that few market fundamentals, support a prolonged reversal of fortunes.

Source: MEPS International Ltd.MEPS International Steel Review

European Commission Announces Proposed Changes to Safeguard Measures

Import share, as a proportion of apparent finished steel consumption, in the EU, has been on an upward trend for several years. However, this largely remained below 20 percent, prior to 2018. The US government’s application of Section 232 tariffs, from March 2018, disrupted international trade flows. This caused concern amongst many steelmakers, in the EU, who feared that material would be diverted into the European market. Consequently, the European Commission introduced safeguard measures, from July 2018.

The safeguard measures may have been, at least partially, successful. Nevertheless, since the implementation of the quotas, imports into the EU have continued to rise, despite weakening demand in the region. Import share, of consumption, has since moved above 20 percent. Many domestic steelmakers have reported significant financial losses, in the second quarter of 2019. Consequently, a joint letter was submitted, via Eurofer, to the European Commission, expressing concerns regarding the state of the EU steel industry and the role that imports play in the market.

One of the biggest issues raised, was the way that imports of hot rolled coil were controlled. Under the current system, there is a single quota for hot rolled coil entering the region, from any country included in the safeguard measures. The annual quota tonnage is divided into quarterly amounts. This has drawn criticism from many steel industry participants. They feel that this has been abused by traders from some countries, who have been undermining European mill prices by taking a large share of this quota, to the detriment of others.

The European Commission is suggesting that the hot rolled flat products category be adapted, capping the volume that any one country can import, in each period, to 30 percent. This will be designed to better protect historical trade flows and prevent one country from utilising most, or all, of the quota, in any one quarter. The global, non-country specific, quotas will remain for this category.

Metallic coated materials were another contentious category – listed under sections 4a and 4b of the definitive safeguard measures. Steel consumers had previously complained about a lack of availability, with the Chinese quota being fully utilised very soon after the opening of the new period, for category 4b – which is for the automotive qualities. No new imports can now enter Europe, tariff free, from China, until the final period, in the second quarter of 2020 – when they gain access to the “All Other” quota.

The preliminary safeguard measures (prior to February 2, 2019) had not made the distinction between the different metallic coated grades. Splitting this product has created issues with imports in the 4b category as some imports arriving within this quota may not have been destined for the automotive industry. Consequently, the European Commission would like to restrict imports under the 4b section only to those who can prove that they will be used in the automotive sector. India will receive a country specific quota, only under the 4a category.

Under the current system, where the relevant quota is exhausted for one specific country, imports from that country can be made under the remaining part of the “All Other” category. However, that provision only applies during the last quarter of each year of application of the definitive measures. The period from April 1, 2020 to June 30, 2020 is classed as the final quarter of this year’s application. 

This had led to criticism that smaller traders have found it difficult to import tonnages, in the final period. This has been particularly true for rebar and wire rod. In the case of these two products, the European Commission is proposing a cap of 30 percent, on each supplying country, when accessing the all “All Other” category, in the final period of each year. However, there is no clarification on how buyers will know if this limit has been reached and if they are still able to bring tonnages into the EU.

The original safeguard measures had a built-in mechanism to increase quota volumes by 5 percent, each year. However, this is to be reduced to 3 percent, for the current and succeeding years. Reductions in annual tonnages will be made to the quarterly volumes to ensure the annual tonnages are in line with the quotas set.

World Trade Organisation members will be asked to comment on the proposed amendments before being submitted for approval by the EU member states. This process is scheduled to be completed no later than September 30, 2019. Any changes will come into effect on October 1, 2019.

If these proposals are adopted, this could restrict availability of steel in the EU market, in the fourth quarter of 2019. Sentiment may improve and local mills will attempt to push through price rises, in the autumn of 2019. However, weak demand and high stock levels may delay any increases in steel selling values until the beginning of 2020.

Source: MEPS International Ltd.MEPS European Steel Review

New World Record High for Stainless Steel Output in 2019

Global crude stainless steel production is predicted to reach a new record annual total of 53.1 million tonnes, in 2019. This would exceed the previous high figure, set last year, by more than 4.6 percent.

Despite strong expansion in emerging countries, such as India and Indonesia, Chinese growth continues to outstrip the world average. MEPS’ forecast of 28.3 million tonnes, for China’s annual outturn, in 2019, represents an increase of almost six percent, year-on-year, and more than 53 percent of the anticipated global total.

Indian production continues to grow at a healthy rate. The forecast output for this year, at 3.9 million tonnes, equates to an increase of more than four percent, compared with the 2018 figure.

Indonesia’s outturn, in 2019, is expected to substantially exceed 2 million tonnes, as the Chinese-owned Tsingshan plant pushes towards achieving its planned production capacity of 3 million tonnes per year.

Japan’s output, in the first quarter of 2019, represents a fall of 9.5 percent, compared with the same period last year. The latest available results indicate no significant improvement on that performance. We have, therefore, downgraded our forecast for this year’s production to 3.125 million tonnes, which would be almost 4.8 percent lower than the 2018 total.

After falling, substantially, in 2018, Taiwan’s output is expected to level out, this year, to achieve a total of 1.175 million tonnes. This is 32 percent lower than the country’s peak figure, achieved in 2006.

While South Korea has experienced a stronger recovery than Taiwan, since the Global Financial Crisis, its forecast crude stainless steel production for 2019, at 2.425 million tonnes, is similar to last year’s outturn.

Output, in the European Union, is predicted to record minimal growth, this year, at 7.425 million tonnes. EU production has remained in a range between 7.1 million and 7.6 million tonnes, every year since 2010.

After rising by 11 percent, in 2017, growth, in the United States, slowed to around 2 percent, last year. The increase, in the current twelve month period, is forecast to be a modest 1.5 percent, compared with the 2018 outturn, at 2.85 million tonnes.

Source: MEPS International Ltd.MEPS Stainless Steel Review

Low Seasonal Demand Impedes Steel Price Growth in Emerging Markets

The prognosis for the Brazilian steel market is unchanged. Distributors plan to persevere with conservative inventory levels, reflecting a seasonal slowdown in end-user demand. Shipments to companies in construction related activities is weak. Steel price support from export demand is limited.

In Russia, steel consuming engineering and manufacturing firms are reluctant to increase production capacity in the absence of sustainable end-user demand. Construction-related sales are fragile. Traditionally, the Russian market is quiet during the summer vacation months.

The Indian steel market is described as “slow”. The business climate is being negatively affected by the monsoon season. Distributors see no indications of an imminent pickup in demand. Pressure is growing, for these firms, to liquidate inventory, to minimise potential losses. Building activity is muted and unlikely to improve, due to heavy rainfall and flooding. The mills are targeting overseas markets to offload their surplus output.

Difficult trading conditions persist, in China. Service centres are still reluctant to conclude contracts. Weak end-user demand is offsetting the impact of a new round of production restrictions, in several parts of the country. Heavy rainfall is also curbing construction related activity. 

Ukrainian steel demand is tepid – weighed down by the country’s parliamentary elections. Construction-related activity is slow. The export market is very competitive. The local association of metal producers, Metallurgprom, reports that finished steel production, in June 2019, totalled 1.5 million tonnes – down 13.8 percent, month-on-month.

Turkish service centres and steel traders are wary of carrying too much inventory during the summer months. They note that it is risky to conclude any deals, at present, because of instability of the Turkish lira against the US dollar and volatile import price quotations. The slowdown in the real estate market is a growing concern. Meanwhile, shipments to automotive part manufacturers are forecast to decline next month, owing to scheduled summer maintenance work. Demand from overseas customers is weak.

Procurement activity is lethargic, in the United Arab Emirates. Distributors are booking for only immediate requirements. Inventories are low-to-normal. MEPS’ research reveals no discernible improvement in downstream demand. Traditionally, construction related activity is limited by the hot weather conditions in August and September. Export opportunities are restricted outside the GCC region.

Business sentiment is lacklustre, in the South African steel market. Domestic buyers remark that their suppliers’ current initiatives to lift steel prices are ill-timed and counterproductive. Any further steel price hikes are forecast to be modest, due to underlying weakness in downstream demand and relatively high inventory levels.

The outlook for the Mexican steel market is unchanged. Producers considered implementing a domestic price advance, but, so far, this has not proved possible. Independent stockists opted to defer purchasing activities, finding the current pricing environment unworkable. Import offers from third country suppliers are, generally, considered uncompetitive, when compared with the steel prices that can be negotiated with local mills.

Source: MEPS International LtdMEPS Developing Markets Steel Review