China finished steel consumption seen down 30% on year in March
China’s finished steel consumption in March is estimated to fall at least 22 million mt year on year, equating to 19 million mt of pig iron consumption and down 30% year on year, due to the coronavirus outbreak, S&P Global Platts calculations based on available data showed Monday.
This will follow a reduction of at least 29 million mt in finished steel consumption in February, down 75% on year and equating to pig iron consumption of 26 million mt, Platts' estimates showed. The reduction would have been greater at 31 million-43 million mt if China's Lunar New Year holidays had not fallen in February in 2019, and in January this year.
The estimates of domestic steel demand loss in February and March are based on China's official prediction that the coronavirus outbreak could plateau in mid- to late February and end by April.
Platts estimates manufacturing activity averaged 22% of normal levels over February 10-16, based on passenger data in major provinces and cities provided by Chinese search engine Baidu and manufacturing business income data in each province. This indicates that most Chinese migrant workers had yet to return to their city of employment after the Lunar New Year holidays.
The China Association of Automobile Manufacturers said 32% of its 183 members had restarted operations by February 12. However, some sources said it was likely most were unable to operate at full capacity due to a lack of workers and auto parts.
Construction activity remained largely suspended over February 10-16, with steel traders saying there had been almost no demand for long steel. Construction sites were unlikely to resume until at least February 24.
China's Ministry of Transport said railways moved 38 million passengers over the first 20 days of the Lunar New Year (January 25-February 13), down 170 million from the same period of 2019.
Even if passenger number rebound to 2019 levels this week, only half the workers would be able to return to their city of employment by end February, and most are unlikely to return until the week of March 9 even in the best-case scenario.
Given migrant workers may face more days under quarantine upon arrival, operating rates in China are unlikely to reach 50% of normal levels until at least end February and full capacity until late March.
Both the manufacturing and construction sectors are facing shortages of labor and protective gear such as masks, difficulties in meeting strict protection protocols imposed by local governments, and interruptions in logistics and supply chains.
The manufacturing sector is likely to resume operations more quickly than the construction industry, which has far greater staff mobility. As a result, flat steel demand recovery is likely to outperform long steel in the short term.
However, some construction industry sources expect restarts at building sites to accelerate quickly in March, not only because they expect the outbreak to be contained, but also because construction companies, especially small ones, will face cashflow problems if work remains suspended.
"Some construction companies will have to restart in March to survive," one source said, adding local governments may relax stringent restrictions to support them.
Steel oversupply looms
While China's steel mills have gradually intensified output cuts amid weak demand and logistics constraints in receiving raw materials and delivering finished products, oversupply seems inevitable in the domestic market in February-March.
Platts estimates 7 million mt of crude steel production will be trimmed in February.
Some market sources expect there will be more output cuts before the end of the month, taking the output loss to 10 million mt in February.
However, other sources doubted steel mills would strictly implement output cut plans as margins, while slim, were profitable, and could ramp up quickly once logistics and supply chains normalize.
As of February 12, China's hot rolled coil domestic sales profit margin was $11/mt and rebar $24/mt, according to Platts' calculations.
Even if output cuts were carried out as planned in February and extended into March, oversupply was likely due to soaring finished steel inventories.
Finished steel inventories at mills, in transit and held by traders was projected to increase by 19 million mt in February, based on Platts' estimates of domestic end-user demand falling by 29 million mt and output falling by 10 million mt in the month.
Exports in February are expected to be steady to lower than in 2019 as orders for February shipments were subdued, traders said. Orders received in February for late March and April shipments have also been poor as overseas buyers monitor falling Chinese steel prices.
The China Iron & Steel Association said finished steel inventories at its member mills and monitored major steel markets rose 5 million mt month on month to 21 million mt in January. Added to Platts' estimated build for this month, this would take China's finished steel inventories to 40 million mt by end February -- up 24 million mt from end December, which equates to more than 30% of apparent consumption in a normal March.
Oversupply in March is likely to ease only if end-user demand recovers quickly and steel mills maintain sharp output cuts in the month.
China has moved swiftly at a policy level to support its enterprises, such as injecting liquidity into markets, setting up a special Yuan 300 billion ($42.9 billion) refinancing loan, deferring loan repayments for impacted enterprises and increasing bank tolerance of non-performing loans.
Market sources expect China to further loosen monetary policies and step up government spending later this year to stimulate growth, which would benefit property and infrastructure construction, which together account for around 55% of China's total steel consumption.
Some local governments have already slightly loosened restrictions on property purchases and sales, such as reducing or removing home purchase taxes and allowing earlier property presales.
Amid expectations that steel demand from the construction sector will be stronger in the second half of 2020 than in H1, the spread between October and May rebar futures contracts on the Shanghai Futures Exchange narrowed to minus Yuan 55/mt on February 14 from minus Yuan 75/mt ($11/mt) on February 3, with the October contract rising 9% over February 3-14 and the May contract rising 5%.
European hot-rolled coil ticks lower; automotive demand remains unclear
The Platts TSI hot-rolled coil index was slipped 50 euro cent lower Monday and was assessed at Eur477.50/mt ($517.42) ex-works Ruhr, and at Eur454.50/mt EXW Italy, a decline of Eur2.50 from Friday.
Cold-rolled coil declined Eur1.50 day-on-day and was assessed at Eur572/mt EXW Ruhr.
A Benelux-based service center manager said that tradable value was at Eur478/mt in hot-rolled coil and Eur560/mt in cold-rolled coil, both basis EXW Ruhr. The source said that mills remained firm in pricing negotiations and continue to look for price increases.
"I think the mills are targeting Eur490-Eur500/mt for June/July [in HRC] and they are holding firm saying they now have deeper order books," he said.
"For us it has been difficult to pass on price rises to industrial buyers and after a great December and January, February has been slow and volumes have eased back," the source said. "Availability in cold-rolled has been notably less, from mills to service centers we have seen less availability in the market. There has been an uptick in automotive orders as buyers have had to restock the supply chain."
A German buyer was less positive on the automotive segment and said car manufacturers have shifted production of some models to other regions which has reduced production numbers in Germany.
"The automotive industry is not going well and that is influencing the supply chain and machinery industry," the buyer said.
"Car dealers say they had a great January, but production itself in Europe has dropped," the source said, confirming price ranges of Eur475-Eur480/mt EXW Ruhr.
According to the German car manufacturer association VDA, production dropped 8% year on year in January to 341,600 cars and exports saw an 11% year-on-year decrease to 255,600 mt, while order numbers went down by 17% year on year.
Another Italian buyer said that demand would be subdued in Italy and that while mills try to push prices up, they do make concessions.
The source said it would be difficult to negotiate below Eur460/mt EXW Italy in the beginning but that prices in the low Eur450s/mt EXW would be possible.
Turkish export rebar prices continue rise amid higher scrap
Turkish export rebar prices continued to rise as mills further increased offers and workable levels amid strengthening scrap prices, sources told S&P Global Platts.
S&P Global Platts assessed Turkish exported rebar at $435/mt FOB Turkey Monday, up $2.50 day on day.
“Around $435/mt FOB is probably the lowest workable price [for 10,000 mt] if the specification is attractive,” a trading source said.
A second trading source cited a tradable value at $435/mt FOB, with a lower value unworkable for mills.
“The mills won’t get many sales at this level, but they are hopeful on March being a traditionally good month for the domestic rebar market, and then perhaps hoping demand from European buyers will come in April or May ahead of the new EU annual quota starting in July,” the second trading source told Platts.
“Most mills have bought scrap at prices between $260-$275/mt CFR so some could probably even do rebar at $425/mt FOB, but they’re not willing to right now,” he added.
The Platts assessment of Turkish imports of premium heavy melting scrap 1/2 (80:20) rose to $276.25/mt CFR Monday, up $2.25 day on day.
The Turkish longs melting margin — the spread between Turkish export rebar and imported scrap — rose to $158.75/mt Monday, up 25 cents day on day.
Most market participants traditionally considered around $160/mt to be a break-even level for most Turkish producers, although larger mills are able to go as low as $145/mt.
Marmara mill offers were heard Monday at $440/mt FOB and $445/mt FOB, according to a Marmara mill source and the two trading sources.
A Marmara mill rebar cargo, booked last week, to the US was heard at $430/mt FOB Marmara, with mill and trading sources estimating the price at $600-$610/mt CFR, duty-paid, while small volume sales to Malaysia were also reported at $430/mt FOB Turkey.
Chinese steel mills mull output cuts due to coronavirus: Platts survey
More than a third of Chinese steel mills are considering cutting steel production due to rising inventories, a shortage of raw materials and weak downstream demand caused by the coronavirus, according to a recent S&P Global Platts outlook survey.
The survey found that 35% of survey participants had already trimmed steel output or were planning to, while 23% said their operations were running normally so far. Some mills had wanted to bring forward maintenance of their steelmaking operations – which is a proxy way of reducing production – but were unable to do so due to lack of workers and equipment.
More than a third of respondents reported problems in sourcing raw materials, though half said there was no issue. There have been some logistical restrictions in China due to the coronavirus, with mills that use trucks to transport raw materials from ports are the most impacted.
"We have difficulties shipping raw materials from the port to mill. Our raw material inventory is not that sufficient; with some brands it's only 2-3 days, but it is higher for some other brands," a mill procurement official said.
Almost 40% of respondents said rising steel inventories presented the biggest market challenge, with 27% noting the lack of downstream demand.
Around 22% of survey participants expected hot-rolled coil margins to average just Yuan 50-Yuan 100/mt ($7-$14/mt) in Q1; 15% believed margins could be at breakeven levels.
Due to the slow construction work restart, the outlook for domestic rebar margins was particularly bearish. A quarter of them said rebar margins could be "zero to negative" in Q1, with just 12% seeing margins of Yuan 150-Yuan 200/mt.
The survey found that 46% of respondents were working from home as Chinese steel industry participants gradually restart work after the extended Lunar New Year holiday. Many construction and factory workers will need to undergo a further 14-day quarantine period once they return to their workplaces. As a result, normal levels of activity are unlikely to occur until the end of February at the earliest, Platts noted.
Survey participants remained generally upbeat about iron ore prices, with 50% expecting the 62% Fe IODEX benchmark to average $80-$85/mt CFR China in the January-March quarter. Around 10% thought iron ore prices would be above $85/mt.
Some 31% said higher grade iron ore (65% Fe) would be the most impacted by current market conditions due to mills gravitating to lower grade material to offset falling steel mill margins and a reduction in steel output.
"Brazilian supply will be affected by the weather there so this will offset the impact of soft demand for 65%. Low grade supply will be sufficient for us," one mill official in northern China commented.
Platts spoke to 26 companies as part of the survey, including Chinese steel mills, domestic and international traders and some mining companies.
Asian HRC market prices slide on lower offers and buying indication
Asian hot-rolled coil prices continued its downward trend Monday, as some Chinese mills cut their export offers amid slow domestic market which remained yet to see essential improvements and buyers’ indication moved downwards.
S&P Global Platts assessed SS400 HRC 3 mm thick at $455/mt FOB China Monday, down $4/mt from last Friday, and marked the lowest point since late November 2019. On a CFR Southeast Asia basis, the same grade of coil was assessed at $461/mt, down $2/mt from day on day.
Some Chinese mills cut offers by $5/mt Monday, with offering level at $470-$485/mt FOB for April shipment, while most other mills are expected to provide new offers for this week Tuesday.
Buying indication from buyers in South Korea was about $460-$470/mt CFR (depending on mill), after deals done last week at the $470/mt CFR level for some Chinese export mills, some traders said.
“Spot market in China stabilized in the recent two days. And mills would be more reluctant to sell lower if resumption of work seen this week,” said an eastern China mill.
“Chinese mills are testing best acceptable price, but I don't think overseas customers will follow the price increase. Pressure is still there…I guess price will drop for another round this week, but not as much as two weeks ago,” said a Shanghai trader.
In the Vietnamese market, trading activity remained quiet for SS400 materials on Monday.
Some offers for China-origin SS400 sheet was heard at $475/mt CFR for April shipment, while tradable level was at $460/mt CFR.
No deals were heard on the day.
Separately, Platts assessed SAE1006 HRC at $461/mt FOB China Monday, down $2/mt on the day.
On a CFR Southeast Asia basis, the same grade of coil was assessed at $470/mt, down $1/mt over the same period.
In Vietnam, sentiment failed to be boosted by the rollover of list prices from local producer Formosa Ha Tinh Steel last Thursday, as buyers said they might turn to cheaper imported coils.
It’s likely to secure SAE coils at the $470/mt level, while offering level was heard at a wide range at $480-$510/mt CFR, according to local traders.
“Vietnam mills cannot sell final products and they have big stock of HRC. There are only some customers who will buy now. Then price will be under great pressure,” said a local stockist.
In Shanghai, the spot price of Q235 5.5 mm HRC was assessed at Yuan 3,480/mt ($498/mt) ex-stock, including value added tax, stable from Friday.
The most actively traded May 2020 contract on the Shanghai Futures Exchange closed at Yuan 3,430/mt Monday, up Yuan 20/mt, or 0.6% day on day and was up Yuan 119/mt week on week.
Platts Asia HRC Assessment Rationale
The S&P Global Platts TSI SAE1006 grade hot rolled coil assessment was assessed down by $1/mt at $470/mt CFR ASEAN Monday, amid bearish buy-side sentiment.
While the lowest offer stood at $482/mt for Chinese-origin SAE1006 coils, bids and buying indications remained absent in the market. At the same time, tradable levels of $470/mt were being considered. No deal was heard concluded Monday.
No data was excluded from February 17 assessment.
Asian rebar mixed on weak China demand amid high stock level
Asian rebar prices were mixed on weak domestic market demand since most construction sites did not resume work amid high rebar stock level.
S&P Global Platts assessed 16-20 mm diameter BS500 rebar at $426/mt FOB China actual weight, unchanged from last Friday.
In the Beijing retail market, spot 18-25 mm diameter HRB400 rebar was assessed at Yuan 3,460/mt ($496/mt) ex-stock actual weight, including 13% value added tax, down Yuan 20/mt from the last trading day.
As Beijing domestic rebar market did not conclude any deal last week amid weak market sentiment, traders dropped offer prices to attract buyers, market participants said. However, market activities have not resumed yet as no deal was heard on Monday, two Beijing-based traders said.
The most active May rebar futures contract on the Shanghai Futures Exchange closed at Yuan 3,427/mt ($491/mt), up Yuan 29/mt, or 0.9% on Monday. Some construction sites were expected to resume work, which pushed rebar futures prices up, a Shanghai-based trader said.
Working activities in construction sites in both Hong Kong and Singapore have been affected by the coronavirus outbreaks. "I expect that 20%-25% work has been affected on the sites due to just a few workers can back to work," a Singapore based fabricator said.
A deal was concluded last week at $440/mt CFR Singapore theoretical weight for 5,000 mt Chinese cargo end March shipment, a Singapore based fabricator said.
Separately, another fabricator said he received a Chinese cargo offer at $450/mt CFR Singapore for April shipment. This offer price was $10/mt higher than last Friday. The price was equivalent to $443/mt FOB China actual weight, assuming freight of $20/mt and 3% weight tolerance after normalization of quantity and shipment period to Platts assessment standard.
However, he has purchased cargos last week, and the inventory was enough to use by now, thus is not interested in this offer price.
Meanwhile, a Hong Kong stockist said that there were almost half of the sites closed in Hong Kong while only a few people went back to work under the epidemic.
Platts assessed 16-32 mm diameter BS4449 Grade 500 rebar at $434/mt CFR Southeast Asia, unchanged from last Friday.
China's steel output steady over Lunar New Year but margins squeezed
Crude steel production at works operated by China Iron and Steel Association member companies remained steady over the Lunar New Year holiday period.
Daily crude steel output rose 0.9% from mid-January and 9.7% from the same period last year to 1.992 million mt/day over January 20-31, the association said Friday.
Some big mills sources said operations remained at normal levels during the holiday while others trimmed output due to the coronavirus outbreak.
Transportation issues, rising finished steel inventories and insufficient raw materials are expected to pressure mills’ production.
Finished steel stocks in 20 cities rose 19.1% on the month to 6.96 million mt in January, ending a four-month decline.
Platts' China domestic rebar mill margins averaged Yuan 166/mt ($23.8/mt) as of February 12, down 60.7% compared with the January average. Some steel mills said profits were around Yuan 100-200/mt but others said they were barely breaking even.
China’s weak auto sector further undermined the outlook for flat steel products.
China's vehicle output and sales in January reached 1.783 million and 1.941 million units, respectively, down 33.5% and 27% on the month, data released by the China Association of Automobile Manufacturers, or CAAM, showed.
Meanwhile, the output and sales volumes of new energy vehicles hit 0.04 million and 0.044 million units in January, a decrease of 55.4% and 54.4% on the year, respectively.
Platts hot-rolled coil steel margin averaged Yuan 489/mt ($70/mt) in January, slightly lower than the December average of Yuan 513/mt ($73.5/mt).
A northern China-based steelmaker said his company’s HRC margin was currently at breakeven level due to the relatively high price of iron ore and softer finished steel prices.
European hot-rolled coil imports fall 10% on year in 2019: Eurofer
European imports of hot-rolled coil ended 2019 down 10% year on year, while total cold-rolled coil imports slipped 7% lower, according to the latest data from The European Steel Association, or Eurofer, published Monday.
Total HRC volumes declined from about 510,000 mt in November to about 310,000 mt in December, 39% lower month on month.
While Turkish volumes for December came in at 81,062 mt, 57% lower than November, Turkey remained the top supplier to Europe shipping 2.77 million mt in 2019.
Hot-rolled coil shipments from Russia fell by half in December to about 54,000 mt, with the combined 2019 shipments sliding 12% year on year. However, Russia remained the second largest supplier by volume to Europe, shipping 1.38 million mt.
Total cold-rolled coil import volumes increased from about 128,000 mt in November to about 150,000 in December, 17% higher month on month.
Import volumes from both India and South Korea more than doubled in December, increasing to about 58,000 mt from India and to about 43,000 mt from South Korea. Imports from Brazil, the top supplier to Europe in November with about 27,000 mt, declined to just about 300 mt in December.
South Korea ended 2019 as the top supplier to the bloc with around 412,000 mt, which was a decline of 13% compared to 2018. Volumes from India fell 26% year on year to around 386,000 mt in 2019, relegating India into second place in volume terms.
Turkey increased cold-rolled coil volumes by 66% year on year, shipping about 348,000 mt, up from around 210,000 mt the previous year.
EU Steel imports December 2019 Source: Eurofer
HRC November December m-o-m (mt) % 2018 2019 y-o-y (mt) %
India 18,925 36,968 18,043 95% 907,464 840,556 -66,908 -7%
Russia 108,617 54,685 -53,932 -50% 1,564,734 1,377,145 -187,589 -12%
Serbia 72,487 69,436 -3,051 -4% 645,602 772,436 126,834 20%
South Korea 38,303 40,122 1,819 5% 516,515 450,116 -66,399 -13%
Taiwan 52,875 12,749 -40,126 -76% 453,556 383,990 -69,566 -15%
Turkey 189,874 81,062 -108,812 -57% 2,867,373 2,771,162 -96,211 -3%
TOTAL EU 509,449 309,725 -199,724 -39% 7,956,198 7,186,388 -769,810 -10%
CRC November December m-o-m (mt) % 2018 2019 y-o-y (mt) %
Brazil 26,634 303 -26,331 -99% 238,054 199,572 -38,482 -16%
India 23,602 57,810 34,208 145% 524,253 386,494 -137,759 -26%
Serbia 9,320 10,404 1,084 12% 172,113 128,399 -43,714 -25%
South Korea 19,595 42,813 23,218 118% 471,212 412,192 -59,020 -13%
Taiwan 10,994 15,200 4,206 38% 132,880 155,994 23,114 17%
Turkey 9,440 4,922 -4,518 -48% 209,899 348,373 138,474 66%
Ukraine 10,906 5,792 -5114 -47% 350,323 260,362 -89,961 -26%
Vietnam 10,375 6,308 -4067 -39% 189,079 246,794 57,715 31%
TOTAL EU 128,091 149,741 21,650 17% 2,415,285 2,237,134 -178,151 -7%
Platts EMEA TSI HRC Index Assessment
The Platts TSI hot-rolled coil index was calculated down 50 euro cent Monday at Eur477.50/mt ($517.42/mt) ex-works Ruhr.
A Benelux-based service center source said tradeable value was Eur478/mt EXW Ruhr.
A German end-buyer reported tradable value at Eur475-Eur480/mt EXW Ruhr.
Lead times from a range of northern European mills were heard to be for early to mid-April delivery.
No data was excluded from the calculation.
Platts EMEA Turkish Rebar Daily Rationale
S&P Global Platts assessed Turkish exported rebar at $435/mt FOB Turkey Monday, up $2.50/mt day on day.
A Turkish trading source cited an indicative tradable value for 10,000 mt at $435/mt FOB, while a second trading source cited a tradable value at $435/mt FOB, with a lower value unworkable for mills.
Marmara mill offers were heard at $440/mt FOB and $445/mt FOB, according to a Marmara mill source and the two trading sources, while a third trading source cited an indicative offer level at $435-$440/mt FOB.
No data was excluded from the assessment.
Turkish pipe producers resist current HRC prices as margins slump
Turkish steel pipe producers, whose margins have slumped to very low levels, have been delaying their hot-rolled coil bookings in anticipation of a downward price correction in mills' HRC offer prices.
"We have concluded our last hot-rolled coil bookings around a month ago in the range of $515-$520/mt ex-works range. We didn't make any HRC bookings since then," an executive of a major Turkish pipe producer told S&P Global Platts.
"Although we managed to reflect only half of the rise seen in HRC costs to our pipe prices, pipe prices fell again as of last week, amid slow demand," the source said, adding that current pipe prices are around $520/mt ex-works, while Turkish mills' latest HRC offers are at $500-$510/mt ex-works, depending upon tonnage.
"We couldn't currently reflect these high HRC costs to our list prices both in the domestic and export markets. HRC prices should be as low as $460/mt, taking into account the current pipe sales price. As we aren't able to reflect the current HRC costs to our pipe prices, we are currently prefering to wait," he said.
As demand in the Turkish coated coil market has also remained sluggish, some Turkish HDG producers, the main customer group of Turkish HRC producers, have begun to offer discounts as of last week, amid stiff competition, Platts heard from market sources.
However, Turkish coated mills were still receiving strong HRC offfers from Turkish producers. "The latest HRC offers from Turkish mills were generally at $500-$505/mt ex-works. But they are not currently receiving orders for May rollings, as they are expecting a rise," an executive of a Turkish coated coil producer told Platts Monday.
Turkish HRC producers, most of whom have full order books until April, have been maintaining their offer prices in the range of $500-$520/mt ex-works in recent days, depending upon tonnage and segment, amid the recent recovery seen in imported scrap prices.
Demand for Turkish HRC from the export markets, particularly from Europe, in the coming weeks will determine the Turkish mills' price policy, sources noted.
Turkish HRC producers have also been trying to maintain their HRC offers at around $500/mt FOB in recent days.
A Turkish HRC producer, which had been offering to the EU and some other export markets at as low as $490/mt FOB in previous weeks, also raised its HRC offer price to $500/mt FOB again at the end of last week, Platts heard from a trade source.
Turkish import scrap prices extend gains into third week
Import prices for ferrous scrap into Turkey rose for the eighth consecutive day on strong demand amid robust product buying.
S&P Global Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $276.25/mt CFR Monday, up $2.25/mt from Friday.
News about deepsea procurement for March shipment continued Monday. One Baltic recycler sold a cargo to a Marmara steelmaker, consisting of 20,000 mt of HMS 1/2 (80:20) at $276/mt and 5,000 mt bonus at $286/mt CFR in a deal done February 14.
Buying interest persisted on Monday on the back of bullish signs in the product market.
While rebar demand picked up mainly on the back of restocking, flat products like hot-rolled coil showed robust buying interest, according to market sources.
“Billets and slabs are both doing extremely well. Hot-dip galvanized coil, wire rods and sections [are] doing very well as well,” one agent told Platts Monday, leading him to expect stronger prices for scrap too.
As such, several recyclers were heard indicating their offer price at $285/mt CFR Monday.
While cargoes with the heavy melting scrap grade and bonus material might still be available at the last concluded price, it was “very difficult to find shredded material” as part of the usual cargo composition, one Turkish buyer currently looking for a cargo said, with US cargoes, including the shred grade, only reported available at higher prices.
Egyptian buyers were currently not heard active in the market, but several cargo bookings, including a notable shred part by Egyptian steel mills, lately had somewhat reduced availability of shred in cargoes, sources said.
Another Turkish agent estimated an additional 20 deepsea cargoes as requirement for March shipment.
“$280 we can hear this week,” he said, with further potential toward $285/mt CFR.
Yet, buyers closely eyed the outlook and robustness on product demand over the coming days to determine how much further upside there was for ferrous scrap.
While Turkish mills in general were “banking on March being a traditionally good month for domestic market and then EU quota returning for July,” the targeted price of $280-$285/mt for premium HMS 1/2 (80:20) was as unreflective of current market fundamentals as $250/mt was a few weeks ago, one European trader said.
He thus expected prices to stabilize in the $270s.
Turkish mills raise domestic scrap buying prices in line with imports
Some major Turkish steel mills raised their lira-denominated domestic scrap buying prices Monday amid ongoing rises seen in imported scrap prices.
Colakoglu, one of Turkey's largest EAF-based steelmakers, raised its buying price for DKP grade (auto bundle) scrap to Lira 1,735/mt ($287/mt), while the company's extra grade domestic scrap buying price rose to Lira 1,620/mt ($268/mt), as of February 15, S&P Global Platts learned.
The DKP scrap buying price for Turkey's largest alloy steel producer, Asil Celik, also increased to Lira 1,735/mt ($287/mt) Saturday, while the company's extra grade domestic scrap buying price rose to Lira 1,560/mt ($258/mt).
Turkey's largest integrated steel producer, Erdemir, began to buy DKP grade domestic scrap at Lira 1,790/mt ($296/mt) as of Feb 15, up by Lira 30/mt, while the company's extra-grade scrap buying price rose to Lira 1,785 ($295/mt).
Erdemir Metalurji Group's Iskenderun plant in southern Turkey, Isdemir, also increased its buying price for DKP scrap by Lira 30/mt to Lira 1,630/mt ($270/mt) as of Feb 15, while the company's extra-grade scrap buying price rose to Lira 1,625 ($269/mt).
Turkish mills have been consuming around 30 million mt of steel scrap per year and are procuring generally one third of it from the domestic market.
Turkish steel mills' imports of ferrous scrap fell around 1.81 million mt year on year to 18.8 million mt in 2019, on the back of sluggish finished product market sentiment, especially in the first half of the year, which also restricted Turkish mills' domestic scrap purchases last year.
Platts EMEA Turkish Ferrous Scrap Daily Rationale
S&P Global Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $276.25/mt CFR Monday, up $2.25 from Friday.
One Baltic recycler sold a cargo to a Marmara steelmaker, comprising 20,000 mt HMS 1/2 (80:20) at $276/mt and 5,000 mt bonus at $286/mt CFR in a deal done February 14 as confirmed with the seller. One Turkish agent said market value was at $277/mt, while a European trader put tradable value at $276.25/mt CFR.
A Turkish buyer put tradable prices at $276/mt CFR. Offers were indicated at $285/mt CFR.
No data was excluded from the assessment.
Moody's downgrades Germany's Thyssenkrupp as negative steel business drags down results
Ratings agency Moody's downgraded German industrial company Thyssenkrupp Monday from Ba3 to B1 following the company's weak Q1 results in the steel bsuiness and a negative outlook on recovery.
The expected sale of the elevator business, which Thyssenkrupp said Monday would be under way with two selected bidding consortiums, would be positive for the company's outlook to reduce "the on-going high cash burn", but the financial burden will remain.
"The downgrade to B1 reflects the further weakening operating performance and negative free cash flow generation of Thyssenkrupp with a reduced likelihood of a material recovery over the next quarters against Moody's previous expectation of a strengthening profitability and cash generation," said Goetz Grossmann, assistant vice president and lead analyst for Thyssenkrupp at Moody’s.
Moody's also noted that Thyssenkrupp is facing persistently lower demand and order intakes especially from the automotive sector which had negative effects on Q1 (October 1-December 31 2019) of the company's financial year resulting in weak capacity utilization on lower volumes combined with higher raw material costs.
Order intake and sales at the steel unit were down 10% and 13% respectively from the prior year in Q1.
Shipments of cold-rolled material fell 3.9% year on year to 1.48 million mt, while hot-rolled shipments dropped 11.2% to 759,000 mt.
Crude steel production at Steel Europe was stable at 2.17 million mt, while production at semis grew 3.5% to 674,000 mt.
Thyssenkrupp's CFO Johannes Dietsch said during a press call on Q1 results that the company is also considering closing down its heavy plate mill if a sole buyer or joint owner cannot be found.
The steel unit as a whole saw an adjusted EBIT loss of Eur164 million in Q1, down from a profit in the previous Q1 of Eur38 million.
Evraz awards contract for 2.5 mil mt/year thin-slab and coil plant to Danieli
West Siberian Iron & Steel Works, or Zapsib, part of Russian mining and steel company Evraz, has contracted Danieli of Italy to build a 2.5 million mt/year hot rolled coils, or HRC, QSP-DUE plant in Siberia, Danieli said Monday.
QSP-DUE is an innovative and patented layout configuration that forms a single thin-slab casting and rolling production line. The new concept guarantees the widest production flexibility by unifying endless or semi-endless or coil-to-coil rolling, according to Danieli.
The complex -- to be built at Zapsib’s site in Novokuznetsk in the Kemerov region of western Siberia -- will become Danieli's second QSP-DUE plant in the world. The contract follows the startup of the first ever DUE plant at Shougang Jingtang United I&S, in China during 2019.
The QSP-DUE plant for Zapsib will make hot rolled coils in 0.8-16.0 mm thicknesses and 950-1,700 mm widths. The vertical-curved thin-slab caster is designed to cast 100-123 mm thick slab and at a maximum casting speed of 6 m/min, depending on the steel grade.
In addition to the QSP-DUE line, Danieli will supply a 310-mt twin-station ladle furnace, 310-mt twin-tank vacuum degasser and associated auxiliary equipment, including a fume and water treatment plants.
Evraz said earlier coils from the new mill will be meant for construction firms and shaped tube manufacturers operating in Siberia and nearby regions.
The new facility, once fully operational in 2023, could eliminate Evraz’s slab sales completely as the entire volume of the semi will be processed in-house.
These sales averaged 1.8 million mt/year in 2017-18 and totaled 2.4 million mt last year, S&P Global Platts previously reported.
CIS billet offers keep firm awaiting more buying interest
Billet sellers in the Black Sea spot market were pushing for higher price levels on Monday amid further upside seen in related markets, including Turkish scrap imports and rebar exports.
Market players agreed that CIS suppliers were comfortable with their order books, having sold March shipment, and were not under pressure to sell April yet. This meant there was little material floating in the market on Monday. Some traders were waiting for buyers to raise their bids in an attempt to close sales around the $400/mt FOB level.
Asking prices heard on the day were minimum $400/mt FOB Black Sea. A Russian mill was reported to be seeking $415/mt FOB.
One mill admitted that the official asking prices were well above the buyers’ expectations. The company added it was not in the market to sell, but if it was, the realistic price to get ranged over $385-$390/mt FOB Black Sea.
However, a couple of traders said they tried to buy at $395/mt FOB Black Sea but failed to secure orders at this level as suppliers stuck to higher targets.
“I think there are a number of long positions, which will look for home soon and [I am] not sure there are enough buyers to take this tonnage,” a market player said. “I don’t think that higher than $390/mt FOB” can work for buyers, he added.
One trader estimated $390/mt FOB Black Sea was the meeting point between buyers and sellers. He cited a sale from Russian Far East at $410/mt FOB, which implied $390/mt FOB Black Sea.
Platts FOB Black Sea Steel Billet Rationale
S&P Global Platts assessed CIS export billet at $390/mt FOB Black Sea Monday, stable from Friday.
Asking prices from CIS suppliers were reported to be minimum $400/mt FOB Black Sea, several sources said. A producer put tradable values between $385-$390/mt FOB Black Sea.
Trade sources said $385-$390/mt FOB Black Sea was not available from suppliers. A trader put a workable price level at $395/mt FOB. Another trade source put a workable level at $390/mt FOB Black Sea, based on a recent sale at $410/mt FOB Far East.
One trade source said indicative bids in the market were maximum $390/mt FOB Black Sea.
No data was excluded from the assessment.
Russia's NLMK awards Tenova contract to upgrade electric arc furnace
Italian engineering company Tenova said Monday it has received an order from Russian mining and steel company NLMK for an electric arc furnace upgrade in Revda.
NLMK Ural, the core company within NLMK’s long products division, has ordered Tenova’s intelligent electric arc furnace, or iEAF, for its plant in Revda, in the Sverdlovsk region.
The iEAF will be installed on the existing EAF at the NLMK’s Revda plant to enhance its performance. The technology enhances EAF melting efficiency, reduces consumption and operative costs as well as carbon footprint.
Tenova's iEAF technology has been successfully installed at 24 plants across seven countries.
Brazil ferrous scrap exports in Jan more than triple on year to 50,348 mt
Brazil's ferrous scrap exports more than tripled year on year to 50,348 mt in January, according to economy ministry data published Monday.
The January exports, however, fell 22% from 77,101 mt in December.
About 25,281 mt of January material -- which reflected majority of the exports -- left Brazil from Santos port, followed by 7,637 mt from Itajai port and 5,477 mt from Manaus port, according to the ministry data.
In line with the recent trend, Bangladesh was the largest importer in January, taking 17,910 mt at an average price of $207/mt FOB, followed by India that bought 17,437 mt at $195/mt FOB.
On the import side, ferrous scrap entering Brazil totaled only 1,172 mt, down 97% from January 2019 at 40,951 mt, but up 18.6% from December 2019 at 988 mt.
From the total imported in January, 650 mt were shipped from Bolivia at an average price of $292/mt FOB, ministry data showed.
Most of the raw material entered the country via Corumba port at 650 mt, followed by Foz do Iguacu port at 150 mt.
Global market heards selection
Platts Steel, HRC/Chinese: Offer Feb 17 for Shagang SS400 at $470-$475/mt FOB China, Apr shipment: eastern China mill source
Platts Steel, HRC/Chinese: Offer Feb 17 for Anshan Steel SS400 at $475/mt FOB China, Apr shipment: eastern China trader
Platts Steel, HRC/Chinese: Offer Feb 17 for Benxi Steel SS400 at $485/mt FOB China, Apr shipment: northeastern China mill source
Platts Steel, HRC/Chinese: Offer Feb 17 for Benxi Steel SS400 at $484/mt CFR Ho Chi Minh City, Apr shipment: Vietnam-based trader [to end-user]
Platts Steel, HR Sheet/Chinese: Offer Feb 17 for Baotou Steel SS400/A36 at $475/mt CFR Ho Chi Minh City, Apr shipment: Vietnam-based trader [to end-user]
Platts Steel, HRC/Chinese: Offer Feb 17 for Anfeng Steel SS400 3-20mm thick at $466/mt CFR Vietnam, Apr shipment: Vietnam-based trader
Platts Steel, HRC/Chinese: Offer Feb 17 for Baosteel SAE1006 at $490/mt CFR Ho Chi Minh City, Apr shipment: Vietnam-based trader [to end-user]
Platts Steel, HRC/Chinese: Offer Feb 17 for Benxi Steel SAE1006 at $482/mt CFR Ho Chi Minh City, Apr shipment: Vietnam-based trader [to end-user]
Platts Steel, HRC/Korean: Offer Feb 17 for Hyundai Steel SAE1006 at $510/mt CFR Ho Chi Minh City, Apr shipment: Vietnam-based trader[to end-user]
Platts Steel, HRC/Chinese: Offer Feb 17 for Mill at seller's option SAE1006 at $480-485/mt CFR Ho Chi Minh City, Mar shipment: Vietnam-based trader [to end-user]
Platts Steel, HRC/OpenOrigin: Tradable Value Feb 17 for SAE1006 at $470/mt CFR Vietnam, Apr shipment: Vietnam-based trader
Platts Steel, HRC/OpenOrigin: Tradable Value Feb 17 for SS400 at $460-465/mt CFR South Korea, Apr shipment: Shanghai-based trader
Platts Steel, HRC/OpenOrigin: Tradable Value Feb 17 for SS400 [other than Anfeng] at $460/mt CFR Vietnam, Apr shipment: Shanghai-based trader
Platts Steel, HRC/Chinese: Tradable Value Feb 17 for Xinyu Steel SS400 at $465/mt FOB China, Apr shipment: eastern China mill source
Platts Steel, HRC/Chinese: Tradable Value Feb 17 for SS400 3.0mm thick at $460/mt CFR Vietnam, Apr shipment: Vietnam-based trader
Platts Steel, HRC/Chinese: Indicative Bid Feb 17 for Benxi Steel SS400 at $470/mt CFR South Korea, Apr shipment: Shanghai-based trader
Platts Steel, plate/N.EU: Tradable value heard Feb 17 at Eur550-570/mt delivered Germany from western mill (S355): mill
Platts Steel, HRC/S.EU: Tradable value heard Feb 17 at Eur452.50/mt EXW Italy (S235): steel service center
Platts Steel, CRC/S.EU: Tradable value heard Feb 17 at Eur520-525/mt EXW Italy (DC01): steel service center
Platts Steel, HDG/S.EU: Tradable value heard Feb 17 at Eur520-525/mt EXW Italy (DX51D): steel service center
Platts Steel, HRC/N.EU: Tradable value heard Feb 17 at Eur475-480/mt EXW Ruhr (S235): end-buyer
Platts Steel, Rebar/Chinese Export: Deal last week for 10-40mm in diameter at $440/mt CFR Singapore theoretical weight, 5,000 mt end March shipment: Singapore-based fabricator
Platts Steel, Rebar/Chinese Export: Offer Feb 17 for 10-40mm in diameter at $450/mt FOB China theoretical weight, End Mar shipment: eastern China mill source
Platts Steel, Rebar/Chinese Export: Offer Feb 17 for 10-40mm in diameter at $450/mt CFR Singapore theoretical weight, April shipment: Singapore-based fabricator
Platts Steel, Billet/Vietnamese: Offer Feb 17 for 5SP 150*150mm at $415/mt FOB Vietnam Apr shipment: Vietnam-based mill source
Platts Steel, Billet/Vietnamese: Offer Feb 17 for 5SP 130*130mm at $413/mt FOB Vietnam Apr shipment, IF billet: Vietnam-based mill source
Platts Steel, Billet/Iranian: Offer Feb 17 for 1SP/3SP/5SP 150*150mm at $420/mt CFR Indonesia : Indonesia-based mill source
Platts Steel, Billet: Indicative Bid Feb 17 for 5SP 130*130mm at $405-$410/mt CFR Manila Apr shipment: Manila-based trader
Platts steel, billet/Black Sea export: Tradable value heard Feb 17 by Platts at $385-$390/mt FOB Black Sea: mill
Platts steel, billet/Black Sea export: Tradable value heard Feb 17 by Platts at $395/mt FOB Black Sea: trader
Platts steel, billet/Black Sea export: Tradable value heard Feb 17 by Platts at $390/mt FOB Black Sea: trader
Platts steel, billet/Black Sea export: Indicative bids heard Feb 17 by Platts at max $390/mt FOB Black Sea: trader
Platts steel, billet/Black Sea export: Indicative offer heard Feb 17 by Platts at min $400/mt FOB Black Sea: trader