North Africa steel: Weakness persists
The North African steel industry faced issues related to Covid-19 and oil price lows throughout June. Egypt was the worst impacted economy, market participants said, followed by Algeria, which has a significant oil-based economy.
Algeria
The Sider El Hadjar steel complex faced financial and operational difficulties in June but steelmaker Algerian Qatari Steel (AQS) has now returned to activity after a down period.
Alongside Tosyali and some smaller re-rollers, offers for Algerian domestic rebar are around 64,750 dinars/t ($502/t) ex-works, up from AD63,250/t ex-works at the beginning of the month. This does not represent a recovery in the industry, market participants said, but rather an effort to capitalise on the recent rally in global rebar prices. The Argus daily Turkey rebar assessment rose by $17/t from 1 June to $420/t fob on 12 June. But the gains have already started to dissipate, with the assessment slipping to $409.80/t yesterday.
As a result, at least one mill is looking to the export market rather than focusing on domestic sales. It offered rebar to northwest Europe this week at $450/t fob.
An ambitious road project that has been in the pipeline for 50 years, linking Algiers with Lagos, Nigeria, has given mills some cause for optimism recently. A critical part of highway in the Chiffa Gorge in Algeria is set to be delivered in the coming weeks, paving the way for a 4,500km motorway to be rolled out. Around 2,500km of the motorway is to be situated in Algeria and the government is set to push for AQS and El Hadjar material to be used in the procurement process.
But market participants are sceptical about the the project's completion. "Tensions and disputes in the region, out of control trafficking and smuggling across borders, terrorism and visa issues will seriously weigh on the viability of this project," said one trader in Algeria.
Egypt
Pessimism abounded in the Egyptian market in June. May's purchasing managers' index number was 40.7, an improvement on April, which saw a fall to 29.7, but confidence is lacking in the Egyptian steel sector.
Steel production in May dropped to 628,000t compared with 651,000t in May 2019, meaning capacity utilisation was around 94pc compared with about 98pc in May last year. But production is up by 0.7pc on the year in January-May to 3.5mn t, according to Industry organisation Worldsteel figures.
A major direct reduced iron mill is offering rebar at 9,750 Eyptian pounds/t ($604/t) ex-works, while other mills are offering at E£9,500-9,550/t ex-works, a marked change since 2019 when prices largely remained above E£10,000/t ex-works. But an Egyptian mill offered wire rod in coil to Saudi Arabia at E£7,830/t cfr.
Morocco
Moroccan activity has been relatively thin this month with much of the country's billet purchasing coming from southern Italy, where Covid-19 measures have brought prices down to competitive levels.
It is favourable for Morocco to buy from southern Europe given proximity and lack of duties. CIS material is subject to 2.5pc duties, while Turkish sellers pay 1pc duties on billet exports to Morocco.
The latest billet sale to Morocco was heard last week at €360/t ($403/t) cfr for European origin billet.
Tunisia
A Tunisian mill purchased a cargo of billet from Brazil this month at $385/t cfr Sousse, a low price that undercut Black Sea material.
But appetite for billet is still lacking and Tunisian re-rollers have been largely out of the market this month, with very few enquiries heard. Tunisian buyers now expect steel prices to fall in the coming weeks and are comfortable holding off before purchasing more billet, a Tunisian trader said.
Prices for domestic rebar in Tunisia were heard at around 1,567 Tunisian dinars/t ($550/t) ex-works today.
Related news posts
Global battery installation growth slows in 1Q: SNE
Global battery installation growth slows in 1Q: SNE
Singapore, 7 May (Argus) — The growth of global electric vehicle (EV) battery installations during January-March this year has slowed with stuttering global EV demand, data from South Korean market intelligence firm SNE Research show. Global EV battery installations during the first quarter rose by around 22pc from a year earlier to 158.8GWh compared with 36pc growth for the same period last year. Most top battery manufacturers have experienced lower growth rate ( see table ), with Japan's Panasonic and South Korea's SK On installing fewer batteries compared with a year earlier. China's Contemporary Amperex Technology (CATL) and BYD continue to spearhead the growth, albeit also at a slower pace. Consumers' preference for battery EVs globally waned as plug-in hybrid EV and hybrid EVs growth gained momentum because of factors including continued high interest rates and a shortage of charging infrastructure, according to SNE. Samsung SDI earlier this year pinned its hopes on a gradual EV battery market recovery in this year's second half when it expected benefits from lower interest rates starting to be realised. Lower interest rates could spur consumers spending and business investment. But US Federal Reserve policymakers earlier this month signalled that they are likely to hold rates higher for longer until they are confident inflation is slowing "sustainably" towards the 2pc target. The higher interest rates and lower residual values of EVs given price cuts on new vehicles could push up EVs' monthly leasing terms, which are often financed, according to Dutch investment bank ING's senior economist Rico Luman and senior high yield credit strategist Oleksiy Soroka. The scaling back of subsidies in Germany will also weigh on EV uptakes, they said. The IEA has forecast that EV sales will continue to grow in most major markets this year but at a slower rate compared with 2023. Global EV sales this year are forecast to top 17mn, more than 20pc of total global vehicle sales. By Joseph Ho Global EV battery installations (GWh) Jan-Mar '24 Jan-Mar '23 1Q '24 y-o-y % ± 1Q '23 y-o-y % ± CATL 60.1 45.6 31.9% 32.9% BYD 22.7 20.3 11.9% 103% LGES 21.7 20.1 7.8% 43.6% Panasonic 9.3 10.6 -12.6% 21.8% Samsung SDI 8.4 6.2 36.3% 44.2% SK On 7.3 7.9 -8.2% 17.9% CALB 6.3 5.2 22.2% 26.8% EVE 3.6 2.3 54.7% 64.3% Guoxuan 3.4 2.7 22.1% 3.8% SVOLT 2.7 0.9 217.7% NA Others 13.4 8.4 59.2% NA Total 158.8 130.2 22% 35.8% Source: SNE Research 1. Calculated 1Q '23 growth rate using SNE Research adjusted figures 2. Used SNE Research 1Q '24 growth rate figures 3. Omitted 1Q '23 growth rate figure for "others" given SVOLT's likely in the list (making it an inaccurate comparison) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Daihatsu fully reopens domestic auto operations
Japan’s Daihatsu fully reopens domestic auto operations
Tokyo, 7 May (Argus) — Japanese car manufacturer Daihatsu resumed operations at Kyushu and Osaka on 6 May and 7 May respectively, marking the full reopening of its domestic plants. Daihatsu produces around 400,000 units/yr and 6,000 units/yr at Kyushu in south Japan and Osaka in west Japan respectively, according to a company representative that spoke to Argus. Combined production at these two plants accounts for around half of its total domestic output. It suspended all its operations in December 2023 after it was accused of tampering with safety test results. Daihatsu partially resumed operations in February and March but the Kyushu and Osaka plants remained closed. The company's March output fell by 65.8pc from a year earlier to 30,453 units , although it recovered from 6,692 units and none in February and January respectively. The country's overall industrial production index increased by 3.8pc from the previous month, according to the ministry of trade and industry last week, mostly driven by a production recovery of passenger vehicles. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil unlocks relief spending to flooded state
Brazil unlocks relief spending to flooded state
Sao Paulo, 6 May (Argus) — Brazil's president Luiz Inacio Lula da Silva signed a decree to ease relief spending to Rio Grande do Sul state, which has been hit with historically heavy rainfall and floods. "We are going to do everything in our power to contribute to Rio Grande do Sul's recovery," he said today after signing the decree, adding that was only the first of "a large number of acts" for the state. The decree recognizes the state of emergency in Rio Grande do Sul and allows the federal government to grant funding and tax waivers to the state without having to comply with spending limits. In addition, it makes rules for public authorities to contract services and purchase products more flexible. The decree still needs both senate and congressional approval — which should be hasty, as both the senate and house leaders were present at the decree's signing. It is still not clear how much money it will take to rebuild the state, chief of staff Rui Costa and planning minister Simone Tebet said. But the minister of regional integration Waldez Goez estimated that it will take around R1bn ($200mn) to rebuild the state's highways. Rio Grande do Sul has been hit with heavy rainfall since 29 April. The highest volumes reached the central areas of Rio Grande do Sul, with cities receiving rainfall of 150-500mm (6-20 inches), regional rural agency Emater-RS data show. The monitoring station of Restinga Seca city, in the center of the state, recorded rainfall of about 540mm. Rainfall in Rio Grande do Sul overall surpassed 135mm in most of the state, according to the US National Oceanic and Atmospheric Administration (NOAA). State capital Porto Alegre is expected to receive more rain later this week, according to Rio Grande do Sul-based weather forecaster MetSul. MetSul warned that parts of the Porto Alegre metropolitan area could remain uninhabitable for weeks or months. The floods have left at least 83 dead and 111 missing, according to the state government. An additional 130,000 people have been displaced from their homes. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Floods halt firms' operations in Brazil's south
Floods halt firms' operations in Brazil's south
Sao Paulo, 6 May (Argus) — Several Brazilian companies have suspended operations in the southern state of Rio Grande do Sul because of heavy rainfall that has caused severe floods and infrastructure damage. Flooding from the record rains has left at least 83 dead with 111 people missing, according to the state government. More than 23,000 people have been forced from of their homes amid widespread damage, including washed out bridges and roads across several cities. The dam of the 100MW 14 de Julho hydroelectric plant, on the Antas River, ruptured last week under the heavy rains . Power generation company Companhia Energetica Rio das Antas, which runs the plant, implemented an emergency evacuation plan on 1 May. Brazilian steelmaker Gerdau said on Monday that it suspended its operations in two mills at the state until it can ensure "people's protection and safety." The company did not disclose the produced volume of steel at those two mills. Logistics company Rumo partially interrupted operations and said that "damages to assets are still being properly measured". Petrochemical giant Braskem shut down its facilities at the Triunfo petrochemical complex as a preventive measure because of "extreme weather events" in the state, it said on 3 May. The company added there was no expected date to resume activities there. Braskem operates eight industrial units in Rio Grande do Sul that make 5mn metric tonnes/yr of basic petrochemicals, polyethylene and polypropylene, according to its website. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more