Latest market news

EU HRC market gears up for mill consolidation

  • Market: Metals
  • 19/09/24

The European hot-rolled coil (HRC) market is gearing up for potential consolidation over the coming year, as mills grapple with tough market conditions.

The share prices of key European producers have rallied in recent days, despite continued weakness in HRC prices. Global steelmaker ArcelorMittal's shares traded above €22/share ($24/share) on the Luxembourg Stock Exchange at 12:30 GMT today, up from €19.70/share on 10 September. This strength is partly attributable to the expected release of economic stimulus measures in China, and the US Federal Reserve's recent interest rate cut, sources suggest. But market strength could also be because of growing talk that a new wave of consolidation is on its way, fuelled by decarbonisation efforts and the strained positions' of some mills.

There has long been talk that steel coil producer Tata Steel Netherlands could be sold, after the Dutch state agreed to contribute to its decarbonisation spend. Recent difficulties at Germany's ThyssenKrupp have also sparked suggestions it could be an acquisition target. Czech Republic energy company EP Corporate Group (EPCG) recently completed its purchase of a 20pc stake in ThyssenKrupp's Steel Europe division, and could increase this to 50pc in the near future. EPCG owner Daniel Kretinsky may be seeking a strategic partner to help run the business, sparking talks that other mills could bid for a stake in the company.

ThyssenKrupp shares were trading at €3.20/share on Deutsche Borse Xetra at 12:30 GMT today, up from €2.78/share on 10 September.

Concerns over strong positions in niche markets, particularly tin plate, saw Tata Steel and Thyssekrupp call off their proposed joint venture in May 2019. But the market is in a different position now. Some mills have reduced capacity but new entrants are trying to join the market as green producers. And the global market is oversupplied, putting European producers in a difficult financial predicament, especially given their capital-intensive efforts to decarbonise. In the case of ThyssenKrupp, expectations that the mill will reduce its production footprint could partially alleviate potential competition concerns in the event of a takeover.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

US light vehicle sales surged in September


03/10/24
News
03/10/24

US light vehicle sales surged in September

Houston, 3 October (Argus) — Domestic sales of light vehicles rebounded in September, increasing to a seasonally adjusted rate of 15.8mn on the strength of greater truck purchases. Sales of light vehicles — trucks and cars — rose from a seasonally adjusted annual of rate 15.3mn in August, the Bureau of Economic Analysis reported today. Sales have whipsawed the previous four months, but September's rate largely was in line with the 15.7mn unit rate in September 2023. The US Federal Reserve last month cut its target rate for the first time since 2020, bringing it down by 50 basis points from its 23-year highs as inflation has been easing. Lower inflation and Fed easing, which ripples across credit markets, make it more affordable for people to purchase new vehicles. Fed policymakers have penciled in another 150 basis points worth of cuts through 2025, as they hope to head off any weakening in the labor market that could scuttle the wider economy. Higher overall sentiment about the US economy, fueled by a robust 3pc growth in gross domestic product (GDP) in the second quarter, healthy labor conditions and consumer spending also have encouraged consumers to spend. Sequentially, light truck sales increased by 3.1pc to a 12.8mn unit rate in September, while sales of cars rose by 4.4pc to a 3mn unit rate in the same time period. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Israel-Iran conflict threatens Mena steel supply


03/10/24
News
03/10/24

Israel-Iran conflict threatens Mena steel supply

London, 3 October (Argus) — The escalating Israel-Iran conflict could lead to a shortage of steel and steelmaking raw materials in the Mena region because of potential logistical disruptions and a surge in freight prices. Tensions have risen after the killing of the leader of Iran-backed Hezbollah militia Hassan Nasrallah , by Israel on 27 September, which sparked retaliation from Iran. This has seen an increase in attacks on vessels in the Red Sea by Yemen's Iran-backed Houthis, disrupting trade routes. The conflict could adversely affect construction and steel demand in the Mena region, which remains a key export outlet for long steel products, as well as billets. "The attacks are highly likely to increase and imports from Asia to Turkey will be negatively impacted due to high freight and therefore, high steel prices," said a Turkish integrated producer whose steel cargo was targeted by Houthi missiles a few months ago. An international iron ore trader echoed this, expecting freight prices to increase. Over the past few years, Israel and Yemen were important rebar export destinations for Turkey. But in April , Turkey imposed a trade ban on Israel. Turkish rebar exports to Yemen have sharply dropped owing to risks to shipments. Currently steel trading activity with Lebanon is on hold . Lebanon typically purchases high volumes of long steel, particularly rebar, from Egypt, Algeria and Libya. Market participants in the UAE, a major producer and consumer in the Gulf Co-operation Council (GCC), had previously anticipated a strong final quarter of the year, because of expected increases in construction activity from large-scale projects. But should the situation escalates, projects could be on hold and demand will shrink, a producer warned. Trading in Oman faces greater risk compared with other GCC countries because of its shared border with Yemen. The conflict could also negatively impact the flat steel industry in north Africa, as many re-rollers import hot-rolled coils (HRC) for re-rolling or coating, often finding it more feasible to use supply from Asia rather than local material. "HRC imports to Algeria will be endangered and this will increase prices of cold-rolled coils (CRC) and galvanised steel prices," a market participant commented. By Elif Eyuboglu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Indonesia’s Ni expansion via HPAL could face challenges


03/10/24
News
03/10/24

Indonesia’s Ni expansion via HPAL could face challenges

Singapore, 3 October (Argus) — Indonesia is expected to continue expanding its nickel production in the coming years, especially through increasing its high-pressure acid-leaching (HPAL) capacity, but the lack of readily available sulphuric acid and proper management of the tailings waste could pose challenges to this plan. Production is expected to rise despite an anticipated surplus in the supply of nickel in the market. Sulphuric acid is used in the HPAL process to separate nickel and cobalt from nickel ore to produce mixed hydroxide precipitate (MHP), which is the feedstock for the downstream processing of nickel sulphate, cathode and battery. Indonesia is expected to produce 325,000-345,000t of MHP this year, up from around 269,000t of in 2023, according to market sources. But with several MHP projects planned to come online in the next few years, MHP output for the next three years is projected to treble to 800,000-900,000t, according to the country's deputy minister for the co-ordinating ministry for maritime and investment affairs Septian Hario Seto on 2 October at a metal event in London. As this would require a lot more nickel ore and sulphuric acid, there are concerns that the availability of limonite ore could deplete as fast as the saprolite ore supply, which is mainly used for nickel pig iron and matte production. There were also discussions that the Indonesian government will convene with nickel market participants to discuss about the supply situation of limonite ore. There are currently four HPAL facilities operating in Indonesia. This includes Huayou's Huayue and Huafei projects , GEM's QMB project and Lygend's HPAL project. Others were also concerned that the availability of sulphuric acid could be a limiting factor to Indonesia's rapid expansion of HPAL production, as sulphuric acid demand from Indonesian HPAL projects is expected to reach 7.12mn t in 2025, almost 40pc increase from this year's demand at 5.17mn t, according to Argus estimates. Indonesia has been importing sulphuric acid from mainly China and South Korea to meet the growing demand for its production units at Obi Island and Sulawesi. But a ramp-up in sulphur-burning operations has pushed several MHP producers like Halmahera Persada Lygend to switch to buying lower-cost sulphur instead. For most sulphur burners, 1t of sulphur produces around 3t of sulphuric acid. The startup of Freeport McMoran's Manyar smelter in Java integrated industrial and port estate in East Java's Gresik, coupled with mining firm Amman Mineral Nusa Tenggara's (AMNT) copper smelter in the West Sumbawa regency of Nusa Tenggara province, is also expected to alleviate some supply concerns, with the two expected to add at least 3mn t/yr of acid capacity by the end of 2025. Proper disposal of tailings waste could pose another challenge to Indonesia's planned HPAL expansion, particularly with increasing scrutiny on the environmental, social and governance (ESG) standards by Indonesia's mining industry. The HPAL process generates a large volume of tailings, with energy consultancy Wood Mackenzie estimating an output of 1.4-1.6t of waste from every 1t of nickel produced through HPAL. There are three common ways to dispose tailings waste – tailings dam, deep sea tailings and dry stacking. Dry stacking is more widely used because it is considered as the more sustainable option. But dry stacking also comes with its own environmental and biodiversity risks, as Indonesia's seasonal wet weather and seismic activity of the site could be a problem for waste storage. To ensure a smooth expansion in HPAL production, it is crucial for Indonesia to find ways to secure the necessary sulphuric acid supplies and to adopt appropriate methods for tailings waste disposal. By Sheih Li Wong and Deon Ngee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

ArcelorMittal increases steel coil offers by €40/t


02/10/24
News
02/10/24

ArcelorMittal increases steel coil offers by €40/t

London, 2 October (Argus) — Europe's largest steelmaker ArcelorMittal has increased its hot-rolled coil (HRC) offer by €40/t to €590/t base in northwest Europe. All offers below this level have been withdrawn and the company is "firm" on this level, buyers said. One service centre reported an offer around €605/t base, for a small tonnage. NLMK La Louviere has also increased its offer by around €25/t, according to sources. The increases follow a sharp rise in China following the country's recent stimulus announcement, and firmer raw material costs — Argus ' benchmark 62pc Fe ICX iron ore index hit $109.35/dmt on 1 October, up from $88.70/t on 23 September, while fob Australia premium low-volatile coking coal prices jumped by $18.80/t to $204.30/t. Service centres have been trying to add additional tonnages to existing deals in recent days, according to mill sources, which they suggest is a signal buyers think the market has reached a floor. They also anticipate a technical rebound from the automotive sector in the first quarter of next year, after a weaker period of late. Futures markets have also been reacting to the increases in China, and talk of higher EU offers. As off 11:23 London time (10:23 GMT), over 26,000t had traded on the CME Group's north European HRC contract, with two 10,000t January-February spreads trading at -€10/t, lessening the pronounced contango of recent days. A 4,000t October-December spread traded at -€65/t, with the outright prices at €565/t and €630/t. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

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