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EU steel troubles weigh on bulk alloys

  • Spanish Market: Metals
  • 21/05/19

Bulk alloy prices have fallen in recent weeks on reduced purchasing from European steel mills that are facing economic pressure and foreign imports.

Prices for ferro-chrome, ferro-manganese, silico-manganese and ferro-silicon were all down in April-May. High carbon ferro-chrome prices fell to 94-98c/lb on 16 May from $0.98-1.05/lb on 1 April and low carbon ferro-chrome prices fell to $1.85-1.98/lb, down from $1.95-2/lb on 1 April.

High carbon ferro-manganese prices fell by €60/t to €990-1,040/t ($1,104-1,160/t) on 16 May, from €1,050-1,100/t on 1 April. Ferro-silicon prices fell most sharply by €125/t to €950-1,000/t on 16 May from €1,070-1,130/t on 1 April on low demand and oversupply.

Traders and producers reported unusually low activity for the second quarter, citing low demand from steel industry consumers. European steel producers are under pressure from a combination of foreign steel imports, an automotive market downturn, global trade conflicts and increasing electricity costs.

China/US trade war hits EU markets

The increase in steel imports into the EU accelerated in 2018 despite preliminary EU safeguarding measures. EU steel consumption rose by 3.3pc in 2018, according to figures released by the European Steel Association (Eurofer). In the same period, EU domestic steel deliveries increased by just 1.7pc.

Imports rose sharply by 12.6pc, taking market share from EU producers. Imported steel rose to a 24pc share of the EU market in 2018, up from 22pc in 2017. That figure rose to 25pc in the fourth quarter of 2018 and is expected to rise because of increased sanctions imposed by the US administration on Chinese goods.

Section 232 tariffs, introduced by the US administration to curb steel imports, have diverted steel from Asia-Pacific available at lower prices away from the US into Europe, along with other materials. Prices for northwest European hot rolled coil (HRC) have fallen to €470.50/t from €519.50/t at the start of the year.

Turkey targets EU buyers

A fall in the value of the Turkish lira and other economic problems in Turkey have affected the country's steel market. Turkish domestic steel demand was down by around 50pc in the first few months of 2019, according to Eurofer estimates, with minimal cuts to production. Producers instead looked to Europe to divert material away from the oversupplied steel market.

Turkish steel accounted for 28pc of the EU's total finished steel imports in the first quarter of 2019, up from an average of 21pc in 2018. Imports of steel from Turkey rose by 35pc in the first quarter of 2019 alone and 65pc overall in 2018. Turkish customs data show a 71pc rise in exports of finished steel to the EU and only a 3pc rise in exports to other countries. At the same time, EU exports of steel to Turkey fell by 26pc on average from January 2018 to February 2019.

Safeguarding measures introduced in February have not had the desired effect. Large exporters — more than 3pc of total EU imports — are subject to 25pc tariffs on steel sold above a quota equal to 105pc of their average 2015-17 exports. There is a 5pc relaxation of the quota due in July. But Turkish producers are offering discounts, rendering the measures ineffective, and Eurofer is calling on the commission to revise them.

Emission costs weigh on producers

Another strain on steel producers is the rising cost of energy and carbon emissions in the EU. EU steel producers are subject to the Emissions Trading System (ETS), where companies must buy permits to cover their carbon emissions. The price of carbon has increased by 230pc since the start of 2018, according to the EU's largest steel producer Arcelor Mittal.

The company recently closed a steel plant in Krakow, one of the largest consumers of ferro-alloys in Poland. The closure led to an immediate reduction in reported offer prices for ferro-manganese and silico-manganese in eastern Europe. The company pointed to a combination of higher imports into the EU and an increase in energy costs because of emissions. Arcelor Mittal also plans to reduce production at a plant in Spain's Asturias and slow down a planned increase in shipments from its plant in Italy.

British Steel was suspended from the ETS on 1 January because of the UK's impending exit from the EU. The EU allocates free carbon emissions permits every year, and British Steel, which was in deficit for emissions last year, was counting on the UK's allocation under the ETS to trade permits to cover its deficit. The failure of the UK government to pass a negotiated withdrawal agreement led to the suspension. The company, Britain's second largest steelmaker, is now at risk of going into administration.

Automotive downturn threatens downstream consumers

A downturn in industry and in particular the automotive sector is also weighing on downstream demand for steel.

Phasing out conventional fossil-fuelled vehicles will reduce demand for steel and ferro-alloys such as ferro-chrome and ferro-manganese, used in engines and exhaust systems. Steel companies are relying on electric vehicles (EVs) requiring steel for bodies and components to drive demand from the sector, but car companies are reporting lower sales figures as EV uptake has not been as fast as some companies expected.

Passenger car registrations in the EU fell by 2.6pc in the first four months of 2019 and grew by only 0.1pc in 2018, according to the European Automobile Manufacturers Association (ACEA). Ford recently announced widespread cuts to its European workforce. There is also a threat of US tariffs on imports of European vehicles.

Germany, Europe's largest steel producer and consumer, has been hit by an economic downturn. Its manufacturing purchasing managers index, an indicator of industrial activity, fell to an 80-month low of 44.1 in March. In April it was slightly up at 44.4, but a score below 50 indicates a contraction in the sector.

The slowdown in German manufacturing and the automotive sector and a rise in imports into the EU is expected to continue into the third quarter.


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18/09/24

US Fed cuts rate by half point, signals more: Update

US Fed cuts rate by half point, signals more: Update

Adds chairman Powell comments, economic projections. Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with policymakers signaling they expect to make another half-point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a 23-year high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most intense rate-tightening campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc, and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." In their latest economic projections, the Fed board and policymakers expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. Policymakers also penciled in another 100 basis points of cuts over the course of 2025. "We're recalibrating policy down over time to a more neutral level and we're moving at the pace that we think is appropriate given developments in the economy," Fed chair Jerome Powell told a press conference after the meeting. "The economy can develop in a way that will cause us to go faster or slower. The US economy is in a good place and our decision today is designed to keep it there." The Fed's economic projections see core Personal Consumption Expenditures inflation — the Fed's favorite measure of inflation — ending 2024 at a median rate of 2.6pc, down from a prior forecast of 2.8pc. Policymakers see core PCE inflation falling to a median of 2.2pc by the end of next year. The outlook for the unemployment rate for the end of 2024 climbed to 4.4pc from 4pc penciled in at the June meeting. Policymakers expect gross domestic product (GDP) growth to end 2024 at an annual 2pc, slightly down from a prior 2.1pc projection. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 2.5pc in August , down from 2.9pc in July, the Labor Department reported on 11 September. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has recently slowed sharply, falling to an average 116,000 in the three months through August from 211,000 for the prior three months. The jobless rate rose to 4.3pc in July, the highest in three years, before edging down to 4.2pc in August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Fed cuts rate by half point, signals more to come


18/09/24
18/09/24

US Fed cuts rate by half point, signals more to come

Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with officials signaling they expect to make another half point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a two-decade high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most aggressive increase campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." The Fed board and policymakers, in their latest economic projections, expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan's Tokyo Steel cuts sales prices on weak demand


18/09/24
18/09/24

Japan's Tokyo Steel cuts sales prices on weak demand

Shanghai, 18 September (Argus) — Japan's steel manufacturing firm Tokyo Steel said it will cut domestic steel product prices for October, marking the first full-scale price cut in over four years. The decision was driven by sluggish domestic demand and increased competition from cheaper imported steel products. Tokyo Steel will reduce prices across all product lines starting October, with steel coils and plates dropping by ¥15,000/t, shaped beams by ¥12,000/t, and tubes and deformed bars by ¥10,000/t. The company had maintained stable domestic steel prices for an extended period on the back of the steadier domestic demand and market conditions compared to the more volatile overseas market. The last price cut for deformed bars was in July 2023. Steel sales in Japan were weak during the third quarter, impacted by rising procurement costs for materials, a shortage of construction capacity, and an influx of cheaper steel products from China in the seaborne market, market participants said. A decline in profitability pushed Japanese mills to cut production costs. From 11 July to 14 September, domestic scrap prices at Tokyo Steel's Utsunomiya plant dropped by ¥12,500/t, or 23.8pc. Market sentiment in Japan remains bearish due to economic uncertainty and the strengthening of the Japanese yen. The upcoming adjustments in US monetary policy could add further volatility to exchange rates. "We may see more corrections in the Japanese domestic market," a trade source said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

July EU HRC imports show 175,000t pullback


17/09/24
17/09/24

July EU HRC imports show 175,000t pullback

London, 17 September (Argus) — EU hot-rolled coil (HRC) imports surpassed 1.5mn t in July — a record high — as importers for the first time faced a cap to the ‘other countries' safeguard quota, which led some to purchase back-up material from other sources. More importantly, official figures show that around 175,000t were pulled back from customs clearing, likely all in Italy, after the initial quota numbers were made available in early July from Egypt, Vietnam, Japan and Taiwan. This leftover amount will likely all be custom-cleared in October, in addition to material that has arrived since July, as market participants expect importers to clear all of their HRC to avoid the risk of retroactive duties, potentially applicable from December. Imports from Taiwan, India, Turkey and Japan in July all surpassed the 200,000t mark each, with total imports from those four origins close to 900,000t, a sharp year-on-year increase. Vietnam saw volumes drop ( see table ), while South Korean imports fell by 75pc on the year to 40,379t and Serbian imports were down by 10pc to 37,437t. Hot-dipped galvanised (HDG) imports were at a record high, topping 750,000t in July, with nearly 30pc of the total from Vietnam. There has been concern in the market that the EU might start an investigation on Vietnamese HDG, as volumes have been on the increase, while suppliers are regularly the lowest-priced in the market. Plate imports were also at a record high, as EU producers are preparing to file for an investigation on some origins. Meanwhile, the increase in imports and the drop in EU demand has led producers to seek export outlets, with EU HRC exports rising on the year and on the month in July to nearly 230,000t, with the bulk going to the UK, US and Turkey. Downstream product exports also increased. By Lora Stoyanova and Colin Richardson July EU HRC imports t July y-o-y ±% Taiwan 227,892.8 8.2 India 225,558.6 134.8 Turkey 223,185.9 255.2 Japan 210,842.9 6.5 Egypt 158,625.7 31.9 Vietnam 144,202.0 -59.5 Ukraine 101,721.2 118.5 Australia 51,784.0 104.4 Saudi Arabia 40,594.8 -36.4 Total 1,565,744.2 9.1 — GTT Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US to impose 25pc tariffs on Chinese critical minerals


13/09/24
13/09/24

US to impose 25pc tariffs on Chinese critical minerals

Houston, 13 September (Argus) — The US plans to impose 25pc tariffs on Chinese minerals including indium, tantalum, chromium, cobalt and tungsten, citing China's efforts to dominate global supply chains, according to the office of the US Trade Representative (USTR). The USTR determined not to exclude any critical minerals from the proposed Section 301 tariffs. The USTR said the concentration of mining and refining capacity of these minerals in China, as well as China's effort to dominate the global supply chains for these minerals, endangers US national security and clean energy goals. The Section 301 tariffs on indium, tantalum, chromium, cobalt, and tungsten will go into effect on 27 September. Tariffs on natural graphite and permanent magnets will go into effect on 1 January 2026. China is the leading producer and exporter of indium, producing an estimated 650t in 2023, about 66pc of the global total, according to the US Geological Survey (USGS). The US imported 219 metric tonnes (t) of unwrought indium in 2023, including 10t from China. So far in 2024 the country has imported 148t, of which 45t originated in China, according to data from the US Commerce Department. Indium is primarily used globally for its electric conductivity in a variety of screens including liquid crystal displays (LCDs) as well as fiber-optic cables and other technical components. US consumption is more focused around solders and specialty alloys. The US imports more tantalum powders, alloys, and metals from China than any other country. The US imported 321t of unwrought tantalum in 2023, including 132t from China and has imported 269t between January and July 2024, including 178t from China. Tantalum is primarily used in high-temperature alloys and capacitors. Although China accounted for only 3.3pc — 79t — of global 2023 mine production, the USGS estimated the country had a world-leading 240,000t of tantalum reserves. Chromium is primarily used in stainless and heat-resistant steels. China is the world's largest producer of ferrochromium and stainless steel. The US imported 103,034t of chromium ores and concentrates in 2023, including just 10t from China. Still, the US did import 9,302t of unwrought chrome metal from China so far in 2024, which accounted for 74pc of total volumes, and US reliance on China for the metal has increased since sanctions forced Russian supplies off the table. Although China does not mine a significant amount of cobalt, it is the world's leading cobalt refiner and consumer. The US imported 18t of cobalt ores and concentrates in 2023, including 11t from China, and imported 11t between January and July 2024, including 6t from China. The US imported 1.6mn contained kilograms (ckg) of tungsten carbides in 2023, including 906,000ckg from China and imported 1mn ckg between January and July 2024, including 491,000ckg from China. Tungsten is primarily used in carbide parts for construction, metalworking, mining, and drilling applications. Tungsten is also used in specialty steel fabrication as well as in electrodes, filaments, and wires for various electrical and electronic products. By Cole Sullivan Critical Mineral Tariffs metric tonnes, t HTS Code Resource Name Imports from China, 2023 Imports from China, 2024 through July 2605.00.00 Cobalt ores and concentrates 11 6 2610.00.00 Chromium ores and concentrates 10 52 2611.00.60 Tungsten concentrates 139 46 2825.90.30 Tungsten oxides 212 19 2841.80.00 Tungstates (wolframates) 0 0 2849.90.30 Tungsten Carbide* 906,375 491,371 8101.10.00 Tungsten, powders 0 0 8103.20.00 Tantalum, unwrought 132 178 8112.92.30 Indium, unwrought; powders 10 45 Source: US Commerce Department *unit of measure is kilograms contained Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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