Italian long steel producer Beltrame is diversifying its product range by installing a slab caster at its Vicenza mill with the aim of optimising the group's production. Argus spoke to the steelmaker's chief commercial officer Enrico Fornelli about technical details, reasons for the investment and green premiums.
What are the expected dates for the start of testing and commercial production of slabs? When do you expect to complete the plant commissioning and start full production?
We expect the test phase to commence towards the end of this year and it will probably last until the early months of 2025. We know that delays are always possible during the construction phase, but we are hoping that the first quarter of next year will mark the start of commercial production. The caster will have a capacity of 200,000-300,000 t/yr.
Is the new slab caster a newbuild or is it a conversion of an existing billet caster, and will the slabs produced be sized for both coil and plate producers?
We can define the machinery as "ex-novo", no conversion has been made, in fact the slab caster sits next to a billet caster in the facility. To answer your second question yes, the final goal of the project is to produce a wide range of dimensions suitable for both coil and plate producers.
I understand that there are several reasons behind your decision to enter the slab market. What are they and are there any synergies with the longs market?
There are two main reasons why we made this investment. First, we need to consider the optimisation of our steel plant.
Optimising our production means making sure we achieve top performance levels, so that the mill works at full capacity and benefits from lower costs. Simply put, an asset that is operating at 70pc capacity will not have the same efficiencies as an asset that is at full capacity. Second of all, we have felt a strong necessity to embark on a road of diversification in regards to our product range.
On the billet side, we do see an issue of overproduction, and the excess supply we are not able to sell locally forces us on the international markets, where Italian and European producers are not competitive. It is no secret that our energy costs are holding European producers back.
The conflict in Ukraine and the reduction of imports from Russia have drastically changed the slab market, considering that Ukraine was also an important supplier for European and Italian steel mills. How did these events influence your decision to enter the market?
First and foremost, I want to reiterate that optimisation is the leading reason that led us to make this investment decision. What I can say on our current situation is that Italy is a net importer of slab, as it currently buys 2mn-3mn t/yr of the product from abroad.
Have you already concluded some supply contracts, and can you give us an idea of the amount of orders collected so far?
At the moment we have not finalised any pre-sales. We are in no rush, when we are ready we will call our customers. Once word spread that Beltrame was looking to enter the slab market, we received many phone calls and a lot of interest, about 7-8 Italian groups that buy significant quantities of slab have contacted us. Our production capacities are a drop in the ocean when compared with the size of the market, I am sure we will have no issue to sell our allocation.
Beltrame has a joint venture with the Grigoli plate rolling mill; what percentage of the slab production will be allocated to this project?
I can say that a small percentage will go to the Grigoli re-rolling facility, we have an agreement that they will test the material initially and help us perfect our product. The first batches of our production will be delivered to them.
Do you expect to get a green premium on your slabs?
We do expect to achieve a green premium, and we are already doing it with our range of Chalibra products, especially in northern Europe where we have some buyers that only request this type of material. The landscape has changed a lot in the past 3-4 years on this front, no matter the pace the future is anyways going towards the direction of decarbonisation.
Buyers in recent times have looked evermore east to secure volumes, but with CBAM regulation coming into force, compounded by a volatile geopolitical environment, we can definitely achieve a green premium. What we believe is that our customers will have no issue paying something like €30/t more, for the security of having low-carbon slab only at about a 200km distance from them.
On top of this we need Europe to urgently standardise and set some sort of benchmark for the industry on low-carbon steel. At the moment we see both voluntary and involuntary greenwashing occurring.
If the project in Vicenza is successful, do you plan to replicate the facility in other countries? Are there any plans to increase production capacity or make new investments, both in Italy and abroad?
We are evaluating further investments in the field, but first we need to see how this current project goes. One idea would be to replicate this kind of investment in France not too close to our plant, where we could benefit from low energy costs. We would take up, again, a very small amount of the market share. I think an investment of this type could be useful for our group, would not look to harm our competitors, and above all help reduce the dependence on steel imports in Europe.
