US steel mill outages unlikely to shift market
Steel mill outages through the remainder of the year will take out nearly 600,000 short tons (st) of flat-rolled production, but few believe that will alleviate persistent oversupply.
The outages, mainly for maintenance, will run from September through November, according to current plans by US-based steelmakers and market participants. That would average out to approximately 6,450st/day across the three months based on the mills' rated capacity.
Still, the flat-rolled outages are expected to have minimal volume impacts on the markets, sources said, pointing to persistent oversupply and the multiple flat-rolled steel mills that are ramping up in the back half of the year. Combined, those mill additions, when ramped up fully, will add 18,700st/day of rated capacity to the market, far outstripping the supply taken out of the market.
For the week ending 13 August daily production in the entire US steel market which includes flat, long, plate, and other steel mills was 248,900st, with capacity utilization rates at 79pc, according to data from the American Iron and Steel Institute.
Since mid-April when the Argus weekly domestic US hot-rolled coil (HRC) Midwest and southern ex-works assessments peaked at $1,500/st, prices have fallen by 46pc to $812.25/st. HRC prices are down by 49pc since the beginning of the year.
Prices have fallen as service centers have held off buying in the face of weak demand from consumers, who have been hit by shortages of labor and parts. Fears that the US is either already in or on the brink of a recession have also prompted some pull-back in purchases.
Many have been disappointed by the lack of semi-permanent or permanent idling of flat-rolled steelmaking capacity in a more sustained manner to prop up prices. This includes some service centers, typically buyers of steel, as falling flat-rolled prices have devalued their existing inventories. The lack of such closures and a recent decline of $70/gross ton (gt) for #1 busheling scrap, a key steelmaking raw material input, have led many to doubt that US steel prices have much room to recover. A recent $50/st flat-rolled steel price increase by electric arc furnace (EAF) steelmaker Nucor appears to have fallen flat for now. The price increase, announced on 8 August, has not drawn buyers at those prices.
In past markets, when flat-rolled prices were at lower levels, integrated steelmakers were seen as the high-cost producers and were expected to bear the brunt of production curtailments.
Now, with raw material inputs like #1 busheling scrap and pig iron at higher levels, some think EAF steelmakers may be the high cost producers needing to cut production instead. Integrated steelmakers are thought to currently have some cost advantages through the control of the majority of their input costs from iron ore mines to steel finishing facilities and even maintain the option to buy as much as 30pc of their melts as scrap should prices decline.
Steel mill outages September through November | st | |||
Company w/outage | Location | Duration | Month | Volume |
NLMK | Portage, PA | 20 | Oct | 46,500 |
North Star BlueScope | Delta, OH | 5 | Nov | 44,500 |
SDI | Butler, IN | 4 | Oct | 35,100 |
SDI | Columbus, MS | 4 | Nov | 35,100 |
USS - Big River Steel | Osceola, AR | 7 | Oct | 60,000 |
USS - Mon Valley | Pittsburgh, PA | 21 | Sept | 80,500 |
Nucor - Berkeley | Huger, SC | 9 | Sept | 80,300 |
Nucor - Crawfordsville | Crawfordsville, IN | 15 | Sept | 104,400 |
Nucor - Decatur | Decatur, AL | 11 | Sept | 75,300 |
Nucor - Hickman | Hickman, AR | 5 | Sept | 37,000 |
Total volume over outages | 598,700 | |||
Daily rate for 3 months | 6,579 | |||
— Company releases, market, AIST data |
Steel mill capacity additions | st | |||
Company | Location | Yearly production | Startup timeframe | Daily production rate |
Cleveland-Cliffs | Cleveland, OH | 1,500,000 | Aug 22 | 4,110 |
Nucor | Ghent, KY | 1,400,000 | 4Q 2022 | 3,836 |
Steel Dynamics | Sinton, TX | 3,000,000 | 3Q/4Q 2022 | 8,219 |
North Star BlueScope | Delta, OH | 936,000 | 2H 2022 | 2,564 |
Total | 6,836,000 | 18,729 | ||
— Company releases |
Related news posts
EU could launch 'other countries' HRC dumping probe
EU could launch 'other countries' HRC dumping probe
London, 25 July (Argus) — The European Commission soon could initiate a dumping investigation on some exporters selling into the 'other countries' quota for hot-rolled coil (HRC), according to multiple market sources. The 'other countries' quota in recent quarters has consistently filled rapidly upon resetting, and this pressure has been intensified by rising Chinese exports since August of last year. Some key 'other countries' sellers have seen the volumes they take from China balloon as a result. Vietnam bought more than 4.2mn t from China in the first six months of this year, compared with about 6mn t in the whole of 2023. China's increased exports has sparked talk that both India and Vietnam may start anti-dumping duty investigations. When announcing its 15pc cap on countries selling into the 'other countries' quota, the commission specifically alluded to the increase in Chinese exports affecting trade flows. Vietnam, Egypt, Japan and Taiwan are by far the largest sellers into the 'other countries' quota, and all of the countries initially exceeded their 141,849t cap quickly when the new quotas took force on 1 July. In April, before the cap was implemented, these four countries amounted for more than half of the 1.4mn t imported by the EU. The 'other countries' quota has essentially been reduced from 940,000 t/quarter to less than 600,000 t/quarter given the new cap. Sources suggested duties could be applied retroactively if the commission finds that material has been dumped. They also suggested it could be difficult to show dumping in some countries, such as Vietnam and Egypt, where domestic prices are often below export levels. A leading producer was gathering information on Egyptian cargoes arriving at EU ports in recent months, a trading firm said. The commission refused to comment on any potential investigation. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China raises EV, ICE vehicles trade-in subsidies
China raises EV, ICE vehicles trade-in subsidies
Beijing, 25 July (Argus) — The Chinese government has raised subsidies to boost trade-in of old internal combustion engine (ICE) vehicles with new energy vehicles (NEV). The subsidy for consumers who trade in an old NEV registered before 30 April 2018 or an ICE vehicle that meets or is below China's national 3 emission standard for a new NEV has doubled to 20,000 yuan from a previous subsidy announced in May . Electric vehicles cost anywhere between Yn50,000 to Yn1mn, with consumers mostly purchasing those in the Yn100,000-200,000 range, according to industry participants. The government is also offering a Yn15,000 subsidy for consumers who trade in an old NEV registered before 30 April 2018 or an ICE vehicle that meets or is below China's national 3 emission standard, and purchase a new ICE vehicle with the displacement below 2.0 litre. Beijing in early March announced a plan to promote the replacement of industrial equipment and consumer goods through large-scale trade-ins, with NEVs making up the main part of the scheme, as part of Beijing's efforts to meet its annual economic growth target of 5pc. China's ministry of finance announced on 3 June that it will allocate Yn6.44bn to local governments to pay the subsidies for vehicle trade-ins in 2024, including Yn107mn to Tianjin, Yn90.81mn to Shanghai, Yn74.61mn to Beijing and Yn66.49mn to Chongqing. The central government announced on 29 May that it will remove purchase restrictions for NEVs during 2024-25, with the capital city Beijing allocating 20,000 additional purchase quotas for NEVs to families without a car. China produced 1.003mn NEVs in June, up by 28pc from the previous year and by 6.7pc from May, with sales increasing by 30pc from a year earlier and by 9.8pc from the previous month to 1.049mn, partly driven by the country's supportive measures, especially the trade-in subsidies. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US-Australia’s Coronado to lift coal sales
US-Australia’s Coronado to lift coal sales
Sydney, 25 July (Argus) — US-Australian coal producer Coronado Coal will boost coal sales during July-December despite logistical challenges, as it maintains its output guidance of 16.4mn-17.2mn t for 2024. The firm sold 7.8mn t of coal during January-June, leaving it a target of 8.6mn t for July-December to meet the bottom of its 2024 guidance . It has maintained this guidance despite warning that shipments from its Australian Curragh mine will be affected by a two-week rail disruption from the end of July . Coronado operates the Curragh mine in Queensland and two mining complexes in the US' Virginia. All produce coking and thermal coal. Coronado's revenues were supported during April-June compared with January-March by a smaller discount for pulverised injection coal (PCI) against hard coking coal prices, which saw the PCI price rise while other metallurgical coal prices were under pressure. Its sales prices will remain strong in July-September, forecasts chief executive Douglas Thompson, on restocking in India and the rail disruption in Queensland, as well as the fire at Anglo American's Grosvenor mine that will disrupt Australian exports. Thompson warned that there was some downside risk of $5-10/t to Australian PCI pricing but if this was realised it will see China restart buying from Australia. In the long term he expects more competition from Russia-origin PCI, as Russian coal producers find new routes to the seaborne market and regain market share lost because of an European embargo. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-volatile price at $224/t fob Australia on 24 July and the PCI low-volatile price at $193.65/t. Coronado's group sales volumes were up 8.3pc to 4.1mn t in April-June compared with January-March , reflecting higher sales from its Australian and US operations. The increase in volumes combined with reduced need to remove waste materials allowed Coronado to cut is mining costs by 27.5pc from the previous quarter to an average of $91.10/t of coal sold. The firm expects costs to fall further in July-December as it demobilises more of its mining fleet at its Curragh mine. This reflects reduced waste removal and should have no impact of coal production at Curragh, Thompson said. Production at Curragh should increase in the second half of 2024, with 100,000t of coal production deferred from June to July because of heavy rainfall. By Jo Clarke Coronado Coal (mn t) Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 Jan-Jun '24 Jan-Jun '23 Sales (mn t) Australia (Curragh) 2.7 2.5 2.5 5.2 4.7 US 1.4 1.2 1.5 2.6 3.0 Total 4.1 3.7 4.0 7.8 7.6 Sales data % coking coal of total sales 81.0 78.7 76.0 79.9 75.3 Australian realised met coal price (fob) ($/t) 216.2 225.2 237.7 220.5 239.7 US realised met coal price (for) ($/t) 161.7 170.9 196.0 166.0 215.5 Source: Coronado Australian coal price comparisons ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australian coal rail line to shut for 2 weeks: Coronado
Australian coal rail line to shut for 2 weeks: Coronado
Sydney, 25 July (Argus) — The Blackwater rail line in Queensland, Australia will be closed for up to two weeks because of maintenance, which will restrict coal deliveries to the key port of Gladstone. The maintenance program will run from late July to early August, coal mining firm Coronado said on 25 July. This is limiting metallurgical supply from Queensland and pushing up the price of pulverised coal injection (PCI) coal relative to Australian premium low-volatile coal, it added. The two-week shutdown was planned before Coronado released its 16.4mn-17.2mn t saleable coal guidance for 2024 , which it still expects to reach despite a week-long outage on the Blackwater line in June-July following a collision . Shippers appear prepared for the reduction in shipping from the 102mn t/yr Gladstone port over the next couple of weeks, with just 12 ships queued outside the port on 25 July, down from 23 on 6 June and below-average queues of around 20. Coal is delivered to Gladstone through the 100mn t/yr capacity Blackwater rail line and the 30mn t/yr capacity Moura line, both of which are operated by Australian rail firm Aurizon. Gladstone's shipments fell by 9.5pc in June compared with a year earlier, partly because of rail constraints. Around two-thirds of Gladstone's coal shipments are metallurgical coal and a third are thermal. A fire at UK-South African mining firm Anglo American's Grosvenor mine already hit Australian metallurgical coal exports, which led the firm to cut its 2024 production guidance to 14mn-15.5mn t from 15mn-17mn t. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-vol price at $224/t fob Australia on 24 July, with the PCI low-vol price at $193.65/t. Aurizon and Gladstone Port were contacted for comment, but have yet to respond at the time of writing. By Jo Clarke Australian coal price comparisons ($/t) 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