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Auto strike risk looms over US steel market

  • Market: Coking coal, Metals, Pipe and tube
  • 24/08/23

The possibility and potential widespread problems caused by an automotive union strike was the topic of most conversations at the largest US steel conference of the year.

Steel market participants at the SMU Steel Summit in Atlanta this week broadly agreed that some type of strike by the United Auto Workers (UAW) union would happen against some portion of Ford, General Motors and Stellantis.

The UAW contract expires on 14 September and a strike at any of the automakers could add thousands of tons of steel into the spot market. The union was scheduled to vote to authorize a strike today with results to be announced on Friday.

Wolfe Research managing director Timna Tanners said on 21 August in Atlanta that her firm's analysis was that a short-lived strike at a single automaker would cost steel demand equivalent to 90,000 short tons/month.

There remains uncertainty over how broad or long an auto strike will be, with UAW president Shawn Fain refusing to choose a single company to target for a strike, keeping open the possibility of a broad strike against all three major US automakers.

Speaking in Atlanta Zekelman Industries chief executive Barry Zekelman agreed that a strike would likely happen.

"[Pricing] definitely is coming off and I think it will level off, absent an auto strike, which I think there will be," Zekelman said on 21 August. "Why wouldn't there be? You have two organizations that are fighting for a strong position."

Demand from the auto industry remains among the strongest pullers of steel as auto companies work to fill up dealer lots ahead of the possible strike.

Service centers are reporting that demand broadly remains steady, with some downstream consumers experiencing slowdowns.

Many have noted that the flat steel market is oversupplied, with integrated steelmaker US Steel reporting production of 671,000st more steel than it shipped in the first half of the year at its US-based integrated and electric arc furnace (EAF) flat steel mills. While it is normal for steelmakers to produce more steel than they ship, the gap between the two metrics has widened this year at some companies.

During the same period, EAF steelmaker Steel Dynamics (SDI) said it produced 5.84mn st from its flat and long product steel mills, 301,000st higher than its external shipments.

Other EAF competitor Nucor reported its steel mills produced at 79pc and 84pc utilization rates in the first and second quarters, respectively, putting its sheet mills at a calculated production volume of 5.62mn st in the first half of the year compared with sheet shipments of 5.61mn st.

Integrated steelmaker Cleveland-Cliffs does not publish its production volumes or its utilization rates. The company is aiming to increase its 2023 shipments by more than 1mn st compared with 2022.

How US steelmakers would react to an automotive strike is an unknown, including whether any steel mill assets would be idled to reduce supply in response to the drop in demand.

When US automakers shut down in 2020 as the US economy shuttered in response to the Covid-19 pandemic, more than 20mn st/yr of blast furnace steel production went idle in response and EAF steelmakers operated at reduced rates. The idled furnaces took many months to restart, leading to record high flat hot rolled coil (HRC) spot prices in 2021 that hit $1,970/st.

The Argus US HRC Midwest and southern ex-works assessments were at $760/st on 22 August.


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21/02/25

Republicans target US energy rules for disapproval

Republicans target US energy rules for disapproval

Washington, 21 February (Argus) — Republican leaders in the US House of Representatives hope to disapprove at least seven energy-related measures issued under former president Joe Biden using a filibuster-proof process created under the Congressional Review Act. House majority leader Steve Scalise (R-Louisiana) on Thursday released a list of 10 rules that his party has prioritized as "potential targets" for disapproval votes, which require only a simple majority to pass in each chamber. Republicans previously used the law in 2017 to successfully unwind more than a dozen rules, and they hope to do so again to repeal Biden-era rules they say will unnecessarily raise costs on businesses and consumers. A US Environmental Protection Agency (EPA) regulation that implements a $900/t charge on oil and gas sector methane leaks is among the rules that Republicans want to disapprove. If those implementing rules are scrapped, it would provide a temporary reprieve from a 31 August deadline for operators having to pay billions of dollars in potential fees on methane emitted in 2024. Republicans hope to vote later this year to permanently end the methane charge, which was created by the Inflation Reduction Act. House Republicans also hope to disapprove an offshore oil and gas safety rule for drilling in deepwater "high pressure, high temperature" environments that Scalise's office says will increase "burdens on energy operations". Other rules that Republicans will target for disapproval are energy conservation for gas water heaters, energy efficiency labeling standards and air pollution restrictions on rubber tire manufactures. Two of the energy measures House Republicans say they plan to target might not qualify for disapproval under the Congressional Review Act, which can only be used on a "rule". The first is a waiver that would allow California to boost in-state sales of electric vehicles and plug-in hybrids, and that President Donald Trump's administration has tried to make eligible for repeal. The second is the US Commodity Futures Trading Commission's decision to release voluntary guidance for exchanges that allow trading of carbon offset futures. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Global HRC quota could be workable: Eurofer


21/02/25
News
21/02/25

Global HRC quota could be workable: Eurofer

London, 21 February (Argus) — A global hot-rolled coil (HRC) quota managed on a monthly basis could be a viable measure adopted by the EU steel safeguard review, according to steel association Eurofer. The idea of a global quota was proposed to the European Commission by Hyundai Steel and the Korean Iron and Steel Association, according to documents obtained by Argus . In a 13 January submission to the commission Hyundai Steel said a global quota allocated monthly would "help ensure smoother trade flows and better supply chain management, preventing distortions that could arise from uneven utilisation of the quota". The fact some countries quickly exhaust their 15pc of the other countries quota risks a "sudden influx" that can flood the EU market, Hyundai said. South Korean mills have their own quota, which typically only fills or goes critical towards the end of the quota period; it went critical earlier in this quarter, however, going critical in the second half of February. The Korean Iron and Steel institute echoed the views of its member Hyundai, suggesting there should be monthly restrictions or increasing tariffs on volumes above the quota level. In a submission to the commission earlier this month, Eurofer said this solution could be workable and prevent "gaming" of the system if accompanied by a first in-first out duty regime — meaning no pro-rata of duties on the first days of a quota — and if its earlier adjustments were adopted. In a 10 January submission Eurofer requested that the flat steel quota should be cut by 50pc to better align quotas with current demand, and that if this was not possible other measures could be taken to reduce import penetration. These measures included the introduction of individual quotas for China and a melt-and-pour rule that means any steel produced using Chinese substrate could come under this quota; this would have most impact on cold-rolled and hot-dip galvanised coil imports produced using Chinese HRC. Eurofer also asked for an increase in the 25pc duty where quotas have been filled; the introduction of first-in first-out, meaning all material pays the fully duty where quotas have been filled; the expansion of 15pc caps to other residual quotas, and the reduction of the HRC residual quota cap to 7.5pc. It also said there should be no carryover of leftover quota between quarters, that more country-specific quotas should be introduced, with a corresponding reduction in residual quotas, and that liberalisation of the quota should be removed. While Eurofer and some importers seem to see eye-to-eye on the idea of a global quota, it is likely that they hold varying views on how much tonnage should be included duty-free. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Mexico central bank slashes '25 GDP outlook on tariffs


20/02/25
News
20/02/25

Mexico central bank slashes '25 GDP outlook on tariffs

Mexico City, 20 February (Argus) — Mexico's central bank slashed the country's growth outlook for 2025 by half, citing potential US tariffs. The central bank cut its forecast for gross domestic product (GDP) growth to 0.6pc for the year, from a prior 1.2pc estimate. Growth was 1.5pc in 2024. In making the revision, the central bank said the weaker growth outlook is due to "high uncertainty" over potential US tariffs and other measures taken by the new US administration. The threat of tariffs alone will impact investment and consumption in Mexico this year, the bank added in its quarterly inflation presentation Wednesday, with the uncertainty potentially extending into upcoming discussions over the USMCA free trade agreement. The central bank provided a range of between -0.2pc and 1.4pc for 2025 growth, while 2026 growth should fall within a range of 1pc and 2.6pc. The central bank updated its inflation outlook, with Mexico's year-end annual consumer price index (CPI)estimated at 4.5pc, slower than its previous 4.7pc estimate. However, the bank said more time is needed to bring CPI down to its goal of 3pc, projecting this will occur in the fourth quarter of 2026, a year after its previous estimate. CPI eased to an annual 3.59pc in January, the lowest in four years, as deceleration in agriculture prices offset faster inflation in energy, consumer goods and services. In a 6 February decision, the central bank accelerated its current rate easing cycle, cutting its target rate by a half point to 9.5pc. It said the board is considering cuts of similar magnitudes in coming months, with the next meeting set for 27 March. Board governors addressed the potential inflationary impact that could occur with the enactment of major US tariffs on Mexico, arguing the flexibility of the Mexican peso-US dollar exchange rate should help absorb some tariff impacts. "Conceptually there would be no reason to rule out a scenario where tariffs materialize and at the same time the central bank could cut the target rate by 50 more [basis] points," said deputy governor Gabriel Cuadra, who joined the board earlier this month. Cuadra added the Mexican economy has proven resilient to complex challenges, adding the bank is ready to confront any eventuality with the trade dispute, citing solid foreign reserves and multiple tools for confronting inflationary spikes. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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EU CBAM to halve S African aluminium export value


20/02/25
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20/02/25

EU CBAM to halve S African aluminium export value

Cape Town, 20 February (Argus) — South Africa's aluminium exports could lose more than half their value to levies under the EU's Carbon Border Adjustment Mechanism (CBAM), according to manufacturer Hulamin. South African products exported to the EU are assumed to have embedded greenhouse gas (GHG) emissions of around 18t CO2 equivalent (CO2e)/t on average, Hulamin environmental sustainability head Hendrik de Villiers said. Hulamin is Africa's largest aluminium manufacturer, with a capacity of 200,000 t/yr. The exact CBAM levy is not known yet, but a rate of €80/t CO2e would translate into €1,440/t for unprocessed South African aluminium, De Villiers noted. Assuming an LME aluminium price of €2,500/t, CBAM could absorb well over 50pc of the value of unprocessed South African product by 2034, he said, adding: "This is, of course, the worst-case scenario, where no mitigating actions are taken." De Villiers was speaking during a webinar hosted by the EU Chamber of Commerce and Industry in Southern Africa and the European Delegation to South Africa. CBAM's transition phase — during which EU importers must provide greenhouse gas (GHG) emissions data to the EU — ends on 31 December 2025. From 1 January 2026, EU importers will have to surrender CBAM certificates for emissions embedded in their products. By 2034, it is assumed CBAM will be levied on Scope 1 and Scope 2 emissions. Scope 1 emissions are direct GHG emissions from a company's operations, while Scope 2 are from the generation of a firm's purchased electricity. In 2023, South Africa's CBAM-affected exports to the EU had a total value of €1.1bn, or 5pc of the total value of the country's exports, according to the European Commission's directorate of taxation and customs. "CBAM will have an important impact on South Africa, because around 4pc of the country's global exports are iron and steel and around 1pc is aluminium," the directorate's CBAM unit head, Vicente Hurtado Roa, said. The EU also receives some 35pc of South Africa's aluminium exports, he said. The European Commission's own figures show South African exports of CBAM goods to the EU running at 1.09mn t/yr — with 900,000t of this iron and steel, and the rest aluminium. De Villiers outlined measures that could help mitigate CBAM costs. Manufacturers could cut their energy intensity through efficiency improvements, for example. Scope 2 emissions can be reduced by integrating renewables and other low-carbon generation sources into the aluminium supply chain. "However, this cannot be done independent from the national grid," De Villiers pointed out. De Villiers also suggested that the South African government should use the country's carbon tax to offset CBAM and retain tax revenues locally. Since CBAM takes into account carbon taxes paid in the country of origin, the government should tax emissions and use the revenue to support decarbonisation of domestic industry, especially energy-intensive users that benefit the economy but are at risk from the high grid emission factor. Around 80pc of South Africa's electricity is coal-fired and the country is the 15th largest GHG emitter, according to the World Resources Institute. This means the inclusion of Scope 2 emissions in CBAM is South African energy-intensive manufacturers' "biggest concern", De Villiers said. South Africa's carbon tax was phased in from June 2019 at 120 rand/t CO2e ($7/t CO2e), and had increased to R134/t CO2e by the end of 2022. The Treasury is targeting $30/t CO2e by 2030. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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EU HRC futures jump on likely safeguard tightening


20/02/25
News
20/02/25

EU HRC futures jump on likely safeguard tightening

London, 20 February (Argus) — European hot-rolled coil (HRC) futures and equities rallied this morning, in expectation of a tightened steel safeguard. The European Commission is due to inform the WTO next week of the results of its functional safeguard review, and some buyers believe mills are anticipating a strong cut in imports, given their toughened pricing stance. The market leader has informed buyers it will be seeking €680/t in the coming days, potentially moving to €700/t in the next week or two. Other mills have also pulled their offers in expectation of stronger pricing. Trade was brisk on the CME Group's north EU HRC contract this morning, with increased buying interest on the comparatively flat curve. Two March-April spreads traded at -€10/t, with the outright prices at €625-635/t, while a 5,000t April trade concluded at €643/t, up by €8/t on yesterday's settlement. May nudged up by €5/t to €645/t, for 2,000t, before trading a minute later at €648/t, again for 2,000t. On screen, March and April both rose by €10/t to €635/t and €645/, respectively. Some mill equities also rallied, with ThyssenKrupp rising by over 3pc as of 11:25 GMT and Salzgitter rising by almost 4.5pc by 11:23 GMT. EU HRC futures appear to have shrugged off the initial malaise following the news of new US import tariffs , with volume also rising today; almost 19,000t had traded by 11:24 GMT, the highest daily volume since 4 December. The likelihood of a tighter safeguard, and the fresh increases sought by mills, bolstered the curve, which had been constrained somewhat by active selling from traders hedging their physical inventories, sources said. Service centres of late have noted an increased number of domestic offers from traders, which bought material — normally from service centres — in the weak fourth-quarter market. Some of that inventory has been offered at a fixed price recently, with deals concluded around €570-580/t ex-stock, while some has been offered at a discount to Argus ' north EU HRC index, the underlying settlement basis for the CME contract. Physical HRC prices have increased quite sharply in the past five weeks, largely driven by a reduction in import volumes, despite underlying demand remaining weak. Argus ' north EU HRC index jumped by €52.50/t from €558.25/t on 6 January to €610.75/t on 19 February, while the daily Italian index rose by €40.50/t from €566.75/t to €607.25/t, over the same period. Margins for north EU HRC producers have increased by €49.44/t over the same period to over €122/t, their highest level since 10 September last year. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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