Automakers seek €200/t price cut from EU coil mills

Spanish Market: Metals
18/10/24

Buyers in the automotive supply chain are seeking price cuts of €200/t from EU mills for 2025 annual deals.

The gap between the annual 2024 contracts and current spot market levels has reached an unsustainably large delta, automotive-facing service centres told Argus. Some automakers are paying as much as €250/t more than general industrial buyers, a figure that they want to reduce dramatically. Argus' daily northwest EU HRC index was €551.50/t on 17 October, down by €198/t since early February, while the daily Italian index was €545.50/t, down by €208.50/t.

Some service centres said automakers may even push for shorter-term deals as a result, but they often reduce their volume offtake and postpone deliveries when required, which some call a built-in 'call option' — a call-option gives buyers the ability to purchase if the market reaches what they view as an agreeable price. Automakers at present are delaying call-offs, which has exacerbated the supply and demand imbalance for steelmakers looking to churn out high volumes to secure carbon credit allowances for next year.

One service centre said it is budgeting for a €100/t drop as mills are trying to maintain rollovers, with little support from the market environment. One large buyer called the recent increases in EU a "dead cat bounce", with little support from demand. Mills might manage to stem the declines to about €75/t, another said, which would still leave automotive deals at a hefty premium to spot market levels. One mill executive called the automotive demands "impossible", suggesting momentum would strengthen in the coming weeks as buyers look to procure first-quarter supply. A reduction in import volumes, existing anti-dumping investigations and other potential cases could contribute to this, alongside an expected cut in EU supply in the new year.

Some automakers last year pushed to move to index-linked deals that would enable them to hedge their coil exposure on CME Group's north European hot-rolled coil contract. Automakers have been hedging their aluminium exposure for years and want to do the same for steel. If mills deem the market to be at its low, indexed deals could be a more attractive proposition this year.

By Colin Richardson

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11/12/24

US inflation rises to 2.7pc in November

Houston, 11 December (Argus) — Headline US inflation ticked higher in November, largely on food and shelter costs, suggesting the Federal Reserve still has work to do to reach its inflation target. The consumer price index rose by an annual 2.7pc in November after rising by 2.6pc through October, the Labor Department said. The gain matched expectations in a survey of economists by Trading Economics. So-called core inflation, which strips out more volatile food and energy, rose by 3.3pc, matching the prior month's gains. Services less energy services rose by 4.6pc following a 4.8pc increase the prior period. Today's report is the last consumer price index (CPI) reading before Federal Reserve policymakers meet next week to assess progress in bringing down inflation to their 2pc long term goal and release economic projections. The CME FedWatch tool today gave a 96pc probability the Federal Reserve will cut its target rate by a quarter point at its last meeting of the year, up from nearly 89pc Tuesday. The Fed began cutting its target rate in September after holding it at a 23-year high for more than a year. The energy index contracted by 3.2pc for the 12 months ending in November after falling by 4.9pc through October. Gasoline fell by 8.1pc and the fuel oil index declined by 19.5pc. The food index rose by 2.4pc over the past year, following a 2.1pc gain through the prior month. Transportation services rose by 7.1pc. Shelter slowed to 4.7pc from 4.9pc The CPI rose by 0.3 in November from the prior month, after rising by 0.2pc in each of the prior four months. The shelter index rose by 0.3pc for the month, accounting for nearly 40pc of the total monthly gain in the headline index, Labor said. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Assad regime end to alter Mena steel trade flow

10/12/24

Assad regime end to alter Mena steel trade flow

London, 10 December (Argus) — The ousting of Syrian president Bashar al-Assad is likely to open up export opportunities for Turkish steelmakers, but this hinges on the political stabilisation of the country. The fall of the al-Assad regime came after opposition forces led by militant group Hayat Tahrir Al-Sham (HTS) launched a sudden military offensive in late November, seizing some of the country's biggest cities over the past week. A former al-Qaeda affiliate, HTS is thought to maintain close ties with Turkey, along with the Syrian National Army (SNA), while the outgoing Assad regime was a close ally of Iran and Russia. Iran not only sold rebar and wire-rod products on occasion to Syria, but also used the country as a transit route for its business into Lebanon and Turkey. With the toppling of the al-Assad regime, steel trade from Iran to Syria has been halted as sellers wait for further developments. Turkish steel mills are expected to benefit from the regime overthrow, and to fill the potential gap left by Iran, market participants said. In a response to this, various construction and iron and steel companies listed on the Istanbul stock exchange appreciated significantly when the markets opened on Monday morning. Rebuilding efforts are likely to present sales opportunities for Turkish longs producers, located in the southern Iskenderun region of the country, market participants said. Turkey exported 17,900t of rebar to Syria in October, an annual increase of 80pc. Industry sources noted the considerable potential for Turkish suppliers to ramp up sales, depending on the developments in Syria. In addition to the political instability, airstrikes were carried by Israel on military assets in Syria in the past couple of days. Market sources expressed a consensus that the rise in stock prices since 9 December in Turkey is speculative. Domestic rebar prices in the Iskenderun region in southern Turkey picked up today and could pick up across the country tomorrow. The Syrian regime change was cited as a smaller factor, alongside the signs of a recovery in global steel prices owing to favourable policies signalled by the Chinese government. Turkish domestic rebar buyers have delayed restocking this winter until signs of a price recovery emerged. "People need to see finance first for construction, the country has no cash so if some other country covers the finance, then demand might increase," one market participant said. HTS is currently designated as a terrorist organisation by the US and various European countries. At the time of writing the UK is reviewing its prescription of HTS as a terrorist group. By Carlo Da Cas and Brendan Kjellberg-Motton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Moselle river crash to have limited impact on AM

10/12/24

Moselle river crash to have limited impact on AM

London, 10 December (Argus) — A collision at a lock gate in the river Moselle near the German-Luxembourg border will have a limited impact on nearby steelmaker ArcelorMittal, the company said, despite ship transportation likely to be disrupted for months. On Sunday 8 December, a vessel carrying 1,500t of scrap metal en route to Mertert, Luxembourg, collided with and broke the lock gate at Muden, southwest Germany. The accident has resulted in the halting of continuous shipping traffic on the Moselle, the German Waterways and shipping Authority (WSA) said. ArcelorMittal said the accident should have a limited impact on its Luxembourg business, and is currently working on alternative short-and-medium term transport solutions to offset disruptions caused to incoming and outgoing flows. "To date, only 10pc of scrap supplies to ArcelorMittal's electric furnaces in Luxembourg and 10pc of shipments pass through the port of Mertert," the steelmaker said. Work is already under way by the authorities to mend the broken lock, but it is estimated repairs will not be completed until March 2025. Under WSA estimates around 70 vessels are stuck in that area of the Moselle up to the French border, no longer able to leave the Moselle valley towards the Rhine. Authorities also said they are looking at ways to release the trapped ships so they can leave the river in the direction of the Rhine. A meeting is scheduled for Wednesday to discuss whether this could be done, the WSA added. Gummed vessels and halted shipping transportation along the Moselle will probably have some impact on scrap metal transport logistics in the region, market participants told Argus . The Moselle is a main waterway to Luxembourg with metal transported via barges. Large scrap metal recycler Theo Steil operates one of its larger yards in Trier, a town in southwestern Germany, which the Moselle runs through. By Corey Aunger Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US House panel approves river infrastructure bill

06/12/24

US House panel approves river infrastructure bill

Houston, 6 December (Argus) — A US House of Representatives committee has approved a bipartisan bill that authorizes improvements to navigation channels by the Army Corps of Engineers (Corps) and maintenance and dredging of river and port infrastructure projects. The House Transportation and Infrastructure Committee advanced the Water Resources Development Act (WRDA) after several months of political wrangling to integrate earlier versions of the legislation approved by the House and Senate . The bill will head to the full House next week, said committee chairman Sam Graves (R-Missouri). This would be the sixth consecutive bipartisan WRDA bill since 2014 if passed by congress. WRDA is a biennial bill that authorizes the Corps to continue working on projects to improve waterways, including port updates, flood protection and supply chain management. WRDA will also "reduce cumbersome red tape", which will allow for quicker project turnarounds, Graves said. The bill authorizes processes to streamline work, he said. The bill also adjusts the primary cost-sharing mechanism for funding for lock and dam construction and major rehabilitation projects. The US Treasury Department's general fund will pay 75pc of costs, up from 65pc, with the rest coming from the Inland Waterways Trust Fund, which is funded by a barge diesel fuel tax. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Tight supply fuels Indian interest in wire rod imports

06/12/24

Tight supply fuels Indian interest in wire rod imports

Mumbai, 6 December (Argus) — Interest in steel wire rod imports is increasing in India owing to limited domestic availability, delivery snags and high prices set by primary producers, according to industry sources. Unspecified quantities of Chinese low-carbon wire rod were booked for $515-520/t cfr Mumbai, excluding value-added tax, in the past few weeks, sources in both China and India told Argus . High-carbon wire rod was also heard to have been purchased from China recently, although this could not be confirmed. The booking follows reduced supply from state-controlled long products manufacturer Rashtriya Ispat Nigam (RINL), according to a Mumbai-based long products trading firm. RINL at present is grappling with financial difficulties and raw material shortages, which has taken a toll on its production. Many participants have questioned this purchase, as no Chinese mill has a Bureau of Indian Standards (BIS) certificate required for exporting wire rod to India. Non-BIS material can be cleared by customs only if the material is used to manufacture goods that will be exported. The booking has been made under the advance licence scheme, which allows for such non-BIS imports, a source said. But there are only a handful of wire manufacturers that export their product and can use imported wire rods, according to market participants. At a trade fair in Mumbai last month, wire manufacturers said they were increasingly seeking alternatives to domestic primary wire rod as high input costs were squeezing their margins. High-carbon wire rod was priced at 57,000-58,000 rupees/t ($672-684/t) by major domestic producers on a delivered basis in western India, sources said. Chinese offers stood at $570-580/t cfr India for high-carbon wire rod a few weeks ago, but have now fallen to $560/t cfr, a trading source said. Wire manufacturers focused on domestic sales were turning to secondary wire rod, which was nearly 20pc cheaper than primary material, according to a participant at the Mumbai trade fair. But trading companies and consumers pointed to availability as the bigger issue, with only a few major primary producers dominating the wire rod market. Securing a regular and timely supply of wire rod from primary mills has become a major challenge, causing supply chain disruptions for end-users, they said. "The price is one factor, but availability is also a key issue. Mills are unreliable when it comes to allocation and delivery of the material," a wire manufacturer said. "This has always been the case but not to the extent seen recently. Now supply concerns have become worse because of RINL's issues." RINL's finished steel output fell by 26pc on the year to 1.6mn t from April-October, according to provisional data from the steel ministry's joint plant committee. Another wire manufacturer said it had not imported wire rod for more than a year, but was now open to cheaper imports to protect its margins. For some finished products, such as automobile parts, it is essential to use wire rod from primary producers but imported or secondary material could be used to manufacture some other products, a manufacturing firm executive said. Long products amount to only a small portion of India's overall steel imports, which are dominated by hot-rolled coil and other flat products. From April-October this year, India imported about 49,300t of wire rod — including alloy, non-alloy and stainless steel products — an increase of more than 30pc on the year, according to data from the steel ministry's Joint Plant Committee. This made up less than 1pc of India's overall finished steel imports during the seven months. By Amruta Khandekar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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