1. Slow growth in China

Slow growth in China continued to spook market participants. Those who have recently returned from trips there shared anecdotes and photographs on social media of blue skies and a lack of cranes and active construction sites, while remaining acutely aware of the importance of the world’s second-largest economy. Find out more about this evolving market at Fastmarkets Ferroalloys Asian Conference 2024. Learn more.

“China gives the direction; it’s the captain,” one ferro-chrome market participant told Fastmarkets on the sidelines of the conference.

2. High electricity prices

Even though electricity prices have come down, they were still extremely high historically and at the forefront of people’s minds, making up a huge portion of input costs. This made sellers reluctant to reduce prices despite subdued demand, leading to suggestions of production cuts in various markets.

3. Potential growth in India

There was a lot of potential for growth in India’s domestic market, but we should not expect it to be the ‘next China.’

“[The economy of] India needs to grow by 10% to offset China dropping by 1%, to keep global steel production stable,” Kevin Fowkes, research director at global consultant Wood MacKenzie, told delegates while speaking on the manganese ore and alloy panel on Monday afternoon.

4. Global uncertainty

Delegates were still wading through exceptionally high levels of uncertainty in geopolitics and macro-economics, with high interest rates and inflation forcing them to rethink trading strategies.

Legislative changes in Europe, in the form of the Carbon Border Adjustment Mechanism (CBAM), added another layer of complexity, with few people understanding what it meant for them, and how and even whether it will work.

“The reporting periods are coming soon, and the [levels of reported emissions] are going to be horrendous,” one financial source told Fastmarkets on the sidelines.

5. Mine depletion

Mine depletion remained a long-term concern, with the manganese content of ore from various origins expected to reduce over the next few years.

Fastmarkets heard that these declining grades could mean “higher costs and a greater environmental burden,” Jack Bedder, founder of data provider Project Blue, told delegates from the manganese panel. But, if it were economical, the sintering of fines could be an alternative method to upgrade lower-content ores, industry sources said.

6. Decarbonization

Decarbonization by 2050 would not be achieved without offsets and there were significant trade-offs, such as balancing the need for greener reductants against wider environmental degradation.

One example of this would be making sure that the replacement of coke with green alternatives, such as acacia and bamboo chips, did not lead to deforestation.

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With no clear indications of a rebound in downstream steel prices in the domestic Chinese market, what is keeping hot metal output supported in China?

Mill margins crimped by weak steel prices

Weak demand for steel products in the domestic Chinese market weighed on steel prices in October following a brief seasonal rally for steel cargoes in September

A trader based in Shanghai told Fastmarkets that they have yet to receive pre-orders for steel cargoes to be delivered ahead of the year-end holidays, reflecting an anticipated dip in consumption toward the end of 2023.

Consumption of construction-related steel traditionally dips further after October, in line with a slowdown in outdoor construction works during the winter season.

Fastmarkets’ steel reinforcing bar (rebar) domestic ex-whs Eastern China index averaged at 3,662.65 yuan ($500) per tonne on the midpoint in October, 32.60 yuan per tonne (or 0.88%) lower than in the previous month.

The October average is also 140.79 yuan per tonne (or 3.7%) lower year on year.

“The suspension of projects across China due to financing issues faced by Chinese property developers has resulted in poor steel demand,” a Beijing-based trader said. “Mills that are unable to switch production to products with stronger margins like flat steel are suffering significant losses.”

A slowdown in consumption was also noted in non-construction-related steel products in October.

Manufacturing activity in China shrank in October against market expectations, with the Caixin manufacturing purchasing managers’ index (PMI) falling to 49.5 from 50.6 in September, according to a trader in Singapore.

Data released by China’s National Bureau of Statistics on October 31 also reflected a contraction in factory activity at 49.5, falling from 50.2 in September.

“Overall orders for materials during the Golden Week this year was significantly lower compared with previous years from consumers and most mills were forced to slash prices to keep inventory moving,” a second Shanghai-based trader said.

Fastmarkets’ steel hot-rolled coil domestic ex-whs Eastern China index averaged at 3,762.65 yuan per tonne at the midpoint in October, 113.85 yuan (or 2.94%) lower than in September.

The October average is also 57.67 yuan per tonne (or 1.5%) lower than in the same month last year.

Burgeoning raw material costs suffocate steelmakers

Lower iron ore shipment volumes from Australia in the third quarter have kept iron ore prices supported amid restocking efforts by Chinese mills before and after the extended National Day holidays

Iron ore port stocks in China slipped below the 100 million tonne mark in the third quarter for the first time since September 2020.

Fastmarkets’ iron ore 62% Fe index fines CFR Qingdao index averaged at $118.91 per tonne in October, a 1.52% decrease from the previous month.

The dip in October prices was relatively small following a firm rally in September.

Fastmarkets’ iron ore 62% Fe index fines CFR Qingdao index averaged at $120.74 per tonne in September, a 10.74% increase from the previous month.

A trader based in Shandong told Fastmarkets that active trading in the domestic portside market by Chinese mills kept prices supported throughout September and October, incentivizing further seaborne trades.

Steelmakers similarly had to grapple with the high cost of coke amid tight supplies.

Fastmarkets’ hard coking coal domestic China spot market, Shanxi-origin, delivered Tangshan index averaged at 2,368.13 yuan per tonne at the midpoint in October, 161.88 yuan per tonne (or 7.34%) higher than the previous month.

October average prices were also the highest since March 2023.

A mine accident in Guizhou province triggered a series of operational suspensions across various mines in the region, resulting in supply tightness in southeast China.

Stricter safety inspections at iron ore and coal mines across China following the accident are expected to result in tighter domestic metallurgical coal supply, according to a Shanghai-based analyst.

A trader based in Hebei said that steelmakers are seeing their profit margins squeezed on both ends, with steel prices continuing to slip further and high operating and procurement costs.

A steelmaker’s dilemma

Despite facing widening losses in steelmaking, most steelmakers in China have not made significant efforts to scale back production.

“Steelmakers are stuck in a vicious trap where they stand to lose out more if they cut existing production,” a second Singapore trader said. “It makes more economical sense in both the medium and long term for mills to continue production than to scale back their output to recoup their losses.”

Fastmarkets presents the three key factors incentivizing steelmakers to maintain production levels:

1. Production volumes in 2024

Production limits on steelmaking are often implemented based on a mill’s total production in the previous year, according to a trader based in Hong Kong.

There is little incentive for Chinese mills to post a significantly lower crude steel output for 2023 in the absence of production guidance from domestic authorities because this could cap their total possible production in 2024, the same trader added.

“It does not make sense for a mill to voluntarily cut production in a climate where its competitor is showing no signs of cutting,” a third trader in Shanghai told Fastmarkets. “As long as mills are able to maintain a positive cash flow through steel sales, they will continue to produce at current rates despite negative margins.”

Government-imposed production cuts are often viewed as lifelines for the smaller, less productive private mills in China, according to a third trader in Singapore.

The absence of clear production restrictions opens up a vacuum for market forces to come into play, creating a ‘survival of the fittest’ condition whereby less efficient mills are forced into bankruptcy, nudging the industry further toward consolidation, the trader added.

The trader also speculated that part of the premise behind the government’s passive approach toward steel production controls in 2023 could also be to support further mergers and acquisitions to take place to centralize China’s existing steelmaking capacity.

2. Low steel inventory supports production

Steelmakers are incentivized to maintain existing production rates with steel inventory remaining at relatively low levels.

Domestic rebar inventory slid for a fifth week in a row, to 8.7 million tonnes in the trading week ended on November 3, despite higher rebar production, according to a second trader based in Hebei.

The trader added that domestic HRC inventory has also dipped steadily over October, in line with stronger demand from both domestic and export markets.

Tight steel inventories motivate mills to maintain existing production capacity to capitalize on any upswings in steel prices triggered by an uptick in demand, according to a trader in Ningbo.

3. Robust steel exports spur production

Strong trading volumes in the Chinese steel export market have kept steel consumption relatively supported in 2023, resulting in a consistent drawdown of excess steel inventory, especially in the second half, according to a trader based in Xiamen.

China exported 8 million tonnes of steel in September, which is 3 million tonnes higher than in the same period in the previous year, according to data released by CISA.

Average export prices in September were, however, down by 41.8% year on year, at $814.20 per tonne.

Year-to-date steel exports from China totaled 66.8 million tonnes, up by 31.8% from the previous year.

A fourth trader in Singapore told Fastmarkets that steady demand for steel products from overseas markets motivates steel mills to continue production despite weak margins.

The trader added that while export prices are mostly compressed due to stiff competition from regional exporters and weak demand from major buyers, mills can still attain a steady flow of income from its exported products.

“Some steelmakers feel that as long as they can maintain existing blast furnace utilization rates while waiting for raw material costs to soften, they will be able to recoup their losses very quickly,” a fourth trader in Singapore said. “But only time will tell if this strategy will reap profits.”

Navigate the complex steel markets with our reliable and market-reflective steel price data and transparent pricing methodology.

The post Three reasons why Chinese steelmakers are trapped in a prisoner’s dilemma appeared first on Fastmarkets.

The discussions would include discouraging trade in high-carbon steel and aluminum that contributes to global excess capacity from other countries and ensure that domestic policies support lowering the carbon intensity of these industries.

The US suspended import tariffs on EU steel and aluminium imposed by then-President Donald Trump in 2018, on the condition that the pair agree by the end of October on measures to address overcapacity in non-market economies, such as China, and promote more environmentally friendly steel production.

“The effective collapse of the talks was surprising,” Dr. Todd Tucker, a director of industrial policy and trade at the Roosevelt Institute, told Fastmarkets on Monday October 23.

Tucker noted that the US had moved steadily towards the EU’s position over the course of the two years of negotiations, pointing to reports that the US had revised its proposal that would complement, and not replace, Europe’s carbon border tariff system, the Carbon Border Adjustment Mechanism (CBAM).

“Given the political mandate, policy feasibility and EU accommodations, a deal could have certainly been landed,” Tucker said.

Lewis Leibowitz, an international trade law attorney, told Fastmarkets, “I think both sides wanted to resolve their differences and failed to do so. Each side has its own reasons—but the inability of the US and EU to compromise on their differences in the middle of global crises is an unfortunate message.”

Negotiations targeting carbon intensity of imported steel can be challenging, sources said, with some noting that the negotiations will likely be stalled for at least the next two years.

“The US and EU are much more closely aligned at their core than the rhetoric would indicate. They both want to ensure that their economies can thrive under climate-safe trade policies like GASSA, but the reality is the details are quite challenging to get right and policymakers taking more time to get it right is a good sign,” Margaret Hansbrough, a campaign lead at SteelWatch, told Fastmarkets on Monday.

Hansbrough highlighted the importance that the pair collaborate on trade policies like these that “send demand signals for green steel” and pave the way for other countries to “benefit from trade if they are also decarbonizing their heavy industry in an aggressive enough manner.”

Tariff rate quota system needs to stay in place

A vital element of the negotiations between the EU and the US is the tariff rate quota system, under which, historically-based volumes of EU steel products can enter the US market without the imposition of a 25% tariff on EU steel products under Section 232.

“It is important to the domestic steel industry that the tariff rate quota (TRQ) system implemented in 2021 remains in place [while] negotiations continue,” Philip Bell, president of the Steel Manufacturers Association said in a release on Friday October 20.

The TRQ system is a necessary measure and needs to stay in place to combat excess capacity, source familiar with the matter told Fastmarkets on Monday.

“There’s a fear that the EU will ship products into the US far above historical norms,” the source said.

Hansbrough added, “The TRQ can indirectly have a benefit for the climate, but its needs to be coupled with strong progress on green primary steel production in the US.”

Now that both parties have decided to continue negotiations through the end of the year, the following steps in the GASSA negotiations between the pair over the next two months are uncertain.

Path forward is ‘unclear’

“It is unclear what the path forward is. The EU has been demanding deeper coordination with the US across a range of green transition questions. A deal around green steel would have been a down payment on further cooperation,” Tucker said. “That they were not able to land it on a ‘low-hanging fruit’ industry makes it less likely they will do so for industries that involve more complicated questions.”

Hansbrough added, “Product- and facility-level environmental product declarations (EPDs) are a good place to start. Steel emissions intensity targets for both primary and secondary steel would be wise too, to ensure both types of production are making progress needed and to make sure primary steel production cannot hide behind industry averages that benefit from a natural increase in scrap-based steel over time.”

The source familiar with the matter said that while there are strong incentives for both parties to reach some agreement by end of year, he expects the agreement to be a partial one and relating mostly to the TRQ system.

“Whatever agreement we see at the end of the year is going to be limited and not going to include the carbon piece,” the source said.

To keep up with the green steel discussion and to follow the critical developments in green steel pricing and low carbon steel production, visit our Green Steel Spotlight page. 

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The company’s microreactors could also expand mining opportunities to more new locations. “It can make thousands of potential mines economic and come online, whereas before, they weren’t economic enough to be commissioned,” Walker said.

While licensing by the Nuclear Regulatory Commission is expected to come in 2030, the company is already “in discussions with a major mining company that wants to install reactors to decarbonize their operation,” the CEO said.

NANO expects to begin the feasibility analysis for a mining installation for the unnamed mining company next year.

Once the analysis is completed, NANO will conduct demonstration projects that “mimic power mining grids” in 2025 and 2026, Walker said.

Portability

NANO was founded in 2021 to design and deploy modular nuclear reactors that are portable, with the goal of leasing them to remote mining operators, according to Jay Jiang Yu, chairman and president of NANO.

To compete against diesel fuel, NANO set out to design microreactors that were “easy to produce, transport, maintain and keep safe,” Yu told Fastmarkets.

NANO also focused on reliability and ease of operations. “With microreactors, you can put it down and, apart from some maintenance work, you don’t need to refuel it for ten years,” Yu said.

NANO has identified potential locations that are likely mining locations for operating its microreactors.

Northern Canada, for example, could be a perfect match for NANO, according to Walker. “It is actually not very well connected to infrastructure, so all of the mines run on diesel. You can replace all of those systems with portable modular reactors.”

Remote locations in Africa also offer attractive possibilities that “could unlock enormous mineral wealth,” Walker said.

“There are enormous tracts of land [in Africa] that are not connected to a national infrastructure grids or to any grids at all. And that means you’ve cut off enormous amounts of mineral resources from being exploited,” Walker said.

Target markets

Walker identified two additional early “prolific end user markets” for its microreactors: the maritime industry, to power shipping vessels, and electric vehicle (EV) charging stations.

Potential markets, however, need not be remote, Walker said, naming the steel industry as one potential target to provide with operational thermal power, as well as electric power.

“In the steel industry, obviously they need to generate quite a lot of heat [and] our own reactor actually generates enormous thermal power – enough so they could run their operations,” Walker said.

A steelmaker “could substitute out their fossil fuels for a microreactor for their operational needs, and chances are they will reduce their energy costs while operating with zero carbon emissions,” the CEO said.

Microreactors could also power remote habitations, military bases and disaster relief areas. “Microreactors could introduce the desalination of potable water and provide energy systems for hospitals in remote areas,” Walker said.

NANO had a meeting with national energy companies in Thailand earlier this year to discuss the potential of microreactors “to power a whole island” at a lower cost than diesel, Walker said.

Zeus and Odin

Pre-fabricated modules for a microreactor are designed to be built in a factory, with modules to be combined on site to generate power.

“They run all of those islands on diesel, but they’re looking to try to stop that as it is flimsy and expensive,” Walker said.

While stationary nuclear reactors have been built since the 1950s, and generate anywhere between 60-1,600 megawatts of electric power (MWe), SMRs are defined as those that generate 300 MWe or less, according to the International Atomic Energy Agency.

NANO has two microreactor designs – Zeus and Odin.

The size of a truck, Zeus was NANO’s first microreactor model. It has a fully solid core and can fit in a standard International Organization for Standardization’s (ISO) intermodal shipping container.

“Zeus is expected to output approximately 4 megawatts of thermal energy (MWt), converting it to approximately 1.5 MWe,” Walker told Fastmarkets.

The Zeus design requires minimal maintenance, since its heat is removed through thermal conduction and does not require coolant or pumps, according to Walker.

Odin is a much smaller microreactor, about 2 ft x 3 ft, and was introduced in February. It is expected to produce 5 MWt, and 1.5 MWe, the same output as the larger Zeus, Walker said.

Odin is designed to use conventional sintered pellet uranium dioxide (UO2) fuel, with up to 20% uranium-235 enrichment.

“Both of these designs are being optimized currently, with the expectation that both will produce higher thermal megawatt outputs,” Walker said.

Demonstration project

NANO expects to begin a demonstration project next year for its Zeus microreactor, “to provide information” for the licensing process.

The path to regulatory approval moved forward in April, when NANO signed a strategic partnership project agreement with Idaho National Laboratory to provide an expert design review panel of the Zeus microreactor.

NANO says it will use a reactivity control system design that minimizes the number of moving parts, uses natural convection of coolant for heat transfer, and will operate at higher-than-conventional water-cooled reactor temperatures.

The Idaho National Laboratory will conduct a technical review of the company’s reactor design, siting, fuel and decommission strategy.

A review will be organized to provide recommendations on the current design and outline a path for further design and collaborations between the laboratory and NANO, according to Yu.

Fuel fabrication

In August NANO filed a proposal for an integrated fuel fabrication facility to be built with the assistance of Idaho National Laboratory.

NANO’s subsidiary, HALEU Energy Fuel Inc., will work with Idaho National Laboratory to develop and manufacture high-assay low-enriched uranium (HALEU) for NANO’s microreactors, as well as for other SMR manufacturers.

Like other contenders in the SMR space, NANO will require enriched uranium to fabricate the fuel for its microreactors.

Earlier SMR demonstration efforts have been stymied by the lack of enriched uranium fuel cells to power the reactors, according to the Department of Energy.

The US has 93 operating nuclear reactors across 54 nuclear power plants, which generated 47% of US carbon-free electricity in 2022, according to the Department’s Office of Nuclear Energy.

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The Trend Indicator has rebounded into bullish territory, at 61.4 for November compared with a resolutely bearish 45.6 in October. This month’s indicator is at its highest since March’s outlook, when it was 65.2. The Outlook’s prediction model allows for an average month-on-month price increase of 5.1%.

Respondents to the Outlook survey were fairly evenly split on the trajectory that scrap prices may take in November. A slight majority – 42.11% – anticipate that prices will move higher month on month, with 40.35% expecting prices to trend sideways over the period. Just shy of a third of those surveyed – 31.58% –  attribute this expectation to increased demand for scrap. Meanwhile, 39.29% of respondents believe inventories will be unchanged in November, with a matching 39.29% seeing them lower.

Respondents still expect prime scrap grades to outperform their cut and shredded counterparts over the next three months. The tentative resolution of the United Auto Workers’ strike – culminating with the third of the Detroit “Big Three” automakers, General Motors, agreeing to terms on Monday October 30 – should loosen prime availability in the longer term.

Generation of those grades was dampened by a dearth of stamping activity amid the strike and will take time to recover, bolstering prospects for prime pricing next month. Recovering finished steel demand from automotive post-resolution is a further boon for scrap demand in the longer term.

Market participants see the potential for a minimum $20-per-gross-ton increase on prime grades in November. Two major US hot-rolled coil producers increased base prices to $900 per ton at the end of October, and this may stymie any potential drop in raw materials prices.

Demand drivers and steel market outlook

Demand for the coveted HRC feedstock is expected to increase over the period, with only four HRC mill outages slated for November compared with 11 in October, per Fastmarkets’ estimates. Higher pig iron prices, now assessed at $450 per tonne CFR Gulf for large tonnage, may also switch mills’ preference to prime scrap, which was assessed at $400 per ton in the benchmark Chicago market in October.

Export volumes booked by the United States’ biggest customer, Turkey, lag those of September by only two cargoes, with the region securing 10 US-origin cargoes despite lackluster rebar demand exacerbated by the Israel-Hamas war. Turkish mills are reportedly operating hand to mouth amid low supply, and they were forced to re-enter the US market at an increase in a cargo deal heard on Tuesday October 31.

Confidence in market direction has surged to 61% in November compared with 56% in October, suggesting that participants are increasingly aligned in their view that the market is showing strength.

Make sense of the US steel scrap market and track the critical indicators impacting steel scrap price movements in our latest outlook.

The post US Scrap Trends Outlook: November appeared first on Fastmarkets.

“As steel is a raw material that supplies several other industrial chains, these protectionist measures would affect the entire industrial [value] chain, which would have significant impacts on several sectors of the economy that employ many workers,” Abimaq executive president José Velloso told Fastmarkets on October 11.

Abimaq said the request for higher import tariffs was “contradictory” because some steel mills import semi-finished steel for their own subsequent rolling.

“From infrastructure to energy generation, rail transport, transportation of trucks, people, and buses, everything uses steel,” Velloso added.

The Brazilian steel association Aço Brasil requested that import duties on steel products be increased to 25% to curb an inflow of imported material and avoid plant closures. At the Brazilian Steel Conference in São Paulo in September, Gerdau and ArcelorMittal said that some factories are operating at lower capacity, and there would be some layoffs if the 25% import duty wasn’t adopted.

Steel import prices have been constantly falling in recent months, with Fastmarkets’ weekly price assessment for steel hot-rolled coil import, cfr main ports South America decreasing to $580-615 per tonne on October 13, down from $590-615 per tonne on September 15 and from $620-640 per tonne on August 4.

On October 1, following mills’ request for higher duties, the Brazilian government decided to increase import tariffs on 12 steel products to 9.0-14.4%, from 8.0-12.8%. However, the Brazilian chamber of construction industry CBIC said that the tariffs should be maintained at the previous level of 8-12.8% for at least the next three years, until December 2026.

According to CBIC, the duty increase could “greatly minimize” the positive socioeconomic impact of Brazilian governmental projects, such as housing finance program Minha Casa, Minha Vida (MCMV) and public investment plan Programa de Aceleração do Crescimento (PAC), or even make these programs unfeasible.

“A house from the MCMV program built with mesh made from wire rod will be more expensive, as will a bridge or dam that are part of the PAC and basically use rebar and concrete,” CBIC’s vice-president Dionyzio Klavdianos told Fastmarkets on October 11. “The price of Brazilian steel is based on the international price and the respective cost of clearing through customs,” he added.

“We can say, without fear of making mistakes, that the direct and indirect effects of price increases and loss of competitiveness will go in the opposite direction to the much-desired reindustrialization and improvement of infrastructure,” Abimaq’s president added.

Steel packaging

The Brazilian steel packaging association Abeaço does not support a tariff increase for steel used in packaging, but it is not against an increase for all 16 steel products because it understands that there is a large influx of steel coming from China, in general, that could harm the Brazilian industry, the association said.

“Abeaço is against increasing the import tax on steel for packaging [in particular] as there is no competition in the domestic market, and some types of steel for this application aren’t produced by the local industry,” the association said in a written statement to Fastmarkets on October 11. The packaging steel sector uses raw materials such as tinplate and chrome-plated sheets.

According to Abeaço, the tariff increase for this kind of product could “seriously affect” steel packaging factories. “Most of them are medium-sized and family-owned, being responsible for more than 20,000 direct jobs and more than thousands of other indirect jobs,” the association said.

Automakers’ stance

When asked by Fastmarkets at a press conference on October 6 about the potential steel import duty increase, Brazilian automotive association ANFAVEA did not directly oppose the request from Aço Brasil. Instead, ANFAVEA president Márcio de Lima Leite said that the automotive sector should participate in this debate.

“I have talked a lot [with Aço Brazil and the Brazilian government] about the need for ANFAVEA to participate in the debate and this decision,” he said.

ANFAVEA’s conciliatory position about the measure can be related to the fact that the Brazilian automotive association has its own battle against imports. Due to concerns about the number of imported vehicles in the country, ANFAVEA is proposing to the government the end of an import tax exemption for hybrid vehicles in Brazil and the adoption of a 35% duty.

Despite pursing its own claim, ANFAVEA highlighted that around 25% of the steel produced in the country is destined for the automotive industry. “So we want to work together to present solutions for the country that keep the [steel] sector competitive, while preventing a loss of competitiveness for the automobile industry,” de Lima Leite said.

Duty towards Mercosur

As a member of the Mercosur trade bloc, Brazil is subject to the Common External Tariff, which defines the import tax rate that can be applied to products according to their tax classification for bloc members like Argentina, Paraguay and Uruguay. However, not every rate change is subject to bloc acceptability.

Mercosur members are allowed to apply duties that are different from those agreed by the economic bloc for a limited number of products in a mechanism called List of Exceptions to the Common External Tariff (LETEC).

At the beginning of October, Aço Brasil made an official request to be included in the list of exceptions to the Mercosur tariff. The association asked for an increase in import duties to 25% for 16 steel products such as hot-rolled, cold-rolled, galvanized, aluminium-zinc coated (Galvalume) coil and rebar.

Daniela Lacerda Chaves, a lawyer specializing in customs law, import and export, from HLL & Pieri Advogados, said that for a product to be included in the Mercosur’s list of exceptions, the industry should demonstrate the expected economic impacts of the proposed rate change in terms of cost reduction, changes in competitiveness, production, employment, import and export conditions.

In addition, the industry must detail the current production scenario and competitiveness of the product with present-day protections, as well as the impact on the tariff structure to the product’s supply chain and the urgency and relevance of the proposed change.

“The request for a tariff increase here in Brazil must consider and highlight criteria of national relevance,” Lacerda Chaves said.

LETEC changes occur every six months, and 20 goods (defined by an eight-digit identification code) can be adjusted each period in Brazil, respecting the limit of up to 100 codes, Lacerda Chaves noted. Aço Brasil’s request must now be approved or rejected by Brazil’s foreign trade ministry.

Lacerda Chaves added that, in addition to LETEC, there are some exceptional cases of adjusting import tariffs, such as in the case of fundamental social-political factors or risky situations like the Covid-19 pandemic.

“It should be noted that the original tariffs for many products in the steel sector that were reduced due to the Covid-19 pandemic are already expected to return to their original rates,” Lacerda Chaves said.

Galvalume® is a registered trademark of BIEC International.

The post Brazilian steel end users criticize import duties increase request, warning of possible high costs appeared first on Fastmarkets.

Buying for green steel in the spot market across Europe was rather low, with small and medium-sized distributors and steel service centers not willing to pay high premiums at the moment.

“For example, in Norway the awareness of green steel is quite high but the willingness to pay [for it] is really low,” Helge Runer, chief executive officer of Norsk Stal, said during the panel discussion at the event.

Sources pointed out that for steel service centers, steel products represent nearly 100% of cost, and paying any premium is a challenge, while for automotive the price of steel is relatively low; it’s “a fraction of their costs.”

Market participants agreed that major producers in the automotive and construction industries were ready to book green steel and pay premiums, focusing on the value of green steel rather than cost.

“Green steel is very clearly on the agenda of big automotive companies; it’s been adopted in their supply chain, but it’s a hell of a job,” a producer source said.

“Familiarizing supply chains with [low carbon emission] steel takes time,” Jaap Jan Aardenburg, distribution marketing manager and business consultant for Tata Steel in Europe, said.

Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was unchanged at €100-250 ($105-264) per tonne on Thursday.

Despite quite a high level of premium, steelmakers who were able to supply fossil free or green steel to the market were reluctant to cut it.

“Steel prices will be trending higher due to CBAM [the Carbon Border Adjustment Mechanism] phasing in; Besides, European steelmakers invest billions of euros [in decarbonizing their operations] and need to see the return of those investments,” a distributor from Denmark said.

Additionally, green steel was expected to remain short in supply in the next several years, before all electric-arc furnace (EAF) capacities come online and while buying interest was expected to grow.

“Buyers will see the need to go green, via banks, which will prioritize financing deals using green steel, and via regulations obliging buyers to use green steel in projects,” a mill source in Europe said.

The lack of common standards and even the very definition for “green steel” were factors slowing the green steel uptake in the market, sources said.

“There is lack of awareness [of green steel] from buyers in some regions; sometimes we get ridiculous requests, it is clear they have no idea of what they need,” a mill source in the Nordics region said.

“We need support from the European Commission – we don’t even have the right wording in place, and lack understanding among us [on what exactly the green steel is],” another market source said.

Some sources disagreed, pointing out that putting out strict regulations would jeopardize the market.

“Having an overregulated market was inefficient. Guidelines could be more relatable,” a mill in Europe said.

Will new green capacity lead to oversupply in the European steel market?

Most European blast furnace-based steelmakers have been investing in green steel projects in the past years, cutting emissions to comply with strict EU regulations.

Under the European Green Deal, the European Commission proposed a new EU target to reduce greenhouse gas emissions by at least 55% by 2030, compared with the levels emitted in 1990. The target for 2050 is net zero emissions.

Some market sources were concerned that bringing new capacities would negatively affect the already-oversupplied steel market in Europe, but steelmakers had different view on it.

“Interest for fossil free steel will be bigger than supply, so in the short-term there definitely will be room for new capacities,” Jan Meier, managing director and sales director for SSAB Europe, said,

“We are heading towards a post-industrial society, with less steel needed in the upcoming years. [The steel] industry is clever enough not to create overcapacity,” Aardenburg said.

“Steel production in Europe would be no more than 120 million tonnes [per year] by 2030,” another source told Fastmarkets on the sidelines of the event.

In 2022, crude steel production across Europe amounted to 136.3 million tonnes, down from 152.6 million tonnes in the previous year. The decline was due to massive output cuts implemented by Europen mills in the third and fourth quarters of 2022, facing deteriorating demand and falling steel prices.

CBAM to stimulate buyers to book more EU-origin steel

The transitional phase of CBAM began on October 1, 2023, with the first CBAM declarations to be submitted to European Commission institutions by the end of January 2024.

Sources suggested that the complexity of CBAM, along with the high and unpredictable costs of carbon permits, would significantly limit the number of overseas steel buyers.

“That’s not even clear how many CBAM certificates exactly will be needed for each importer to covered the purchased goods,” a market source said.

“Smaller distributors, steel service centers simply wouldn’t be able to afford importing steel. So they will need to switch to the domestic suppliers entirely, and purchase import steel at big companies who are able to hedge risks,” a second trading source in Europe said.

Another source that spoke to Fastmarkets on the sidelines of the event expressed concerns that CBAM would lead to an “oligopoly for imports,” with only a few large market participants potentially able to provide all the necessary documentation and purchase CBAM certificates to cover emissions.

“It is very likely that smaller buyers would have no other option but to buy European steel,” the same source said. “European distributors need to rely on imports to diversify supply sources in order to secure an uninterrupted supply of steel products for their customers. Nobody should buy 100% [of steel] from imports and nobody should buy 100% domestic material.”

To keep up with the green steel discussion and to follow the critical developments in green steel pricing and low carbon steel production, visit our Green Steel Spotlight page.

The post Green steel, decarbonization drive, CBAM: key takeaways from Eurometal’s Nordics meeting appeared first on Fastmarkets.

The consultation period for this proposal will run from Wednesday October 11 to Friday November 10, 2023.

The specifications for the grades in question are:

MB-STE-0653 – Steel scrap punchings and plate, broker buying price, fob Cleveland, $/gross ton
Specifications: Punchings and plate scrap contains punchings or stampings, plate scrap, and bar crops containing not over 0.05 percent phosphorous or sulfur and not over 0.5 percent silicon, free from alloys, as specified by the Institute of Scrap Recycling Industries. All materials cut 12 inches and under, and with the exception of punchings or stampings, must be at least 1/8 inch in thickness. Punchings or stampings under 6 inches in diameter may be any gauge.
Location: Cleveland
Currency and unit: USD per gross ton on car
Pricing point: Prices that a broker will pay for items delivered to his yard loaded onto rail-road cars, trucks or barges FOB
Frequency: Monthly, typically before the 10th
ISRI Code: 234

MB-STE-0598 – Steel scrap punchings and plate, consumer buying price, delivered mill Pittsburgh, $/gross ton
Specifications: Punchings and plate scrap contains punchings or stampings, plate scrap, and bar crops containing not over 0.05 percent phosphorous or sulfur and not over 0.5 percent silicon, free from alloys, as specified by the Institute of Scrap Recycling Industries. All materials cut 12 inches and under, and with the exception of punchings or stampings, must be at least 1/8 inch in thickness. Punchings or stampings under 6 inches in diameter may be any gauge.
Location: Pittsburgh
Currency and unit: USD per gross ton on car
Pricing point: Delivered mill price
Frequency: Monthly, typically before the 10th
ISRI Code: 234

These prices form part of Fastmarkets’ scrap package.

For more information or to provide feedback on this pricing notice, or if you would like to provide price information by becoming a data submitter to these prices, please contact Amy Hinton by email at: pricing@fastmarkets.com. Please add the subject heading: “FAO: Amy Hinton Re: punchings and plate.” Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets’ pricing methodology and specification documents, go to https://www.fastmarkets.com/about-us/methodology.

The post Proposal to discontinue steel scrap punchings and plate assessments for Cleveland, Pittsburgh appeared first on Fastmarkets.

The proposal comes in response to sustained changes in liquidity patterns, which were first exacerbated by the onset of the Russia-Ukraine war in February 2022.

Changes in flows of material have become ingrained in the US import market as a result, with US importers sourcing the lion share of their material from South Brazil amid sanctions on Russian imports and logistical difficulties in securing continuous shipments of material from Ukraine.

The addition of bids, offers and assessments to the pricing process will allow Fastmarkets to more accurately reflect the market level without reliance on deals alone during periods of low liquidity.

This will also align the assessment methodology with that of Fastmarkets’ existing CFR Gulf of Mexico pig iron price, which captures the same incoming shipments of Brazilian and Ukrainian basic material per the the below material specifications, before these sales are broken out and shipped basis FOB NOLA to US mills and foundries.

Fastmarkets acknowledges that shipments of Russian material do not formulate part of its weekly assessment period at the present time but has no immediate plans to change the name of its Russian/Ukrainian basic pig iron price.

The specifications for the grades in question are as follows:

MB-FE-0003 Hot-briquetted iron, fob New Orleans, $/tonne
Quality: Min size: standard shape featuring a metallic iron content of 85-85.5 percent carbon, 0.6-0.7 percent carbon (total iron content 91.5-92 percent), .01 percent sulfur, .07 percent phosphorus and 5-6.3 percent gangue
Location: fob New Orleans
Timing: Spot
Unit: USD/tonne
Payment terms: Prices are those effective on the date of publication for future delivery of material loaded on barge (free on board) New Orleans
Publication: Weekly. Monday, by 5pm NY time

MB-IRO-0078 Pig iron basic grade, Brazil, fob New Orleans, $/tonne
Quality: Min size: standard size featuring 3.5-4.5 percent carbon, less than 1.5 percent silicon, 0.5-1.0 percent manganese, less than 0.05 percent sulfur and less than 0.12 percent phosphorus.
Quantity: 1,000-70,000 tonnes
Location: fob New Orleans
Timing: Spot
Unit: USD/tonne
Payment terms: Prices are those effective on the date of publication for future delivery of material loaded on barge (free on board) New Orleans
Publication: Weekly. Monday, by 5pm NY time

MB-FEN-0004 Pig iron foundry grade, Brazil, fob New Orleans, $/tonne
Quality: Min size: standard size featuring 3.5- 4.5 percent carbon, 2.25-3.50 percent silicon, 0.5-1.0 percent manganese, less than 0.05 percent sulfur and less than 0.12 percent phosphorus.
Location: fob New Orleans
Timing: Spot
Unit: USD/tonne
Payment terms: Prices are those effective on the date of publication for future delivery of material loaded on barge (free on board) New Orleans
Publication: Weekly. Monday, by 5pm NY time

MB-IRO-0079 Pig iron basic grade, Ukraine/ Russia, fob New Orleans, $/tonne

Quality: Min size: standard size featuring 3.5-4.5 percent carbon, less than 1.5 percent silicon, 0.5-1.0 percent manganese, less than 0.05 percent sulfur and less than 0.12 percent phosphorus.
Quantity: 1,000-70,000 tonnes
Location: fob New Orleans
Timing: Spot
Unit: USD/tonne
Payment terms: Prices are those effective on the date of publication for future delivery of material loaded on barge (free on board) New Orleans
Publication: Weekly. Monday, by 5pm NY time

These grades form part of Fastmarkets’ scrap package.

For more information or to provide feedback on this pricing notice, or if you would like to provide price information by becoming a data submitter to these prices, please contact Amy Hinton by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Amy Hinton Re: Alternative irons.” Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets pricing methodology and specification documents, go to https://www.fastmarkets.com/methodology.

The post Proposal to adjust US alternative irons methodology appeared first on Fastmarkets.

A correction was issued on the same date after these prices were originally moved on that basis during the settlement on September 12, and not in line with that month’s market trend.

The original notice can be found here.

That market has now been re-adjusted as follows:

The assessment for MB-STE-0340 steel scrap No1 heavy melt, dealer selling price, fob dealer yard Atlanta is now $310 per gross ton for October versus $303 per ton in September, which represents a sideways market trend and a $7-per-ton non-market adjustment.

The assessment for MB-STE-0341 steel scrap No1 busheling, dealer selling price, fob dealer yard Atlanta, is now $350 per gross ton for October versus $295 per ton in September, which represents a sideways market trend and a $55-per-ton non-market adjustment.

The assessment for MB-STE-0342 steel scrap shredded auto scrap, dealer selling price, fob dealer yard Atlanta is now $330 per gross ton for October versus $334 per gross ton in September, representing a trend of down $10 per gross ton and a $6-per-ton non-market adjustment.

The assessment for MB-STE-0344 steel scrap cut structural/plate 5ft max, dealer selling price, fob dealer yard Atlanta, is now $335 per gross ton for October versus $316 per ton in September, which represents a sideways market trend and a $19-per-ton non-market adjustment.

These grades form part of Fastmarkets’ scrap package.

For more information or to provide feedback on this correction notice, or if you would like to provide price information by becoming a data submitter to these prices, please contact Amy Hinton by email at: pricing@fastmarkets.com. Please add the subject heading: “FAO: Amy Hinton, re: Houston shredded auto scrap.” Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets pricing methodology and specification documents, go to https://www.fastmarkets.com/about-us/methodology.

The post Decision to adjust Atlanta ferrous scrap dealer selling assessments appeared first on Fastmarkets.