beeld van europa:
Stronger demand and higher prices gave European steelmakers a boost over the fourth quarter of 2016 and in the first three months of 2017.
However, concerns about under-priced imports remain, even as steel prices continue to soften as the second half of 2017 approaches.
Crude steel production in the EU fell by 2.34% to 162.29 million tonnes in 2016, according to the World Steel Assn (Worldsteel), as a number of EU steelmakers lowered their output as a part of efficiency and cost-saving measures, following the price trough of late 2015 and early 2016.
EU steel prices rose sharply in the fourth quarter of 2016 on the back of a surge in the iron ore, scrap and coking coal markets, after China had announced that it was limiting the number of working days of coal mines to 276 days a year, down from 330 days per year.
Metal Bulletin’s assessment of prices for Northern European domestic hot rolled coil rose by €90-100 ($102-113) per tonne over the month to €540-550 ($609-620) per tonne on November 30.
ArcelorMittal, retaining its position as the world’s largest steelmaker in 2016, was at the forefront of driving price increases for both flat and long steel products. The Luxembourg-headquartered producer reported an operating profit of €1.27 billion ($1.43 billion) for its European operations in 2016, up sharply from €171 million ($193 million) in 2015.
Improved buying activity in the first quarter of 2017 and limited imports sustained the higher HRC price levels, which rose to their highest in close to six years, at €560-580 ($632-654) per tonne ex-works Northern Europe on March 22.
However, prices gradually weakened on news that the European Commission (EC) had declined to impose provisional duties on hot rolled flat steel products from Brazil, Iran, Russia, Serbia and Ukraine on April 10. A decision on final duties is expected to be announced by October 6.
European steelmakers remain critical of the speed at which the EC’s investigations are conducted, and the level at which anti-dumping (AD) duties are imposed on under-priced imports.
According to regional steel association Eurofer, steel demand in Europe rose by 3.20% year-on-year in 2016, while imports increased by 9% over the same period, preventing domestic steelmakers from taking advantage of the sector’s growth.
In the second half of 2016, imports to the EU hit an all-time high of a 24% share of the market, Eurofer said.
In late 2016, the EC proposed shorter investigation periods as well as a new anti-dumping calculation method to combat under-priced steel imports from state-backed or state-owned organisations.
The latter was a response to the expiration in December 2016 of a provision in China’s 2001 World Trade Organization (WTO) accession agreement that had allowed other countries to treat it as a non-market economy.
The WTO set up a dispute panel in April after China complained that the EU had continued to consider the Asian country as a non-market economy in anti-dumping investigations.
Flat steel imports related to trade cases opened by the EC totalled 478,800 tonnes in the first quarter of 2017, according to regional steel trade federation Eurometal. This is down 76.44% from over 2 million tonnes in January-March 2016, though producers argue more can be done against under-priced imports.
Meanwhile, asset sales and consolidation look to further reshape the European steel industry this year. India’s Tata Steel – ranked 10th among global steelmakers – remains in discussions with Germany’s ThyssenKrupp – ranked 15th – to merge their European flat steel operations. The Indian steelmaker is edging towards a solution to end its participation in the British Steel Pension Scheme – a stumbling block to any potential merger.
The sale of troubled Italian steelmaker Ilva to ArcelorMittal and Italian re-roller Marcegaglia now looks likely to go ahead after the bid was given the thumbs-up by the Italian authorities. The joint bid was always considered the favourite by analysts, ahead of the consortium led by India’s JSW Steel – 19th in the rankings – and Italy’s Arvedi, which is placed at 99th.
The European steel exporters will be awaiting the outcome of the USA’s Section 232 investigation into whether steel imports pose a threat to national security, after US president Donald Trump signed a memorandum on April 20.
Concerns also remain over the ambitious fourth phase of the EU’s Emissions Trading System, which will run from 2021 to 2030. Eurofer has said that the plan would negatively affect investment in the European steel industry.
Market participants will also be watching the UK’s Brexit negotiations with the EU closely.
Despite these uncertainties, total activity in EU steel-consuming sectors, including construction and automotive, is forecast to grow by just over 2% per year in 2017 and 2018.