Steel Strip

Overcapacity remains a significant problem in the global steel industry. A healthy rate of plant utilisation is around 85 percent - allowing 15 percent to cover maintenance stoppages and unforeseen factors.
One part of the world where the crisis of excess supply can be seen most acutely is in the EU. Steelmakers in the region are presently operating at approximately 70 percent of maximum production potential. Even at this level, there is severe competition between mills for orders as demand is so weak and buyers are keeping purchasing to a minimum. Consequently, the financial performance of European mills continues to deteriorate.
Numerous key figures within the steel industry have been calling on decision makers to act for some time and the European Commission (EC) has heeded the call. It is preparing an action plan, due to be unveiled in the middle of this year, which aims to increase the global competitiveness of the sector. The EC will cover a range of concerns including energy prices, trade, labour, raw materials and climate change policy. Although changes in the regulatory environment are required in order for European steel companies to compete effectively on the world stage, many would agree that market forces should ultimately decide the fate of individual steelmaking facilities.
ArcelorMittal has taken the lead with capacity closures in Europe. Many other local steelmakers have yet to follow and have instead chosen to idle plants temporarily or run mills at a reduced level of operation. ArcelorMittal has the advantage of being a global organisation and can adjust its portfolio accordingly. Whereas, a local steelmaker, with just one or two units, is unable to benefit from such economies of scale.
It is clear that the decision to permanently close facilities involves significant opposition by political and labour forces, as seen by the recent experience of the Luxembourg-based steel producer. The future of a number of the company’s west European plants remains unresolved.
Some of the current overcapacity is due to cyclical factors. Apparent steel consumption in 2012 declined by approximately 10 percent, year-on-year, and stood more than 50 million tonnes below the level witnessed in 2007. No gains are forecast this year. Only moderate rates of growth are envisaged thereafter.
The apparent level of structural overcapacity and the resultant effects on long term profitability have led some producers to exit the region’s business altogether. This scenario can be seen in the export-orientated steel industry of eastern Europe. Mechel has recently disposed of assets in Romania. US Steel in Serbia made a similar decision last year. Evraz is considering the future of its operations in the Czech Republic, including a possible sale.
Despite the drive for rationalisation, capital expenditure by European mills is likely to continue in the future, albeit at a reduced rate. Investment will be made for environmental upgrades and energy efficiency, rather than in expanding production potential. Furthermore, there will be an ever more increasing focus on value-added products - targeting niche, high-end markets, with less and less commodity material being manufactured.
The long term sustainability of the region’s steel industry does not solely rely on changes in policies and the elimination of excess capacity. The prospects are tied to the performance of steel consuming sectors - construction, automotive, energy, engineering, home appliances. A stronger economy will provide a significant boost to the steel industry. Conversely, as we have seen in recent times, a weak economy will create sizeable problems.

Reported by MEPS http://www.meps.co.uk/steelnews.htm

PROPOSALS have emerged about a multi-million pound relining of the Queen Anne blast furnace at the Tata Steel works in Scunthorpe.

Work worth around £50m is expected to start later this year on the blast furnace, which is one of four in the town.

The work – which would involve putting down new bricks – would be completed in time for the 60th anniversary of the commissioning of Queen Anne in 2014.

The work would be the biggest single investment in the town since Tata Steel bought the former Corus works as part of a £6.4 billion deal in April 2007.

Read more: http://www.thisisscunthorpe.co.uk/story-18879651-detail/story.html?#ixzz2SIo1Mvmb

Tool steel refers to a variety of carbon and alloy steels that are particularly well-suited to be made into tools. Their suitability comes from their distinctive hardness, resistance to abrasion, their ability to hold a cutting edge, and/or their resistance to deformation at elevated temperatures (red-hardness). Tool steels are generally used in a heat-treated state. With a carbon content between 0.7% and 1.4%, tool steels are manufactured under carefully controlled conditions to produce the required quality. The manganese content is often kept low to minimize the possibility of cracking during water quenching. However, proper heat treating of these steels is important for adequate performance, and there are many suppliers who provide tooling blanks intended for oil quenching.

Tool steels are made to a number of grades for different applications. Choice of grade depends on, among other things, whether a keen cutting edge is necessary, as in stamping dies, or whether the tool has to withstand impact loading and service conditions encountered with such hand tools as axes, pickaxes, and quarrying implements. In general, the edge temperature under expected use is an important determinant of both composition and required heat treatment. The higher carbon grades are typically used for such applications as stamping dies, metal cutting tools, etc. Tool steels are also used for special applications like injection moulding because the resistance to abrasion is an important criterion for a mould that will be used to produce hundreds of Alloy steel is steel alloyed with other elements in amounts of between 1 and 50% by weight to improve its mechanical properties. Alloy steels are broken down into two groups: low alloy steels and high alloy steels. Low alloy steels are defined as having an alloy contents between 1 and 4% and high alloy steels have 4 to 50% alloying contents. However, most commonly alloy steel refers to low alloy steel. These steels have greater strength, hardness, hot hardness, wear resistance, hardenability, or toughness compared to carbon steel. However, they may require heat treatment in order to achieve such properties. Common alloying elements are molybdenum, manganese, nickel, chromium, vanadium, silicon and boron.

BSS Steel Strip, now stock a range of tool steel sheet to complement their range of spring steels

Transaction values for almost all steel products recorded moderate decreases, in April, in northern Europe. The usual, seasonal upturn in activity in the early part of the year has not occurred. Demand from all the major consuming sectors for strip mill products is weak. Distributors and service centres are aiming to minimise their inventories. Delivery lead times from the mills are short. Import offers from Asia are keeping downward pressure on prices from Western European producers. The mills will need to increase selling values soon in order to ensure that they cover their production costs.
Hot rolled plate prices have been far more stable in recent weeks. Sales volumes to manufacturers of trucks and yellow goods have been reasonable, in some areas. Demand from linepipe producers is expected to pick up in the second half of 2013. The mills hopes of raising selling values have been frustrated by the presence of competitive offers from Eastern Europe and the Far East.
The continuing wintry conditions in northern Europe have slowed construction work and, consequently, reduced demand for sections and rebar. Activity is predicted to increase when the weather improves. Suppliers face competition from Germany and Eastern Europe. Consumption of merchant bars, by the manufacturing sector, is subdued. Prices slipped further, this month but the bottom of the current cycle is thought to be close.

MEPS- Steel Industry Analysts

A consortium led by Luxembourg-based stainless steel maker Aperam is the front runner for the acquisition of a stainless steel plant in Terni, Italy, market sources said this week.

The consortium, which besides Aperam, a firm floated by ArcelorMittal in 2011, includes Italian steelmakers Arvedi and Marcegaglia, is expected to place on Friday a binding bid for the acquisition of the Acciai Speciali Terni (AST) plant, in central Italy.

Three other firms though are also still in the running: Chinese steelmaker Tsingshan and private equity firms Apollo and JP Morgan’s One Equity Partners, sources said.

Finnish stainless steel maker Outokumpu has to sell the steel mill, one of Europe’s most modern, by May 7 to gain approval for the acquisition of ThyssenKrupp’s stainless steel branch Inoxum, the previous owner of AST.

“I think the Aperam consortium is the front runner; it is the best solution for the European market,” a first industry source said.

“There is a belief in Italy that if a private equity company gets the plant it will downsize it within 3-4 years while they believe that in the Aperam group there is a long term solution where Terni is secured.”

Italian unions said they would prefer an industrial participant rather than a financial player to buy the plant to guarantee its competitiveness.

Outokumpu, Aperam, One Equity Partners and Apollo declined to comment on the sale process.

Acciai Speciali Terni has facilities in Terni and its group is composed of several subsidiary and affiliated companies in Italy and abroad. The group is involved in the sector of special (stainless, low-alloyed and carbon) steels

A SENIOR Tata Steel figure said Turkey, Ukraine and Russia posed the biggest commercial threat to the steel giant.

Paul Brooks added that “very high” UK energy prices compared to the US were a big issue

Dr Brooks, Tata Steel group director of environment, was speaking about climate change and the steel industry at Swansea University.

He said world steel consumption was expected to double by 2050, and that meaningful agreements to reduce the industry’s carbon dioxide emissions had to have China on board.

Outlining threats to steel-making, Dr Brooks cited “well meaning” but “often very blunt” cap and trade schemes, in which the quantity of pollutant is fixed and participants trade emissions.

“All we ask for is a level playing field,” he said.

“Our largest threats commercially are from Turkey, Ukraine and Russia.”

He said steel arrived in the UK every day from Ukraine, and China.

Read more: http://www.thisissouthwales.co.uk/story-18733936-detail/story.html?#ixzz2QtOnKNGO

Conditions in the European flat products market are exceptionally quiet at present, leading to renewed downward pressure on basis values. As consumption has not improved, both end-users and distributors are reluctant to place forward orders of any significant volume. The mills are so short of business that their determination to lift prices appears to be crumbling. However third country offers are no longer attractive since the euro has started to weaken.

The German mills still have free capacity for the second quarter as order intake is slow. Buyers, who are currently in negotiations for that period, expect to pay less, once deals are concluded. Service centres are trying to keep inventories as low as possible because they have little confidence in the performance of the market, either in terms of price or consumption.

End-user activity remains subdued in France, with very short order books and completion times. As a result, steel demand from distributors is weak. Consumption by the auto sector is down, while activity in the remainder of industry is stable at a modest level.

The Italian economy is very depressed. The results of the recent election have produced an uncertain political scenario. Steel market conditions are described as “tough”, with few buyers. Final demand is weak and, consequently, distributors are sourcing only limited quantities as they try to cope not only with a lack of sales opportunities but also payment issues with their customers.

There is little, or no, import threat in the UK at present because the exchange rate is favourable for the domestic producers. Certainly, some, if not all, of the proposed £30 per tonne rise, announced in early February, has been secured. However, service centres are keeping inventories at a low level as resale values are not moving up as quickly as mill figures.

There has been no improvement in Spanish demand. Service centres are struggling as a result of minimal profit margins. They are fighting over every available order. End-users say they can virtually put their business out to tender if they have any to place.

MEPS

BSS have launched their new website . Hopefully multi device friendly

Economic actively, or the lack thereof, will make it difficult for the likes of ArcelorMittal to impose their proposed €20 increase (they tried to imposed a €40 increase in November).

Customers and service centres are very sceptical about price increases at a time of very poor demand.

The major European manufacturing countries describe demand as very weak, with little optimism from any areas.

Despite mill efforts to resist, prices are falling around the world according to MEPS.

Falling raw material costs, together with a flood of imports resulting from weak economic conditions in other regions of the world, have created further downward pressure on flat product prices in the US. Overall, the domestic economy is performing satisfactorily but steel demand has declined. Currently, although end-user activity has not changed, service centres are unloading their high priced inventories to make room for lower cost steel in the future. Consequently, resale values are becoming very competitive…….

West European buyers are reluctant to place orders in what they perceive to be a declining market. Although the mills are attempting to hold on to selling values, it is a struggle to do so. They may decide to lower their capacity utilisation rates even further in order to try to balance supply with demand. As the euro loses ground against the US dollar, third country import offers are scarce.

Read the full report here

The mills efforts to resist price fall (i.e. restricted production), are having some affect upon the special steels sector, as high carbon and spring steel shortages are becoming apparent