Plate
and hot rolled coil prices will bottom and stabilise in the near term amid
improved global demand, says head of Metinvest Western Europe Roberto Re.
The “red line” for HRC prices is approaching for European
producers due to the high cost of gas and energy. “I think that prices during
the month of June can somewhat change, maybe not in the sense of a complete
trend inversion, but also thanks to the international demand resumption, as we
expect better demand from China and the USA,” Re said at the Kallanish Europe
Steel Markets 2022 conference in Milan on Monday. “We believe prices will stabilise,
which will also cause apparent demand to restart.”
However, there will be no going back to pre-pandemic levels.
International trading limitations are resulting in a “structural change” that
is seeing the regionalisation of prices, Re observed. In the next 3-4 years,
Europe may see quite high prices driven by the future post-war reconstruction
of Ukraine.
The steep March price increase followed by the rapid decline
seen in recent weeks has halted apparent steel consumption. In Italy, state
infrastructure projects have been suspended due to escalating construction
material prices.
Ukraine’s Azovstal and Ilyich plants are meanwhile severely
damaged but “we will never work under any legislation that is different from
Ukrainian”, Re pointed out. The company has no plans to restart production in
Mariupol as the area has been taken over by Russian forces. The firm has
however restarted Zaporizhstal which produces billet for its European
re-rolling facilities, particularly Promet Steel in Bulgaria. Metinvest’s
Kametstal plant was meanwhile the only steelmaker to maintain operations in Ukraine
in March during the Russian invasion.
Zaporizhstal is currently facing some logistical issues but
trying to reach 50% capacity for the production of HRC. Metinvest’s other
European mills are Trametal and Ferriera Valsider in Italy, and Spartan UK in
Newcastle.
All the flat steel mills are currently going ahead with
production. Despite the disruption in semis’ supply, Metinvest succeeded in
running Valsider until 25 April and Trametal until 11 May. Promet Steel was
idled to give the steelmaker time to re-establish billet deliveries from
Kametstal, while output at Spartan UK was reduced.
The Italian units are currently undergoing maintenance works due
to slow slab deliveries. Trametal is scheduled to restart in the next ten days
and Valsider towards the end of June.
“We’ve changed our supply chain completely. We have become
re-rollers again,” Re observed. Trametal was a slab re-roller souring from
the merchant market before Metinvest purchased the mill.
Metinvest needs around 160,000 tonnes/month of slab to run all
its European units. Towards mid-March, European non-integrated re-rollers such
as Marcegaglia and Technosider in Italy, and Laminoir des Landes in France,
went to the global market to procure high volumes of slab. This caused a
speculative bubble, particularly for material from the Far East.
After the outbreak of war in Ukraine, the main sources of global
slab supply were countries such as Malaysia, Indonesia and China. The supply
chain is now easing, with some more price stability and a larger pool of
suppliers including steelmakers from India, Brazil, South America, China and
Indonesia, Re said. However, quality is the issue, not volumes, he added.
“Our idea in Europe is to make an important investment in steel
production,” Re stated. In an interview with Italy’s RAI television
network earlier this month, Metinvest owner Rinat Akhmetov said the firm
is going ahead with its plan to build in Italy a new 2 million tonnes/year flat
products steel mill supplied by equipment maker Danieli (see Kallanish passim).
It may however have to amend its plan of sourcing slab for the new mill from
its Ukrainian steelworks.