Slowing EU steel demand, global overcapacity and weaker worldwide demand could become a major threat to European steel market stability.

The growth in apparent steel consumption in the EU will slow to only 0.5% in 2019, followed by a 1.2% rise in 2020, European steel association Eurofer said on Thursday January 31.

Europe’s apparent steel consumption was forecast to reach 164 million tonnes in 2019 and 166 million tonnes in 2020.

These numbers are «less than one-third of the compound annual growth rate of apparent steel consumption over the period 2014-18,» according to Eurofer.

Development of EU steel demand – in combination with global overcapacity, slowing worldwide demand and increasing protectionism – might become a major threat to the stability of the European market.

Although the European Commission (EC) announced its final decision in a safeguard case concerning a number of steel product categories on February 1, Eurofer is concerned that the measures might not be be enough to protect the domestic market.

Definitive measures were set in the form of partially country-specific tariff rates and quotas for 26 steel product categories.

Eurofer estimates that the EU’s apparent steel consumption rose by 2.6% year-on-year to 163 million tonnes in 2018.

However, European mills have not fully benefited from the rise in consumption, with steel import increasing by 12.3% year-on-year. European producers barely gained from domestic growth, it added, with shipments to the domestic market picking up by only 0.6% year-on-year.

«The sharp increase in imports in the second half of 2018 is proof that, in spite of the justified imposition of preliminary safeguard measures by the [European] Commission last July, the EU market is still under siege,» the director general of Eurofer, Axel Eggert, said.

«Market access to other regions has been blocked by protectionist measures in those places, leading to a continued diversion of steel to the EU market,» he added.

Fastmarkets’ weekly price assessment for domestic hot-rolled coil (HRC) in Northern Europe was €520-530 ($597-608) per tonne ex-works at the end of 2018, down by 5.83% since the beginning of July that year.

Domestic prices in Europe moved down on slow trading and on tough competition from imports, particularly material originating from Turkey. Turkey has redirected significant volumes of material to Europe from the US market due to that country’s Section 232 measures.

Fastmarkets’ weekly price assessment for HRC imported into Northern Europe was €480-490 per tonne cfr main ports in late December, down by 12.61% since the beginning of the third quarter.

«The diversionary trend [in the EU steel market] is expected to continue in 2019, especially because the safeguard quota will be increased by 5% in February and by another 5% in July,» Eggert said.

«This ‘relaxation’ could occur even as 2019 EU steel demand is forecast to be flat,» he added, «and [means] even greater uncertainty for steel producers.»

China’s mineral supply squeeze continues to challenge refractory producers.

A range of factors arising in 2017 and spilling into 2018 significantly compounded the shortage of key refractory (and other) mineral exports from China vital to the world’s refractory manufacturing sector.

Poursuivant sa politique de cession d’activités représentant un chiffre d’affaires global d’au moins 3 Mds € avant fin 2019, le géant des matériaux a annoncé être entré « en négociations exclusives » avec le fonds d’investissement américain OpenGate Capital.

Leader mondial des grains et poudres de carbure de silicium – élément qui entre dans la composition d’abrasifs, d’isolants électriques ou encore de miroirs pour l’industrie aérospatiale – Saint-Gobain génère dans cette activité un chiffre d’affaires annuel d’environ 120 M€.

Et pourtant, le leader mondial des matériaux de construction a décidé, dans le cadre de son objectif de « rotation de son portefeuille » (3 Mds € de cessions d’ici fin 2019) d’accorder une exclusivité au fonds américain OpenGate Capital après avoir reçu de ce dernier une offre d’achat de sa branche Saint-Gobain Silicon Carbide.

Ferme et irrévocable « Cette offre ferme et irrévocable ne comporte pas de condition de financement », a précisé Saint-Gobain dans un communiqué, précisant que la transaction envisagée, dont le montant n’a pas été dévoilé, ne pourra être finalisée « qu’après les procédures usuelles d’information et de consultation des instances représentatives du personnel compétentes ».

Soumise à l’approbation des autorités de la concurrence, cette transaction devrait être effective au premier semestre 2019.

Strict environmental regulation on magnesite and magnesia production in China has resulted in strong demand for imported products. Cameron Perks, Fastmarkets IM correspondent, looks at how Sibelco’s Australian operations are currently benefiting from this.

The refractory maker reports higher end-user demand outweighing raw material volatility.

Refractory maker RHI Magnesita reported a sharp rise in revenues, thanks to increased sales volumes and prices, even as its raw material costs rose.

RHI Magnesita reported a pre-tax profit of €246 million in 2018, compared with a €5.9 million loss in 2017, with rising revenues more than outpaced increased raw material costs.

The company forecast a more stable market for refractory raw materials in 2019, but prices are expected to stay high compared with pre-2017 levels.

Chinese refractory material production has been restricted by a number of factors in China, including environmental restrictions on dynamite use and other mining activities.

«As a result of potential further export taxes, more restrictive allocation of explosives, strict environment enforcement and the nationalization or controlled consolidation of mining operations in China, the structurally altered raw materials pricing environment is expected to remain in 2019 and beyond,» RHI Magnesita said.

Refractory material prices have seen extreme volatility since the implementation of Chinese environmental restrictions.

Fastmarkets IM reported the price of magnesia, dead-burned,94-95% MgO, lump, fob China, at $500-580 a tonne on March 26, 2019. This was down from $680-700 a year earlier, but well above the $160-235 per tonne reported at the same point in 2017.

Meanwhile end use markets are expected to remain strong.

«Whilst some uncertainties exist in the macroeconomic outlook for 2019, robust customer markets in the medium term (albeit with some uncertainty in the short term) and positive trends in raw material pricing support our expectation to deliver modest organic revenue growth,» RHI Magnasita chief executive Stefan Borgas said.

The segment of the company’s business which supplies to the steel industry reported revenues up by 15% year on year in 2018, at €2.20 billion ($2.47 billion).

And the company’s industrial division reported sales of €877 million over the same period, up by 33% year on year.
RHI Magnesita also announced it is seeking a secondary listing on the Vienna Stock Exchange, in addition to its existing listing in London, as a protection against Brexit uncertainty.