Thursday, September 08, 2016

Chinese and other threats to European Rebar Producers

The following extract is from an ISSB discussion about future threats to European producers of steel rebar.

Deformed Rebar is a very important product for certain European long product producers. After Turkey and Ukraine, the other countries in the top five exporters list are the Southern European nations of Italy, Spain and Portugal. It may come as a surprise to learn that Algeria is the most important export market for each of these countries with Italy alone shipping around 1.2 million tonnes of rebar to the country each year. This important market accounts for about 76% of all tonnage exported from Italy and about two thirds of exports from Spain.

Southern European producers enjoy a fairly unique situation in Algeria as a 2005 agreement between Algeria and the EU permits free trade between the two regions and Algeria imposes an import duty on shipments from the dominant player in the market, Turkey. Despite this, however, there are indications that this beneficial situation may not carry on indefinitely.

In a situation familiar in other parts of the world, Chinese rebar producers have identified an opportunity in Algeria and Chinese exports of all HR bars to the country have increased from 131 tonnes in 2013 to 345,000 tonnes in 2015 and a further increase so far in 2016. This already seems to have had the effect of displacing Spanish and Portuguese tonnage as exports from Spain have fallen by 440,000 tonnes in the same period whilst shipments from Portugal were down 141,000 tonnes. The Italian producers seem to be more aggressive in defending their market share, however, with more modest declines.

The long-term threat may not actually be coming from China, however, as in the face of falling tax revenues from the collapse in the oil price, the Algerian government is looking to diversify its industry away from the oil and gas sector. In order to facilitate this, they are looking to invest in steel projects and are mandating that government sector end users prioritise locally produced products over imports. In addition, the government has imposed a two million tonne limit on rebar imports this year and has revoked some import licenses.

On the supply side, Tosyali Algerie has a 500,000 tonne a year rebar mill which started production in 2013 and has initiated an expansion to nearly double its steelmaking capacity, although a timeline for the project has not yet been announced. The old Arcelor Mittal plant, which passed into the government's hands in October has a 400,000 tonne per year rebar mill and it is looking to add another long products mill with a capacity of one million tonnes by 2017. Finally, a joint venture between the state owned steel company and Qatar Steel has been initiated which is expected to have a 750,000 tonne per year rebar mill up and running by the end of 2017.

So far this year Italian exports have increased by 6% and Portuguese exports grew by 21%, offset by a 34% decline in Spanish shipments but how long can European producers hang on to this vital market given the two-pronged assault from Chinese producers and the measures taking place to grow the rebar industry within Algeria itself? Given that combined, these three countries supply well over two million tonnes a year to Algeria, the loss of this market would likely have profound consequences for the rebar industry in Europe.

For further information on steel-related statistics and data, visit

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Tuesday, August 30, 2016

Iron ore price forecast

The international iron ore price is set to collapse later this year. According to a new analysts’ report, the price of the raw material will drop to a year-end low of $US37 a tonne, averaging $US47 in the fourth quarter and $US38 in the first three months of 2017.

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Friday, July 01, 2016

Impact of Brexit on UK steel sector

The following extract is from an ISSB discussion about the probable impact of Brexit on the UK steel sector.

There has been much conjecture over both the short-term and long-term effects of the UK referendum vote to leave the EU but how will the result effect the steel industry in the country? The simple answer is of course that no-one knows for sure but there are some things we can look into.

One important aspect is the effect the vote will have on markets for steel products, and in particular the key automotive and construction sectors. The UK automotive sector has been a success story over the past few years with SMMT figures showing a 13.6% rise in production in the first five months of 2016. The successful future of this industry will most likely hinge on whether the UK can retain its free trade deal with the EU, an outcome viewed as likely given the importance of the UK as a premium market for German manufactured vehicles. In the short term, however, the uncertainty is thought to lead to a slow-down in growth for the industry.

The factors affecting the construction industry are rather different. Although the market has been strong in recent months with an estimated 9% growth in steel-intensive heavy construction based on heavy section sales, the Brexit vote brings uncertainty to the industry. The share price performance of the UK's listed construction companies hints at the fact the market is viewing a slowdown as likely with the construction of large steel-intensive buildings reliant to some extent on the economic health of the country as a whole. The industry may also experience cost inflation, particularly in regard to worker wage inflation if restrictions are placed on skilled EU workers entering the country.

While the outlook for the markets for steel products is mixed, the vote could potentially offer some hope to the steel industry. The UK steel industry has undergone an unprecedented period of turmoil over the past year with issues such as aggressively priced Chinese imports and expensive energy costs given as factors. In leaving the EU, Britain should be able to self-determine more effective solutions to both of these issues should the political will be forthcoming.

If domestic markets are about to enter uncertain times then more importance may be given to UK exports. One immediate effect of the Brexit vote was the depreciation of sterling. In just one month, the pound has fallen by 8% against both the US dollar and the euro which is a very significant slide in forex terms. This has the effect of making UK produced goods much more competitive in export markets and although raw material prices such as iron ore and coking coal will become relatively more expensive too, the steel scrap price will not be affected by currency movements.

Again, the success of the export market will likely depend on trade agreements struck with the US and the EU in particular but a look at the trade figures suggest an agreement should be in the best interests of many other EU nations.

The EU as a whole is the most important export market for the UK for finished steel. In Q1 of this year 685K tonnes of steel was shipped to the region, accounting for just under 65% of the total exported. Germany, Ireland and Belgium were the most important single markets in the EU, although it should be noted that non-EU Turkey was the largest market for UK produced steel.

Of importance, however, is the fact that this export figure was dwarfed by the import tonnage, with imports from the EU accounting for 71% of the total with the tonnage from the EU being nearly twice that of exports, at 1.2 million tonnes. This means that the UK is a large net importer of finished steel from the EU. In Q1, the UK imported more than 100K tonnes from each of the following member states: Germany, Spain, the Netherlands, Belgium and France. The UK was also the second largest "non-EU" destination for German steel after Switzerland, itself a member of the European Free Trade Association.

Whilst the British vote to leave the EU will likely cause heightened uncertainty and risk and much depends on the political will and diplomatic nous of the leaders of the country, it seems clear that there are potential opportunities for an industry that has suffered its fair share of issues over the past year.

For further information visit the ISSB website at or check out for the latest steel news.

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Tuesday, June 14, 2016

Böllinghaus has a new website

Böllinghaus Steel is well known as a specialist for stainless steel longs. Daily customers from all over the world are visiting the website of the company, which is on the market for more than 125 years. This long lasting tradition bases on highest possible product quality, reliable processing, customer friendly services and a passion for stainless steel.

Consciousness of tradition does not necessarily mean that the Böllinghaus team is content with the goals achieved. The stainless steel experts are permanently aiming at improving and enlarging their international presence and their product range. That is why the customer’ demands are so important.

A clear and distinct appearance in the public is part of a friendly customer relationship. Although Böllinghaus Steel is well accepted worldwide by its customers the company has easily to be found and identified in the world wide web. Bearing this in mind the company created a new internet presence. Under the IP address a visitor is presented a clearly structured and easily operable website with a modern and manageable design. Often it takes just one click to achieve the desired result.

At Böllinghaus Steel a friendly customer relationship begins already on the homepage

Contact address

Böllinghaus Steel GmbH
Nina Härtel
Hofstraße 64
D-40723 Hilden
Tel. +49 2103 88 010-38



Thursday, June 09, 2016

Sanjeev Gupta calls for radical change to make the UK steel industry competitive again

Sanjeev Gupta, Executive Chairman of the Liberty House Group, has just posted a video calling for radical change to make the struggling UK steel industry competitive again. The script below gives more information and the video and full script can be accessed on:

Hello. My name is Sanjeev Gupta. I run Liberty House Group.

I’d like to address everyone out there who, like me, is concerned about the future of the UK Steel industry.
The current turmoil and uncertainty in our sector presents us with a significant challenge – one that we need to address in order to safe guard its future. But this challenge also provides us with a great opportunity to re-shape our industry so that can make it successful and profitable again.

What we need is new thinking, a fresh approach, an innovative strategy that can provide a much needed change from the current status-quo. My team and I have such a strategy and I’d like to share it with you.
What are the facts? We in Britain invented modern steel making, yet today a staggering 80% of the 21 million tonnes of steel and steel products we consume every year comes from abroad. A century and a half ago we were the first to mass produce mild steel; yet over time as our raw materials diminished other countries have taken the lead.

We should not be surprised by this - it is part of globalisation. It is our responsibility as an industrial nation to constantly re-define our capabilities to keep us current in a highly competitive market.  
Other countries – such as the United States in the 1980s – did take steps to remain competitive.
The Americans looked at all the steel that had already been produced. Buildings, bridges, cars - all ultimately re-cyclable. Then they supplemented their blast furnaces with arc furnaces, and today 70% of their steel consumption comes from recycled materials.
So why has recycling steel never taken root in the United Kingdom? Expensive power? Or lack of investment? Whatever the cause it has left us with over reliance on old technologies which force us to import 100% of our iron ore and coal for our blast furnaces and export the majority of our steel scrap to be re-melted in other countries so that we can buy it back again. What is more UK customers that want to buy UK steel find its price too high and are forced to  rely on imports.
It is clear that today our UK steel sector is in a precarious and unsustainable position with no viable long term future. We have two options - one path continues the status quo leading inevitably to a final demise. The other leads to a new industrial renaissance.
At Liberty, we have already made our choice. We have begun an ambitious process, designed to trigger the revival of UK manufacturing: re-growing UK steel and downstream engineering products, re-invigorating the supply chain, championing the development of new sustainable sources of power, generating tens of thousands of new skilled jobs, and stimulating new sectors in the economy.
Of course the UK will continue to need some blast furnaces. But what we need even more are electric arc furnaces, small mini-mills that can be dotted around the country, next to customers, powered by low cost carbon free electricity. These mini-mills will take in the mountain of scrap steel we produce every year (up to 20 million tonne in the next 2 decades) and turn them into a range of steels and steel products.
Our strategy for achieving it is called GREENSTEEL, and it has three elements.
  • The first is to invest in electric arc furnaces alongside blast furnaces, and to begin to tackle the mountain of our own steel that we can recycle.
  • The second is to invest in low cost long term renewable power, as close to the steel plants as possible.
  • The third is to invest in engineering companies that use this steel and turn it into advanced components for existing and new UK based growth industries.
Liberty has an outstanding track record. In the last year we have revived 7 steel plants and re-employed over 1,500 workers. Our leadership team is composed of many of the industry’s leading executives. We have all the skills and the knowledge to to re-invent this industry.

In our view this is the only comprehensive, proven and sustainable holistic approach that will bring stability and growth to the UK Steel sector.

Thank you for listening.

For this and other steel news visit

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Tuesday, May 31, 2016

Plans unveiled for 2m tonne GREENSTEEL plant at Newport

Gupta Family Group Alliance companies, Liberty House and SIMEC, have unveiled major plans to turn their adjacent Newport sites into a two million tonne a year steel super-plant, powered by renewable energy.

It would be the first GREENSTEEL facility in the UK and would play a major part in a renaissance of the struggling sector by meeting up to 20% of current steel needs.

Newport’s key role at the forefront of a green revolution in UK steel was outlined to the city’s elected representatives during a fact-finding visit to Liberty’s 1.2m tonne a year rolling mill and SIMEC’s adjacent 396 megawatt Uskmouth Power Station.

Both Newport MPs, Jessica Morden and Paul Flynn, and Assembly Members, John Griffiths and newly-elected Jayne Bryant, were briefed on how the plants will help realise the vision for a sustainable steel sector, powered by renewable energy.

They met top management of SIMEC and who explained how the UK’s changing energy policies will help achieve the dual objective of reducing carbon emissions while making the UK steel sector competitive again.

Liberty executive chairman Sanjeev Gupta explained how the firm intends to install 2m tonnes of liquid steel-making capacity at Newport and almost double the existing rolling capacity at the site.

At the same time, as part of its GREENSTEEL strategy, SIMEC aims to power the steel plant by converting its existing coal-fired power-station to eco-friendly biomass generation. Longer term it will develop a centre of excellence for renewable energy that includes various forms of green power, including waste-to-energy and tidal lagoon power in the adjacent estuary.

All of this can provide low-cost, low-carbon fuel sources to power a steel industry which in turn can be made more competitive and sustainable through recycling and upcycling of Britain’s growing mountain of scrap. 

A recent University of Cambridge report predicted that the UK’s supply of scrap will rise from 10m to 20m tonnes a year within a decade. At present 70% of Britain’s scrap steel is melted abroad, because of high power prices, but melting at home instead would generate thousands of new jobs.

Following significant investments SIMEC reopened Uskmouth Power Station and Liberty restarted the adjacent steel rolling mill in 2015, both of which had been mothballed by previous owners.

At present the two sites employ over 200 people with plans for many hundreds more when SIMEC rolls out its energy park plan and Liberty recommences the melting of scrap steel at Newport. The Newport sites are part of the Liberty’s nationwide network employing a total of over 1,500 people, which also includes steel making and engineering facilities in Tredegar, the West Midlands and Scotland

Mr Gupta who co-hosted the visit with SIMEC’s Head of Energy, Industrials and Mining, Jay Hambro, said: “This was a very valuable opportunity to brief Newport’s elected representatives about our GREENSTEEL vision, which we believe will generate many new skilled jobs in the city and ultimately make a major difference to the whole UK steel and wider manufacturing sectors.

“Historically Newport has been one of the country’s most important steel-making locations so it’s very appropriate that this is the springboard for our GREENSTEEL plans. If we can make steel competitively in the UK, we can generate potentially hundreds of thousands of jobs in the manufacturing sector nationwide,” he added.

He explained that he and his colleagues wanted to create a major fully-integrated ‘end-to-end’ business which encompassed everything from green power, through liquid steel production, to steel processing and the manufacture and distribution of high-value steel products.

Mr Gupta added that Government support in removing carbon tax on power stations feeding steel plants, their backing for conversion of coal-fired stations to biomass and the green light for tidal lagoon power would give the steel industry and manufacturing a huge boost and a bright future.   
Jessica Morden, MP for Newport East which includes both Llanwern Steelworks and the SIMEC and Liberty plants said: “It was fantastic to visit SIMEC and Liberty Steel today to learn first-hand from Sanjeev about the GREENSTEEL programme which has huge potential for Newport, linking the steel plant with a biomass power station and tidal lagoon. This is very exciting for our area and for the steel industry.”

Further information from Eoghan Mortell 07977 555116

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Monday, May 16, 2016

Liberty House re-opens Tredegar steelworks in the UK

Liberty House will re-open yet another steelworks next month (June 2016) as it steps up its drive to transform the UK steel industry.

As part of its GREENSTEEL strategy, Liberty is set to re-start steel pipe and tube manufacturing at Tredegar in the South Wales Valleys, closed by administrators in 2015. This is the 7th British steelworks Liberty House has re-opened in as many months. Tredegar was inaugurated by Prince Charles in 1977.  A second production line was inaugurated there by Indian Prime Minister Indira Gandhi in 1978 and the heyday of this high-profile facility was in the 1980s and 1990s.

The re-opened plant will form the latest link in a British steel supply value chain Liberty is developing, that will encompass all stages of the process, using green energy to "upcycle" scrap steel from its melting through to the engineering of advanced products. Hot rolled coil for the plant will come from the rolling mill at nearby Liberty Steel Newport, itself re-started in October 2015, over two years after being mothballed.

Tredegar's output will replace some of the almost one million tonnes of steel tube currently imported into the UK each year for construction and manufacturing. The UK currently has one of the highest import dependency levels of this core product in the developed world. In preparation for the re-opening in June, the company has been re-contacting former workers from the plant. Tredegar will be expanding its range of products and is planning multiple training opportunities for young apprentices. The facility was part of the Caparo Industries group of steel and engineering companies rescued from administration by Liberty in November and December last year.

Several companies from the group are now thriving in the West Midlands, supplying a range of core and advanced products to automotive, aerospace and other‎ manufacturers. For example, last week Liberty Vehicle Technology's 920Engineering unit unveiled an industry-first fully-integrated parkbrake system, marketed to automotive OEMs (Original Equipment Manufacturers) for high-spec vehicles.

Executive chairman of Liberty House, Sanjeev Gupta said: "Tredegar will once again supply steel tube domestically. This is great news for the UK steel industry and for skilled workers in South Wales. It is also another step in turning the tide for the UK's steel industry. Steel tube is a vital link in the supply chain and adds to the integration which is essential for the sector. 

"The steel ecosystem is at the heart of manufacturing, and the global oversupply of steel increases the need for the UK to refocus our industrial strategy around both reducing costs and adding value to steel. Without significant change we will lose the remaining cornerstone of manufacturing. Our plan is to restructure the sector around production efficiency, engineering integration, and innovation. Britain's outstanding skills, engineering and production knowledge and resources can re-invigorate the supply chain and bring about a new industrial renaissance."

Based on 25 years' experience in global steel markets, Liberty has developed its "GREENSTEEL"‎ vision for a clean, integrated and competitive UK steel industry, based on melting and upcycling the growing mountain of scrap in the UK.

According to a recent report from the University of Cambridge, the volume of recoverable steel emerging in the UK from sources ranging from scrap vehicles and household appliances to ageing Victorian infrastructure, is set to rise from 10m to 20m tonnes a year in the next decade. Around 70% of UK scrap generated is already exported for melting abroad, a far higher proportion than competitor countries. This is expected to increase substantially unless the UK builds high-tech recycling facilities to recover this resource.

Mr Gupta called for the development of a national strategy for the creation of a sustainable manufacturing base in the UK. "This is much bigger than steel. Resolving the steel crisis opens the door to the rejuvenation of manufacturing and making a host of high-value goods in this country. Government and industry need to agree a road map that contains a consistent approach to all the vital ingredients: competitive energy, competitive raw materials, innovation, skills, and an investment-friendly environment. The only way to stand up to the forces of globalization is with a value-adding game plan."

Andrzej M Kotas, MBA
Managing Director
Metals Consulting International Limited

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Wednesday, May 11, 2016

Tata Steel Port Talbot - the road to viability

We have previously discussed in this blog some of the issues surrounding the future of Port Talbot in south Wales. Below, I outline our own views of the way ahead for steelmaking in south Wales – as seen by the experts at Metals Consulting International Ltd.

The problem
The biggest problem at present is that Port Talbot is reportedly losing somewhere between GBP £0.5 million - £1 million per day. With production of finished steel products at Port Talbot of the order of 3 million tonnes / year, this translates (assuming losses of just £0.5m per day) into a loss of ~£60/tonne. With weak balance sheets across the steel industry pretty much worldwide, few steel companies today are able to sustain loss-making at this level for very long.

Suggestions for business turnaround
In recent weeks, a number of apparent solutions for the turnaround of Port Talbot have been mentioned in the international press. These include business rate reductions, employment cost reductions and even reductions in energy costs. Let us examine these ideas in turn.

(i) Business rate reductions
Many industry commentators note the cripplingly high business rates that sometimes apply in the UK. Port Talbot currently pays ~£10m/year in business rates. On a sales volume of ~3 million tonnes, this cost amounts to roughly £3 / tonne. If the objective is to improve profitability by £60/tonne, it is clear that substantial reductions of business rates will do little to restore viability at Port Talbot.

(ii) Employment cost reductions
Port Talbot employs a labour force of ~4000. If we assume an average wage of £25,000/year per employee, this gives a total wage bill of £100 million per annum or roughly £33/tonne. Trimming this by 10% could therefore reduce Port Talbot’s production costs by ~£3/tonne. If the objective is to improve Port Talbot profitability by £60/tonne, trimming the wage bill by a few percentage points will also do very little to restore viability to the business.

(iii) Energy cost reductions
There is much discussion concerning the relative cost of electricity prices in the UK as compared to the continent; many observers consider that electricity costs in the UK are double those in other parts of Europe. Depending a little on the exact steel product, our own assessment is that Port Talbot’s electricity costs are currently in the £12.50-£17.50 / tonne range.  If we ignore the fact that much of this electricity can be generated from hot gas that is generated from carbon-based inputs such as coal and coke, and further assume an average electricity cost of £15/tonne of finished steel, it is clear that whilst halving of these costs might save ~£7.50 per tonne, this level of cost saving is also very far from the profit improvement target of £60/t discussed above.

The solution
What then is the solution for Port Talbot if the objective is a profit improvement of £60/tonne, when measures such as business rate reductions, employment cost reductions and reductions in electricity costs can at most generate savings of £3, £3.50 and £7.50/tonne respectively (or just £14/tonne in total)?

MCI’s view is that the only solution is to stop production of liquid steel in south Wales, and to ship in steel slab (for further downstream processing into hot and cold rolled and coated steel at Port Talbot) from one of the lowest-cost producers of these steels.

The chart below illustrates Port Talbot’s slab production costs on the world cost curve, as at Q1 2016.


Readers of this blog post will notice that the difference in slab production cost between the world’s lowest cost producer and the Port Talbot works is ~$110/tonne. If we assume a transport cost via sea freight of ~$35/tonne, the total cost saving at Port Talbot of purchasing rather than making slab works out at $75/tonne or ~£52 / tonne. With some small reduction in business rates or employment costs or energy prices, Port Talbot should therefore be able to achieve a profit improvement of £60/tonne and thus attain viability, if it can source low cost slab.

Next steps  
Do we have any other evidence that such a strategy would be viable for Port Talbot? Who would be the best foreign partners for sourcing the low-cost slab (and do they have the capability for immediate slab supply)? How do we calculate the production cost savings and freight costs?

For further information, please contact us.

Andrzej M Kotas
Managing Director
Metals Consulting International Limited

Mobile: +44 775 149 0885


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Monday, May 09, 2016

Centro-Metalcut gears up for production on a large Conditioning Grinder

Rockford, IL, May 2, 2016 – Centro-Metalcut, a world-class manufacturer of Abrasive Cutoff Saws and Conditioning Grinders for the steel industry is gearing up for production on a large Conditioning Grinder with some impressive features.

The grinder, a 400HP stationary grinding machine features a 90/45 degree grinding head, electric car drive system.  The machine will have dual grinding cars; a rounds grind car and a slab grind car that allows onboard slab turning more than 20tons (over 40,000lbs), which will allow for increased production capabilities through a reduction in material handling time.  Material load and unload tables will be supplied with the machine as well.

Like all Centro-Metalcut machines, the grinder is a custom-engineered design.  It will include constant load monitoring technology which offers benefits such as constant surface speed while grinding, increased quality of the end product, increased grinding wheel life, fast and compact design, the highest degree of safety, and improved surface finish. 

The grinder, whose final home will stay in the United States, is set to be complete in late 2016.  Centro-Metalcut plans to have an open house at their facility in Rockford, IL in Fall 2016 for current and potential customers, vendors and employees to see the final machine in action. 

For more information about Stationary Grinders from Centro-Metalcut, visit Centro-Metalcut at AISTech 2016 May 16-18th, booth #2659, or visit

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Friday, April 29, 2016

ISSB News - Chinese steel production in March 2016

The Iron & Steel Statistics Bureau today comment as follows on Chinese steel production levels in March 2016.

“The decline in Chinese domestic demand for steel has been well documented and there had been reports in the press of government plans to cut some of the older, more polluting capacity and to reduce annual production by around 150 million tonnes in five years. There has been very little evidence of any progress being made in this regard, however, as although Chinese production fell by 3% year on year in the first quarter, the traditionally strong month of March actually saw production increase by 1% to 70.7 million tonnes which, incredibly, represents the highest ever monthly production figure from the country”.

To read more visit or visit our website at for other news.

Andrzej M Kotas

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