Poor overseas demand for Vietnamese galvanized coils

Poor demand from end users for imported hot-rolled coil (HRC) was due to high inventories of HRC substrate and poor galvanized (GI) coil exports to Europe and the United Kingdom.

“There’s at least a $30 per tonne bid-offer gap between international buyers and Vietnamese offers for GI,” a trader source in Vietnam told Fastmarkets. “European buyers can buy from cheaper sources, actually.”

Market sources said Vietnamese galvanizers had also previously purchased large quantities of HRC at high prices and were not willing to sell any downstream coated materials cheaply.

New domestic offers

Market participants were also waiting for new offers from domestic steel producer Hoa Phat Steel, which then released its latest offer on Friday for January/February shipment and delivery materials.

It is offering SAE1006/SS400 grade HRC at 13,560 Vietnamese Dong per kg ($535.95 per tonne) to northern and central Vietnam and at 13,590 Vietnamese Dong per kg to southern Vietnam.

These prices do not include value-added tax and are valid until November 6, 3pm.

Domestic steel producers are heard to be still having some excess volumes to sell because of poor export demand for HRC substrate, particularly with India looking to impose anti-dumping duties on Vietnamese flat steel.

“Domestic sales were good last month, but still, the loss of export markets has caused a buildup in domestic HRC inventories,” another trader source in Vietnam told Fastmarkets.

Looming anti-dumping duties

In the import market, offers for Chinese SAE1006-grade HRC were heard at $515 per tonne CFR and $520-525 per tonne CFR.

But even if offers fall, interest will still remain limited, the second Vietnamese trader source told Fastmarkets.

“There’s no point trying to buy Chinese HRC now, because anti-dumping duties may kick in from November onward,” he said.

There has also been market chatter that anti-dumping duties may be applied retrospectively on imported materials since the start of investigations.

Chinese Q235-grade HRC was heard to have traded at $505 per tonne CFR Vietnam, although offers from smaller Chinese privately-owned mills were at $505 per tonne FOB.

Fastmarkets’ weekly price assessment for steel HRC, import, cfr Vietnam, which mainly looks at 2-3mm rerolling-grade SAE1006 HRC and equivalent products, was $515-520 per tonne on Friday, narrowing downward from $515-530 per tonne a week earlier.

A major Japanese producer lowered its offer for HRC to $540 per tonne CFR Southeast Asia, although it wasn’t immediately clear whether it had sold any materials in the past week.

Taiwanese mills had lowered offers to $550 per tonne FOB, which is around $570-580 per tonne CFR Southeast Asia.

“The market is tepid and demand is poor, so business is poor,” a seller source handling Taiwanese HRC told Fastmarkets.

Fastmarkets’ weekly price assessment for steel HRC (Japan, Korea, Taiwan-origin), import, cfr Vietnam was $540 per tonne on Friday, falling by $10 per tonne week on week.

Major world events

Market participants were also mainly waiting for more market signals amid two major upcoming events, namely the United States presidential election on November 5 and China’s National Party Congress meeting on November 4-8.

Spot prices of HRC in China have remained rangebound in the last three trading days amid a lack of clear direction because market participants are awaiting a meeting of the National People’s Congress on November 4-8 November.

Market participants are waiting for clear decisions or directions on adjusting budget targets, or any new special bond issuance of up to 10 trillion Chinese yuan ($1.40 trillion) in the mid-term.

Navigate the complexities of the steel industry and make informed decisions with our global coverage of steel market news, steel price developments, steel market trends, forecasts and analysis. Find out more.

The post Four key reasons why Asian steel hot-rolled coil prices remain stagnant appeared first on Fastmarkets.

Ferro-alloys are essential ingredients for steelmaking and green ferro-alloys are now more in demand of downstream steelmakers aiming to realize policies to achieve a low carbon footprint for the steel supply chain. These moves are in line with China’s energy transition and targets for peak carbon emissions and carbon neutrality.

At least 10 ferro-alloy producers in China are now producing green products certified by the China Metallurgical Industry Planning and Research Institute (MPI), including ferro-chrome, ferro-manganese, ferro-silicon and silico-manganese. More producers are actively seeking official certifications, sources told Fastmarkets.

The green certification is awarded to ferro-alloy smelters in China that fulfil key criterion in energy intensity, electricity consumption, coke consumption, water recycling, water wastage, carbon emissions and allowable emissions concentrations.

This has also given rise to the question of green ferro-alloys pricing, where price differentials will encourage smelters to make more efforts in decarbonization and establish a healthy pricing mechanism for the market to recognize the contribution to sustainability.

It is amid this backdrop of the world’s largest ferro-alloys producer driving green ferro-alloy production that Fastmarkets launches four green ferro-alloy prices in China this week.

The assessments are as follows:

• MB-FEC-0025 Green ferroalloy domestic, ferro-chrome 6-8% C, 50% Cr, differential to FeCr assessment, ddp China, yuan/tonne
• MB-FEC-0026 Green ferroalloy domestic, ferro-chrome 6-8% C, 50% Cr, weekly inferred price, ddp China, yuan/tonne
• MB-FEM-0008 Green ferroalloy domestic, ferro-manganese max 7% C, 65% Mn min, differential to FeMn assessment, in-whs China, yuan/tonne
• MB-FEM-0009 Green ferroalloy domestic, ferro-manganese max 7% C, 65% Mn min, weekly inferred price, in-whs China, yuan/tonne

These price launches follow Fastmarkets’ recent launches for green steel prices for reduced-carbon hot-rolled coil in China and green rebar in Southeast Asia, reflecting Asia’s rise to compete in increasingly carbon-aware markets globally amid pressure from governments and state actors to reduce carbon emission levels, as well as to enter lucrative overseas markets.

Fastmarkets also publishing a green steel import differential to the CFR Vietnam HRC index, which focuses on Japan-, Korea-, Taiwan-origin HRC imports into Southeast Asia, as well as a weekly inferred green steel base price, hot-rolled coil assessment on a CFR Vietnam basis.

Green ferro-alloys premium ‘meaningful and has potential’

While there is presently no premium for green ferro-alloy products in China, ferro-alloy producers are heard to be looking actively into price differentials while still actively applying for green product certifications to remain competitive, sources said. This could give rise to a price premium for green ferro-alloys in the supply chain, they added.

Weak downstream markets and an oversupply of ferro-alloys are weighing on sellers’ ability to command a premium for even green ferro-alloys products.

“To my knowledge, the primary reason why the ferro-alloys producers did not widely accept the green ferro-alloys premium is because the weak downstream demand and the current ferro-alloys supply still slightly exceeds demand,” a China-based ferro-alloy trader source said.

“Currently, many ferro-alloys producers are thinking about how to digest their inventory since some ferro-alloys producers do not make that many profits,” a second China-based ferro-alloy trader source said.

Yet premiums for green ferro-alloys still have potential to grow alongside the increased introduction of them by alloy producers and acceptance among whole industry supply chain, participants said. This is especially so with major Chinese steelmakers already offering premiums of up to 800 yuan ($122) per tonne for reduced-carbon flat steel such as hot-rolled coil.

China’s State Council had stipulated previously in its Action Plan for Carbon Peak Before 2030, that by 2025, the share of non-fossil energy consumption should reach around 20% during the 14th Five-Year Plan period. By 2030, the share of non-fossil energy consumption should reach around 25% during the 15th Five-Year Plan period, sources said.

“Despite the fact that no premium is added to green ferro-alloy products now in China, the green and low-carbon development path is the right way to go and definitely the future trend in alignment with China’s overall action plan for carbon peak before 2030,” a third China-based ferro-alloy trader source said.

Especially, the premium will grow with the introduction of smelters on the high-quality development journey and the realization of increasing green steel premiums from end-user industries.

“The downstream steel industry is undergoing a green and low-carbon development, it is with great potential the upstream raw materials including ferro-alloys will go green and there will be a green premium added to ferro-alloys products. Otherwise, without green ferro-alloys, how will there be green steel?” the same third ferro-alloy trader said.

Follow the low carbon steel discussion and keep up to date with the developments influencing the decarbonization of the steel industry. Visit our dedicated green steel page here.

The post Fastmarkets launches Chinese green ferro-alloys prices to cover whole clean steel supply chain appeared first on Fastmarkets.

And as Asia embarks on its green steel journey, establishing its own pricing mechanism is crucial. This not only fosters innovation and investment in green technologies within the region but also ensures that Asia’s steel products remain competitive in the global market. Consumers, businesses and investors are also increasingly seeking green steel that is produced using sustainable methods. This shift in consumer preferences presents a significant opportunity for Asian steel producers to capture market share and differentiate themselves from competitors.

Major Chinese steelmakers, such as Hebei Iron & Steel, have started offering reduced-carbon steel with carbon emissions of 1.1-1.4 tonnes of carbon per tonne of steel produced via the blast furnace-basic oxygen furnace route. Many are also setting themselves up to sell into markets with strict carbon standards in the future, notably the European Carbon Border Adjustment Mechanism, or whichever export markets may enact such carbon safeguards in the future.

It is against this backdrop that Fastmarkets launches green and reduced-carbon steel prices in China and Asia this week, which comes at a time when a period of heavy industrialization is over, and China seeks to leverage its strength in steel production toward high value-add steelmaking, such as electrical steel. China is also presently at what many term “peak carbon” and “peak steel production”, anticipating that steel production levels will continue to dip year on year even as national policymakers attempt to force the mammoth industry to consolidate and improve quality and quantity controls.

Fastmarkets’ reduced-carbon steel prices in China will consist of a fortnightly flat steel reduced carbon emissions differential, exw Eastern China, yuan/tonne, and a daily inferred flat steel reduced carbon emissions, exw Eastern China, yuan/tonne, assessment with the following specifications:

MB-STE-0922 – Flat steel reduced carbon emissions differential, exw China, yuan/tonne
Quality: Steel produced with Scope 1, 2 and 3 emissions of 1.10-1.40 tonnes CO2 per tonne of steel
Quantity: Minimum 10 tonnes
Location: Ex-works China
Timing: Open
Unit: yuan/tonne
Publication: Every two weeks, Friday, 5-6pm Shanghai time

MB-STE-0923 – Flat steel reduced carbon emissions, daily inferred, exw China, yuan/tonne
Quality: Steel produced with Scope 1, 2 and 3 emissions of 1.10-1.40 tonnes CO2 per tonne of steel
Quantity: Minimum 10 tonnes
Location: Ex-works China
Timing: Open
Unit: yuan/tonne
Publication: Daily, 5-6pm Shanghai time

Asia green long steel premiums have also been long coming, with east Asian steelmakers now attempting to achieve green steel premiums for zero-carbon long steel in the domestic and export markets.

Electric-arc furnaces (EAFs) typically have a lower carbon footprint compared to blast furnaces, because they use electricity to melt ferrous scrap. This naturally puts them in a favorable position to produce zero-carbon steel with the aid of carbon credits. Upcoming green steel projects in Asia will also focus on using ferrous scrap or DRI as a steelmaking raw material and will contribute toward lowering emissions even from the relatively less carbon intensive EAF-based production routes.

Fastmarkets’ Asia green long steel assessment will consist of a fortnightly green steel import, differential to rebar assessment, cfr Singapore, $/tonne assessment, and a weekly inferred green steel base price, rebar cfr Singapore, $/tonne, with the following specifications:

MB-STE-0921 Green steel import, differential to rebar assessment, cfr Singapore, $/tonne
Quality: Steel produced with Scope 1, 2 and 3 emissions of 0-600 kg of CO2 per tonne of steel
Quantity: Minimum 10 tonnes
Location: CFR Southeast Asia
Timing: Open
Unit: $/tonne
Publication: Every two weeks, Monday, 5-6pm Singapore time

MB-STE-0924 Green steel base price, rebar cfr Singapore, weekly inferred, $/tonne
Quality: Steel produced with Scope 1, 2 and 3 emissions of 0-600 kg of CO2 per tonne of steel
Quantity: Minimum 10 tonnes
Location: CFR Southeast Asia
Timing: Open
Unit: $/tonne
Publication: Mondays, 5-6pm Singapore time

Asian green steel premiums and market dynamics

Asian green steel premiums have held up well under volatile market conditions, with blast furnace-based producers reporting 20-50% premiums for high-grade flat steel sales to buyers fulfilling sustainability requirements. These include electrical motor producers, shipbuilders, data center construction and wire cutters for silicon chip production.

Fastmarkets’ green steel import, differential to HRC index, cfr Vietnam, was at $102-206 per tonne on October 4, rising for the first time after declining for four consecutive weeks, in line with higher prices for east Asian flat steel.

The weekly inferred green steel base price, hot-rolled coil cfr Vietnam, was at $612-721 per tonne on October 4.

It is worth noting that green long steel premiums may not be as high as those for flat steel, especially because they serve the construction industries primarily, which are a very different segment compared to flat steel applications.

But green long steel premiums will play a part in realizing the decarbonization of property and infrastructure, completing the circular economy once buildings are torn down and obsolete steel is turned into ferrous scrap for re-entry back into the steel production cycle.

The continued development of Asia’s own green steel pricing mechanism will not just benefit the region’s steel industry but also contribute to a more sustainable and prosperous future.

To keep up with the green steel discussion and to follow the critical developments in green steel pricing and low carbon steel production, visit our green steel spotlight page.

The post Fastmarkets launches green prices for Asia long steel, China HRC as industry eyes sustainable future appeared first on Fastmarkets.

The initial assessment will be published on Monday October 7. The differential will be published every two weeks, while the inferred price will be published weekly, on Mondays.

The specifications are as follows:

MB-STE-0921 Green steel import, differential to rebar assessment, cfr Singapore, $/tonne
Quality: Steel produced with Scope 1, 2 and 3 emissions of 0-600 kg of CO2 per tonne of steel
Quantity: Minimum 10 tonnes
Location: CFR Southeast Asia
Timing: Open
Unit: $/tonne
Publication: Every two weeks, Monday, 5-6pm Singapore time

MB-STE-0924 Green steel base price, rebar cfr Singapore, weekly inferred, $/tonne
Quality: Steel produced with Scope 1, 2 and 3 emissions of 0-600 kg of CO2 per tonne of steel
Quantity: Minimum 10 tonnes
Location: CFR Southeast Asia
Timing: Open
Unit: $/tonne
Publication: Mondays, 5-6pm Singapore time

These prices will be a part of the Fastmarkets steel package.

To provide feedback on these prices, or if you would like to provide price information by becoming a data submitter to this price differential, please contact Sam Li Xiaoyu / Paul Lim by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Sam Li Xiaoyu/Paul Lim, re: Asia green long steel prices”.

Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets pricing methodology and specification documents, go to https://www.fastmarkets.com/methodology.

The post Launch of Asia green long steel prices appeared first on Fastmarkets.

The key factor that has emerged from the market is “transparency.”

The end of the quarterly benchmark has meant a growing shift toward a new era of greater transparency, including a trend toward the use of spot pricing mechanisms, with clear, publicly available methodology that closely tracks market dynamics.

Recent ferro-chrome market movements

In the months after the discontinuation, market participants globally have been grappling not only with what the benchmark’s replacement could be, but with challenging market conditions.

For example, in Europe, the downstream markets for stainless and special steel have faced issues such as high (albeit fluctuating) costs and waning demand.

Prices for the most common grades of stainless steel fell during August, in line with lower alloy surcharge values.

In turn, the markets for high carbon ferro-chrome have shown persistently weak spot demand, even taking into account the traditionally quieter summer period, leading to reports of growing competition among sellers to secure deals.

In recent days, transaction prices have come down in the spot market, leading to a decrease in Fastmarkets’ weekly price assessment for ferro-chrome, high carbon, 6-8.5% C, basis 65-70% Cr, max 1.5% Si, delivered Europe. This fell to $1.40-1.90 per lb Cr on Tuesday September 3, from $1.53-2.00 per lb Cr the week before.

China, being a major producer and consumer of ferro-chrome, exerts a significant influence on global markets. Its production and consumption patterns can have a substantial effect on prices and supply-demand dynamics.

Successive declines in monthly tender prices from major stainless steel mills in the country, alongside high raw material costs, have continued to put pressure on spot markets.

High production rates of ferro-chrome have also continued in the Chinese domestic market, leading to persistent reports of oversupply.

Fastmarkets’ weekly price assessment for ferro-chrome, spot, 6-8% C, basis 50% Cr, ddp China has been falling gradually since July 2, and was 8,650-8,850 yuan ($1,214-1,242) per tonne at the latest assessment on September 3. This was down by a further 0.57% from 8,700-8,900 yuan per tonne the week before.

Elsewhere, geopolitical issues have continued to affect markets. These include, for example, the logistical challenges presented by the tensions in the Red Sea corridor, which have dogged shipments from India, a key production hub for high-carbon ferro-chrome with 60-64.9% chrome content.

Meanwhile, the weakness of demand in Europe has capped the upside for this material’s price, leading to further declines in prices in recent weeks.

Fastmarkets’ weekly price assessment for ferro-chrome, high carbon, 6-8.5% C, basis 60-64.9% Cr, max 3% Si, cif Europe was $1.04-1.20 per lb Cr on September 3, down by 0.89% from $1.05-1.20 per lb Cr the week before.

Search for a new pricing paradigm

Alongside this, market participants have continued to look for a reliable, transparent alternative to the quarterly benchmark price.

The benchmark, a cornerstone of the industry for more than two decades, had become increasingly disconnected from the spot market, and had seen its relevance diminish toward the end of its run.

Feedback from across the ferro-chrome market globally suggested a strong preference for either Fastmarkets’ existing prices, or a combination of these with other pricing mechanisms. A producer-listed price announced in June has also been considered as a potential option.

Beyond the choice of a transparent pricing mechanism available in the public domain, there is also a growing consensus on the need for more frequent price updates.

A significant part of the market has come out in favor of weekly price assessments, as opposed to a quarterly figure that may not fully reflect the nuances of market dynamics between updates, such as price volatility and changes in demand and supply.

This shift suggests a clear desire among market participants for greater flexibility and responsiveness to changing market conditions.

Some market participants have also continued to support a quarterly indication, which Fastmarkets can seek to accommodate.

The role of transparency and flexibility

With commodity markets maturing, there is a clear trend toward more transparent and flexible pricing mechanisms.

And while the ferro-chrome market moves toward a future where long-term contracts may no longer be negotiated on the basis of a quarterly published price, daily and weekly price indications that reflect spot price trends, and that offer buy-sell opportunities to all sectors of the market, may provide that transparency.

The ferro-chrome industry now has an opportunity to move toward a more data-driven and market-oriented approach to pricing.

Fastmarkets, with its long history of providing price information to the metals industry, is already producing benchmark prices for ferro-chrome and will continue to support the industry in its development.

Fastmarkets’ offering

Fastmarkets continues to publish its ferro-chrome, lumpy Cr benchmark indicator, charge basis 52% (and high carbon), Europe, which has historically been strongly correlated with the actual quarterly benchmark, as a way to offer some continuity to the market.

The indicator has an eight-year history and uses weekly price inputs, reflecting up-to-date market dynamics.

It is calculated using Fastmarkets’ weekly price assessments for ferro-chrome 50% Cr import, cif main Chinese ports, and ferro-chrome, high carbon, 6-8.5% C, basis 60-64.9% Cr, max 3% Si, cif Europe.

The indicator is not a forecasting tool but provides a weekly snapshot of what the benchmark would be if it were negotiated on that day.

In addition to the benchmark indicator, Fastmarkets also provides a comprehensive overview of the global ferro-chrome market through its coverage of a range of other ferro-chrome prices, including charge chrome delivered to Europe, high carbon ferro-chrome of different grades, and prices for the Asian market.

Fastmarkets’ methodology

Fastmarkets gathers data directly from the market, considering transactions, bids, offers and indications.

Data is stored securely and reviewed by trained team members before publication. This rigorous methodology ensures the market-reflectiveness and useability of Fastmarkets’ price assessments.

Fastmarkets encourages market participants to become data submitters for published prices. By contributing market intelligence, they also help to augment the transparency and relevance of Fastmarkets’ price information.

With the ferro-chrome markets moving into a post-benchmark world, using transparent, flexible and data-driven approaches can support a more resilient and efficient pricing system that better reflects underlying market fundamentals.

The post Transparency key for ferro-chrome markets in post-benchmark world appeared first on Fastmarkets.

Billions of dollars are now being poured into the decarbonization of steel, with major Brazilian iron ore miner Vale in the midst of building green briquette megahubs in the Middle East, while also pushing similar projects in Brazil and North America through collaborations with green steel producers like H2 Green Steel.

Elsewhere, Green Steel of West Australia is also developing a green hydrogen-powered facility to produce green steel from iron ore, while Lincoln Minerals is looking to produce 5-10 million tonnes of magnetite concentrate annually to support Australia’s drive to position itself as a key producer of green iron.

HBI is a pre-reduced iron product that can be used as a feedstock in electric arc furnaces (EAFs), which is a steelmaking process with lower carbon emissions as opposed to traditional blast furnaces. HBI becomes a cornerstone of the green steel transition when produced using green hydrogen.

But the economic viability of green HBI is dependent on multiple factors, according to green hydrogen developer CWP Global’s chief product officer Bobby Pecotic.

A cost conundrum

Among the challenges is the cost of green hydrogen. While it offers a zero-emission alternative to fossil fuels, its production is currently more expensive than grey or blue hydrogen, and significantly pricier than natural gas, which directly contributes to the increasing price of green HBI, according to Pecotic.

Green hydrogen, or “clean” hydrogen, is produced by using clean energy from renewable energy sources, such as solar or wind power, compared with grey hydrogen, which is captured from natural gas or methane, but without the use of carbon capture and storage technology to reduce carbon emissions. Hydrogen is labelled as blue when the carbon generated from steam reforming is captured and stored underground.
 
“HBI is created by reducing iron ore using a reducing agent, which can be either natural gas or hydrogen. While natural gas is a cheaper option, it generates substantial carbon emissions. Green hydrogen, on the other hand, produces zero emissions during the reduction process but comes at a higher price tag,” Pecotic said.

“Assuming a hypothetical scenario where green hydrogen costs $2.50 per kilogram and natural gas costs $8.00 per million British thermal units (MMBtu), the cost of producing HBI using green hydrogen is significantly higher than using natural gas. This price gap poses a significant challenge to the widespread adoption of green HBI,” he added.

Supportive government policies

Many countries are implementing policies like carbon taxes, subsidies and mandates for green fuels, to accelerate the transition to a low-carbon economy. These measures are gradually narrowing the price gap between green and traditional production methods.

The European Union (EU), for one, is at the forefront of these efforts.

“The bloc has introduced ambitious climate targets and is imposing carbon taxes on various industries, including steelmaking. Additionally, the EU has mandated the use of green fuels in sectors like aviation and shipping. These policies are creating a more favorable environment for green hydrogen derivatives,” Pecotic said.

Geographical advantage

Apart from supportive governmental policies, the geographical location of HBI production facilities can also significantly impact overall costs. Regions with abundant renewable energy resources like wind and solar power can produce green hydrogen at lower costs due to the decreasing price of renewable energy technologies.

The cost of onshore wind-generated electricity fell by 70% between 2009 and 2019, with the price of electricity from solar power falling by 89% in the same period, according to the World Economic Forum, which used supporting data from research and data publication OurWorldinData.

“Northwest Africa, for example, is emerging as a potential hub for green hydrogen production. The region boasts exceptional wind and solar resources, which can be harnessed to produce green hydrogen at competitive prices. This, in turn, can make green HBI produced in the region more cost-effective,” Pecotic said.

Transporting hydrogen over long distances is another obstacle to overcome. While hydrogen can be transported in various forms, including gaseous and liquid. This means that iron is likely to be reduced where the hydrogen is produced, such as in places like Northwest Africa.

The road ahead

While ferrous scrap is a low-carbon alternative to iron ore and is widely used in the steel industry, given that it is generally cheaper and more readily available than iron ore, its supply is limited. As the demand for scrap increases, its price is likely to rise in tandem, making HBI a more attractive option, sources told Fastmarkets.

But several challenges still need to be addressed on the green HBI front. These include reducing the cost of green hydrogen production or further regulations on carbon emissions, improving hydrogen transportation infrastructure and developing innovative technologies, all of which are factors that are crucial for the widespread adoption of this low-carbon steelmaking process, sources said.

Looking ahead, the growing pressure to decarbonize the steel industry, coupled with supportive government policies, is creating a favorable environment for green HBI, which is posed to play a pivotal role in shaping the future of cleaner steel production.

Learn how our green steel and low carbon steel raw materials pricing options can help your business to meet its sustainability goals. Talk to us today.

The post Breakthrough hydrogen hubs to power future of green steel: CWP Global appeared first on Fastmarkets.

Glencore had previously expressed its intention to spin off those units into a separate entity, after acquiring a substantial stake in Teck Resources’ metallurgical coal business, Elk Valley Resources (EVR), and envisioned combining this asset with its existing coal operations to create a standalone company.

The turnaround in decision was made after engaging shareholders, who expressed a preference for keeping the cash generated from coal production within the company, allowing for reinvestment in other areas of the business, such as copper and other transition metals.

This means Glencore will retain its ferro-alloys business, which is part of its steel business and includes chrome, vanadium and manganese assets.

“The expected cash generative capacity of the coal and carbon steel materials business significantly enhances the quality of our portfolio, by commodity and geography and broadens our ability to fund our strong portfolio of copper growth options as well as accelerate shareholder returns,” Kalidas Madhavpeddi Glencore chairman said.

Glencore maintains that it remains committed to its broader sustainability goals.

The company has outlined plans to reduce emissions from its coal operations and invest in cleaner energy technologies, in addition to a gradual decline of its thermal coal business.

Discover 1,500+ prices for global metals markets. Talk to us today.

The post Glencore shelves coal, carbon steel demerger plan appeared first on Fastmarkets.

The tide of Chinese steel is affecting a raft of major markets. Low prices from China have led to large export bookings to major scrap buying nations such as Turkey, as well as seriously reducing prices in Southeast Asia, where mills are also exporting large volumes of steel.

The consequences of this domino effect are being felt as far afield as the Russian and Middle Eastern steel markets, while also affecting demand for raw materials such as ferrous scrap.

Problems in China

Massive destocking and price drops have been unleashed in the Chinese long steel markets over recent weeks due to a revision of rebar manufacturing standards by China’s Standardized Administration in June, to come into effect on September 25.

Sellers need to clear their existing stocks of rebar before September 25 because rebar produced to the 2018 standard will not comply with the regulations for sales after that date.

Chinese domestic rebar prices dropped to a seven-year low on July 25. This led to bearish sentiment in the steel market, with the prices for hot-rolled coil and semi-finished steel following the dive downward.

Fastmarkets calculated its steel hot-rolled coil index, export, fob main port China, at $495 per tonne on August 1. This compared with $518 per tonne on July 1.

In the first six months of 2024, China’s exports of HRC and steel sheet amounted to 13.70 million tonnes, up by nearly 58% from 8.69 million tonnes in the corresponding period of 2023, according to Fastmarkets’ calculations based on Chinese customs data.

China also exported 1.09 million tonnes of hot-rolled bar and rebar in the January-June 2024 period, up year on year by 100,933 tonnes, 11%, from 989,067 tonnes.

Chinese mills have reduced their output of rebar due to a lack of orders recently, but they increased their production of billet.

“The higher supply of billet will put downward pressure on billet prices, and steel mills are seeking export orders because domestic demand isn’t strong enough,” an exporter based in China said.

Despite the rise in exports and poor local consumption, Chinese steel output fell by just 1.1% year on year in the first half of 2024, to 530.6 million tonnes. But production in June 2024 actually increased year on year by 0.2% to 91.6 million tonnes, according to the World Steel Association (Worldsteel).

Cheap billet floods Turkey

Concern about China’s influence on external steel markets has been mounting over recent months, but kicked into high gear in late July.

Fastmarkets heard that one Turkish steel mill purchased 45,000 tonnes of Chinese steel billet at $480 per tonne CFR Turkey on July 30, with a second mill in Turkey buying a 50,000-tonne cargo at $485 per tonne CFR.

Around 50,000 tonnes of Malaysian billet was also heard sold at $507 per tonne CFR Turkey in the second half of July.

Turkish steelmakers booked another 300,000 tonnes of billet from China at $500 per tonne CFR last week, in addition to at least 200,000 tonnes of imports from the same origin at $515 per tonne CFR in the previous weeks.

The growing competitiveness of steel billet against scrap can be seen when looking at Fastmarkets’ pricing histories. While Turkey is the largest importer of steel scrap in the world, its electric-arc furnace (EAF) operators are more than content to switch to rolling semi-finished steel when prices support that option.

But the mills have to export the same volume of finished long steel products to avoid the 22.4% import tax on billet imposed under the country’s inward-processing regime.

“Turkish steelmakers are buying this cheap Chinese billet under the inward-processing regime,” a trading source said. “These are really good prices, but I wonder how they will export [a similar] volume in such weak export markets. The Chinese billet will arrive in three months, and it is not certain that the export markets will be any stronger by then.”

Moreover, the cheap billet imports from China were also expected to put downward pressure on scrap prices soon, according to trade sources.

“The Turkish steel market has been very quiet recently. Cheap billet imports from China have made the situation worse. Scrap and rebar prices have not been affected much yet, but we may see the rock-bottom [of the market] if the mills stay away from the scrap markets for a couple of weeks,” a Turkish trading source said.

“Unfortunately, these Chinese billet sales have ruined the market,” a Turkish mill source said. “People stopped buying material. The Chinese material will arrive in three months. It seems that August and September will be worse. I see that traders are taking positions accordingly. Everybody is aware of the situation.”

The premium for Fastmarkets’ price assessment for steel billet, import, cfr main port Turkey, over the daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $108.85 per tonne on August 1. This was down significantly from a year-to-date average premium of $137.20 per tonne.

Displaced Russian exports

The recent inflow of cheap Chinese material into Turkey has added to the factors behind the already decreasing flow of Russian billet into the Middle Eastern country, trade sources said.

Russia traditionally was the key supplier of billet to Turkey. But after its invasion of Ukraine in 2022, and the growing pressure of western trading sanctions, the loyalty of Turkish customers has gradually eroded.

In the first half of 2023, the country imported a total of 3.24 million tonnes of semi-finished steel, of which 1.85 million tonnes, 54%, originated in Russia. Malaysia, China and Indonesia supplied 151,000 tonnes, 52,810 tonnes and 81,216 tonnes respectively, according to data from Global Trade Tracker (GTT).

Meanwhile, in January-June 2024, when Turkey imported a total of 3.18 million tonnes of semi-finished steel products, Russia’s share fell to 27%, 862,521 tonnes. At the same time, Malaysia increased its supply of such materials to Turkey to 929,182 tonnes, and Indonesia to 309,156 tonnes.

Chinese volumes were not significant in the first half of 2024, but now, with prices falling dramatically, their presence has already exceeded 2023 figures.

Market sources said that Russian suppliers can now only get new billet orders from Turkey in two situations: either they reduce prices below the level available from China, or they sell only small volumes with prompt shipment to the north of Turkey, where the majority of ports cannot accept large cargoes and the re-rolling facilities are comparatively smaller than in mills in the south and west of the country.

“With recent Chinese billet bookings at $480-485 [per tonne] CFR Marmara and Iskenderun, it would be a great [stroke of] luck for Russian mills to get $498-500 per tonne CFR Turkish Black Sea ports for prompt shipment cargoes,” one semi-finished steel market source said.

He also said that Russian mills were currently offering material at prices in the range of $496-503 per tonne FOB, depending on the mill, which would equate to $511-523 per tonne CFR Turkish Black Sea ports. But he added that they would have several weeks to wait before closing their order books.

He did say, however, that Russian mills may consider selling this material domestically in the form of long steel, for which the pricing environment is much more favorable. Other mills, with large allocations, understand that they will have to cut prices to keep their market share.

GCC demand weak

Billet importers in the Gulf Co-operation Council (GCC) region received offers of China-origin billet at $505-510 per tonne CFR for September shipping, and estimated that the workable price would be about $500 per tonne CFR.

But extreme heat in the region, especially in the United Arab Emirates and Saudi Arabia, has resulted in a slowing of construction activity, market sources said.

Local rebar prices in the UAE have been stable since late May because of weak construction output.

Billet from Oman was recently offered to the UAE around $520 per tonne CPT. But buyers considered this price was high considering the weak demand, as well as the lower prices available from China.

Iran-origin billet is also occasionally available in the GCC countries at competitive prices.

“Buyers are in no hurry to book material in the region because of summer conditions. Most decision-makers are on holiday, and construction activity is unlikely to improve before September,” one trader in the UAE said.

“The market has been stable since early summer, and will remain stable until the end of August. I do not expect big-tonnage imports,” another GCC-based trader said.

Asian steel prices pushed down

Chinese steel exports have affected Asian markets disproportionately this year, with countries such as Vietnam, South Korea and Thailand among the largest importers of Chinese steel, according to customs statistics.

Lower Chinese prices and rising exports have forced regional mills in Southeast Asia to also drop their prices, to try to retain market share.

Fastmarkets’ price assessment for steel billet, import, cfr Manila, was $475-477 per tonne on August 1, falling week on week from $470-480 per tonne on July 25, and down from $500 per tonne on July 2.

This price pressure shows no sign of reducing, market sources said.

“We will only bid if prices come down to $450 per tonne CFR Southeast Asia for 5SP-grade billet, and I am very confident that spot prices will reach that level,” a buyer source in Southeast Asia told Fastmarkets.

Many offers are for billet from Chinese blast furnace steel, with 1SP- and 3SP-grade billet also heard being offered to Southeast Asia.

Major Indonesian steelmaker Dexin Steel has had to reduce its billet offer to $460 per tonne FOB to stay in the market.

Scrap demand in Asia remains poor

Negative effects from the volume of Chinese steel exports can also be seen in the major scrap import markets of South Korea and Vietnam.

Vietnam’s steel scrap imports rose by 4.17% year on year to 2.44 million tonnes in the first half of 2024, according to the latest customs data. But this pales in comparison with the 48.07% surge in overall steel imports, which reached 8.23 million tonnes in the first half of 2024.

Softer scrap import demand, linked to higher imports of steel products, weighed on prices, market sources said.

Fastmarkets’ weekly price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam, averaged $380-399 per tonne in June 2024, down by $5-12 per tonne from an average of $392-394 per tonne in June 2023.

South Korea imported 4.37 million tonnes of iron and steel products under HS code 72 from China in January-June 2024. If these volumes were repeated through the rest of the year, it would be the largest import volume from China since 2017.

At the same time, South Korea has also seen the biggest dip in production among the major steel-producing countries in Asia this year, with June volumes of 5.1 million tonnes, a 7.2% year-on-year decline, according to Worldsteel.

Fastmarkets’ monthly price assessment for steel scrap, HMS 1&2 (80:20), deep-sea origin import, cfr South Korea, averaged $335-380 per tonne in June 2024, down from $391-403 per tonne a year earlier.

The East Asian nation imported just 1.12 million tonnes of steel scrap in the first half of 2024, down from 2.12 million tonnes in the first half of 2023, according to South Korea customs data. This marked a year on year decline of more than 1 million tonnes, slightly more than 47%.

Follow the critical developments impacting the ferrous scrap market with our market coverage, short- and mid-term forecasts and market-reflective ferrous scrap price data. Find out more.

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Green hydrogen hubs to drive global shift in commodities production

Stable and global markets for green hydrogen are essential for the decarbonization movement, CWP Global chief product officer Bobby Pecotic told Fastmarkets.

This necessitates then that the production of hydrogen-derived commodities, such as green hot briquetted iron (HBI), ammonia and SAF, is located in regions where hydrogen production is the cheapest, according to Pecotic.

“It will always be easier to transport hydrogen-derived commodities than hydrogen itself. This means that future-facing sustainable commodities will be produced in regions with good renewal resources like Africa, North America and South America,” Pecotic said.

“However, the more complex downstream processes such as steelmaking may continue to stay in places like Europe and Asia,” he added.

Supportive governmental policies needed for price tipping point

Clear and long-term governmental regulations which favor green hydrogen and price in the environmental costs of fossil-fuel based commodities production are also needed to incentivize green commodities production chains, according to Pecotic.

“Falling renewable energy costs and increasing green hydrogen production capacity are key factors to driving green commodities production, but the biggest aspect is pricing in the economic burden of carbon dioxide emissions and ensuring they are reflected in the price of fossil fuels,” he said.

Carbon taxes and regulations that penalize carbon dioxide emissions are steps in this direction, he added.

“The European Union’s carbon tax on industries, for example, increases ship fuel costs. While this isn’t enough yet to make green alternatives competitive, it’s a significant step. Furthermore, regulations mandating the use of sustainable fuels, like the EU’s requirement for 20% sustainable aviation fuel in aviation fuel by 2035, are fostering a market for these solutions,” Pecotic said.

Organizations, such as the International Maritime Organisation, which are drafting regulations are likely to include a mix of factors such as stipulated greenhouse gas emissions reductions for each tonne of shipping fuel, credit trading systems, carbon taxes and green subsidies.

Tweaking traditional hubs and technologies

The shift toward green commodities production is not also just isolated to green hydrogen hubs; shaking up current fossil-fuel based production technology will also be necessary, Pecotic said, where retrofitting existing industrial plants and developing new infrastructure will be needed.

“These challenges are not insurmountable with the right economic conditions. Traditional integrated steel mills can gradually idle their blast furnaces and replace them with electric-arc furnaces, or retrofit existing basic oxygen furnaces with new smelting technology to take in green HBI,” he said.

The “drop-in” nature of some green hydrogen-based commodities is also an advantage; they can be blended with other conventional raw materials or fuels, requiring no additional costs or changes for steel mills, pilots or captains.

This means that commercial and business owners acting in their own interests are likely to increasingly choose green commodities over their fossil fuel equivalents in the future because of the increasing number of complex regulatory ecosystems which will act to reduce carbon emissions and close the price gap with green fuels.

“Green hydrogen hubs hold immense potential to revolutionize commodities production. By addressing cost competitiveness, creating stable markets and leveraging existing technologies, green hydrogen can pave the way for a sustainable future,” Pecotic said.

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It is no surprise that many have rolled out net-zero ambitions and undertaken different pathways to achieve them.

Exporters in Asia are pressed with having to report their greenhouse gas emissions when importing to the European Union due to its Carbon Border Adjustment Mechanism (CBAM).

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Path 1: Blast furnace to electric arc furnace (EAF) steelmaking

One common pathway steelmakers have undertaken is shifting from traditional blast furnace steelmaking to EAF, which uses renewable energy and more ferrous scrap and has proven to be less carbon intensive.

Path 2: The use of carbon capture technology

A second pathway is the use of carbon capture and storage technologies, which involve capturing emissions at steel plants before they escape into the atmosphere and storing them.

Leading Japanese steelmaker Nippon Steel last year said it was studying this technology with multinational oil and gas corporation ExxonMobil and Mitsubishi Corporation.

The plan is to capture the emissions from the steelmaker’s plants in Japan and evaluate underground storage opportunities in Asia Pacific, such as in Malaysia, Indonesia and Australia.

Path 3: The adoption of green hydrogen-based technologies

The third and most explored pathway of decarbonization in Asia is the adoption of green-hydrogen-based technologies, which can effectively reduce carbon emissions and reduce the industry’s dependence on coal.

At least half of China’s leading steelmakers have started investing in these technologies to decarbonize their production, focusing on hydrogen-based iron (HBI) in steel production.

Hover over the map below to discover green steel developments in Asia

Chinese steelmaking giant Baowu Steel began construction in 2023 on a new, green hydrogen-based EAF in Zhanjiang, Guangdong province, which would reportedly be the company’s first zero-carbon furnace.

Elsewhere in Asia, Singapore-based Meranti Green Steel has also partnered with Australia-based Green Steel of WA to develop the pelletizing, direct reduction and briquetting of green hydrogen-based iron in western Australia.

The joint venture is set to produce high-grade iron ore pellets, direct reduction of the pellets and briquetting of reduced iron for export including MGS’s new green steel plant in Thailand, the company said.

Fastmarkets assessed Asia HBI prices at $415-425 per tonne CFR Asia on February 16, unchanged week on week.

Hydrogen-based approaches to green steel remain costly

In January 2024, Malaysia-based Esteel Enterprise Sabah Sdn Bhd also launched a RM20 billion ($4.2 billion) green steel project at the Sipitang Oil and Gas Industrial Park after signing an agreement with a domestic energy supplier for the supply of 150 million standard cubic feet per day of natural gas.

Local news outlets reported that the three-phase project at the Sipitang Oil and Gas Industrial Park will use natural gas as a reducing agent instead of coke and coal, which will lower carbon emissions by 70%.

Despite many investments in the development of such hydrogen-based or natural gas reduction technologies, they remain immature and costly, but that is not to say that the adoption of green steel in Asia has not taken off.

Several transactions, especially from leading steelmakers in Japan and South Korea, have been heard in the spot market over the past year.

Nippon Steel, has seen a growing adoption of its zero-carbon “NSCarbolex Neutral” steel products to several steelmakers in Asia, one being to Yangling Metron New Materials for the production of electroplated diamond wires, used to slice wafers from silicon ingots.

In December 2023, the steelmaker also announced that its zero-carbon plates will be supplied to Singapore-based Steelaris, a steel wholesaler that supplies steel plates for oil and gas projects, construction and offshore structures in southeast Asia.

It has also sold zero-carbon materials to Japanese bolt producer Nitettsu.

Fastmarkets’ latest weekly price assessment of its green steel import differential to HRC index, cfr Vietnam, which calculates the price difference of flat-rolled green steel to the CFR Vietnam HRC index, Japan/South Korea/Taiwan, was $204-340 per tonne on Feb 23, unchanged week on week.

Fastmarkets’ assessment of the green steel base price, hot-rolled coil cfr Vietnam, weekly inferred, which is calculated by adding new spreads to Fastmarkets’ Japan, Korea and Taiwan-origin HRC prices, was $824-970 per tonne on Feb 23, down $5-10 per tonne from $834-975 per tonne a week earlier.  

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