About: Jack Otai

Whether the steel market can survive the winter smoothly this year, winter storage will become a key factor. After all, this is the window period for the last concentrated release of demand before the Spring Festival in 2023.
It is understood that this year’s winter storage is basically similar to last year’s winter storage: low inventory of raw materials, poor profitability of steel mills, and a pattern of “weak supply and demand” in fundamentals. The difference is that the center of gravity of steel prices this year has moved down significantly as a whole, and the social inventory of steel is at a historically low level.
Although winter storage has a certain room for operation this year, under the influence of sluggish demand and repeated epidemics, the enthusiasm of steel traders for winter storage is not high at present. The current steel price is still far from the psychological price of steel traders for winter storage . The author predicts that the winter storage window will not open in the short term, and it is expected to open around the end of December. The scale and intensity of winter storage this year are roughly the same as last year. In the absence of major positive news or preferential winter storage policies for steel companies, it is difficult to release more than expected winter storage demand this year.
However, under the condition of low inventory, the replenishment procurement demand brought by winter storage is still expected to drive a new round of “warm winter” market.

According to statistics, in November, the PMI (Purchasing Managers Index) of the steel industry was 40.1%, a decrease of 4.2 percentage points from the previous month, and a decline from the previous month for two consecutive months. Among them, the new order index was 34.5%, down 8.9 percentage points from the previous month. This shows that steel demand has shown a contraction trend.

Entering December, as the demand “cools down” seasonally, the steel market must be prepared to “warm up”. In the later period, as the off-season effect continues to ferment, the speed of demand contraction may further accelerate, and the weak characteristics will become more obvious.

Under such circumstances, the game between the strong expectations driven by favorable policies and the weak reality of declining demand will further intensify. Before the market finds a new equilibrium point, there is little room for steel prices to continue to rise. At the same time, due to the restart of coke price hikes, iron ore prices are still strong, and steel cost support is still strong, which will also lead to limited room for steel prices to fall. On the whole, the price trend of steel products in the short term will be dominated by high volatility.

Anmi will carry out project trials related to carbon capture, utilization and storage technology in Europe and the United States

Recently, ArcelorMittal (hereinafter referred to as Ammi) announced that it is working with Mitsubishi Heavy Industries Engineering Corporation, Mitsubishi Development Corporation, and BHP to develop carbon capture, utilization and storage (CCUS) technology-related projects in EU countries and the United States. test.
The four companies will first test the system developed by Mitsubishi Heavy Industries Engineering on a large scale at Ammi’s Ghent steel plant in Belgium (with an annual production capacity of 5 million tons) and a steel plant in the United States (not yet confirmed).

Among them, the Ghent steel plant project consists of two phases. In the first phase, Ammi will capture carbon dioxide from the blast furnace, with plans to capture 300 kilograms per day. Anmi said the second phase of the project involved testing the separation and capture of carbon dioxide from exhaust gases from reheat furnaces in hot rolling mills. The reheat furnace burns an industrial gas mixture including coke gas, blast furnace gas and natural gas. Ghent Steel will also start running the “Steelanol” demonstration project at the end of this year, which aims to capture gas from blast furnaces and convert the collected gas into ethanol.

Manfred Van Vlierberghe, CEO of AMMI Belgium, said in a statement: “We are developing two routes to decarbonize steelmaking: smart carbon use and innovative direct reduced iron. Both All routes will contribute in our journey towards decarbonizing steelmaking. The smart carbon use route can also integrate carbon capture and utilization (CCU) technology and carbon capture and storage (CCS) technology to capture the carbon dioxide emitted by the steelmaking process .”
Anmi stated that its goal is to reduce carbon dioxide emissions by 35% (compared to 2018 levels) in European operating areas by 2030, and reduce carbon dioxide emissions by 30% (compared to 2018 levels) in all operating areas worldwide.
According to reports, Mitsubishi Heavy Industries Engineering will provide technical support for related project trials, while BHP Billiton and Mitsubishi Development Corporation will provide financial support for related project trials.
BHP Billiton vigorously carried out cooperation projects, and successively carried out similar cooperation projects with China Baowu, Hegang Group, Posco, JFE Steel, Tata Steel and other enterprises.

According to the International Energy Agency, carbon capture, utilization and storage technology is a key solution for carbon reduction in hard-to-achieve carbon reduction areas such as steelmaking, and should be used in more than 53% of primary steel production in the EU by 2050. to achieve its carbon neutrality goals.
At present, there are few steel manufacturers in the world investing in R&D projects related to CCUS. Mitsubishi Heavy Industries Engineering has developed the “KM CDR ProcessTM for CO2 capture” technology in cooperation with Kansai Electric Power Company. So far, the technology has been applied in 16 factories around the world.

The United States is considering additional tariffs on China’s steel industry. In this regard, Chinese Foreign Ministry spokesman Mao Ning said that China will also take all necessary measures to safeguard its legitimate rights and interests.

China is currently the world’s largest producer of steel and aluminum. The US and EU are considering new climate tariffs on Chinese steel and aluminum. The new tariff framework was proposed within the Biden administration and will be formulated on the basis of the relevant agreement between the United States and Europe last year, mainly targeting China and other major emitters.

The U.S. is not likely to reach an agreement with the EU until the end of next year at the earliest, including details such as thresholds for imposing tariffs, according to people familiar with the matter. According to reports, the move means that the United States and Europe will seek to use tariffs, a tool usually used in trade disputes, to advance their climate agenda.

The steel market staged a “warm winter” market in November, which was the result of multiple effects from the macro, capital, and fundamental aspects.
On the one hand, the real estate “rescue market” policy aimed at “guaranteeing the delivery of buildings” and the “warm wind” of various policies to stabilize growth have been blowing frequently, superimposed on the continuous optimization and adjustment of the prevention and control policies of the new crown pneumonia epidemic, and the market sentiment has been restored under the stimulus of macroeconomic benefits. The futures market took the lead in pulling up and driving the spot market to rise accordingly.
On the other hand, in the context of resilient demand, the contradiction between supply and demand in the market has not been intensified due to the off-season effect of demand. On the contrary, driven by the downstream rush period, the increase in terminal replenishment purchases has provided impetus for the rebound of steel prices.

The current steel industry is still facing a weak recovery in steel demand

On October 31, the China Iron and Steel Association held an informal conference for the third quarter. In the first three quarters of this year, the domestic steel industry market demand was relatively weak and the recovery was less than expected. Steel production and consumption, import and export, and prices all fell year-on-year. The operating efficiency of steel enterprises fell sharply, but the asset status was relatively good.

This year, the international commodity market has fluctuated greatly. The prices of raw materials such as coking coal, coke, iron ore, and scrap steel have risen rapidly and remain high. The industry is under enormous pressure to improve economic efficiency.

According to the statistics of the Iron and Steel Association, in the first three quarters, the procurement cost of coking coal of key iron and steel enterprises increased by 51.1% year-on-year, and the procurement cost of injection coal increased by 40.3% year-on-year. Although the procurement cost of imported iron ore decreased year-on-year, it was still higher than that in 2019 and 2020. the same period level. At the same time, affected by the epidemic and rising energy prices, the logistics costs of iron and steel enterprises have also risen sharply, increasing the cost pressure on enterprises.

According to industry analysis, the steel industry has entered a stage of high-quality development, and the current and next few years will still be a window for integration and reorganization. With the advancement of production capacity integration, the increase in the concentration of the steel industry is a certain trend. The reduction of the number of enterprises can optimize the competition structure of the industry and reduce disorderly competition, which is conducive to stabilizing market price fluctuations to a certain extent and promoting the stability of steel prices. The integration of tail-end companies is also conducive to their focus on subdivisions, improving their bargaining power with upstream and downstream, which is conducive to weakening the cyclical nature of the industry and promoting more stable industry and corporate profits.