October UK Steel Market Evaluation

Dear All Steels Customers,

Changes in the steel market certainly continue to move at significant pace, and the forecasts we predicted in our mid-August note have very much all now come to fruition.  Hence, many of our customers have been asking for our considered view on the current and foreseeable market situation, so here is another relatively succinct update on observations, and our forecast for the most likely changes ahead.

Understandably the resurgence of Covid-19 is causing further confusion and uncertainty for us all.  However, it is also fair to say that most countries around the world seem to be taking the stance that the industrial world cannot be allowed to suffer, and construction markets all appear to be strong as governments advance their infrastructure projects to assist employment.  “The Get Britain Building Campaign” certainly still looks to be a top initiative in the UK, and if we look at the sales statistics produced by the National Association of Steel Service Centres (NASS) it is evident that demand for structural sections, merchant bars and hollow sections have returned back, indeed since July, to pre Covid-19 levels.

Our own UK rolling mills are also very busy and overtime working is now starting to be applied to keep up with demand, so the speed of positive turnaround of our industry from being in a rather dark place in the spring is quite extraordinary.

For simplicity, we have started off by updating the usual graphs, which we last presented to you in mid-August, and that we typically follow on a daily basis as it is these fundamentals that drive steel prices combined with supply and demand. 

Iron Ore



Iron ore prices clearly remain strong.  Recent concerns have been expressed that increased mining capacity coming on stream would result in a price softening and whilst the bull run came to a halt in mid-September prices once again seem to be on an upward trajectory. 

China's crude steel output is now estimated to exceed a record breaking 1 billion metric tonnes this year.

What is evident from media reports is that China’s crude steel production has been running at very high levels since May with consumption being lifted by the country’s infrastructure boom, and underpinned by their manufacturing sector.  Such activity is probably now sufficient to keep iron ore hovering around its current high levels.

When considering ratios of iron ore usage to the manufacture of steel it cannot be ignored that this element alone is adding circa £52 per tonne to BOS route steel-making costs since the end of April’s low point!

1.7t of iron ore is used to make a tonne of steel. 

Coking Coal



Like most commodities coking coal prices recovered sharply following the first wave of the Covid-19 pandemic.

As seen with iron ore, Chinese BOS route steelmakers are producing crude steel at a rate of knots with daily output records being recorded in September.

With such strong demand coking coal prices must logically stay strong, which the graph reflects from one of China’s major domestic sources.

The top graph also shows FOB Australia prices that are a good illustration of the recovery following the price decline at the end of Q1.

Moreover, only this week severe heavy rainstorms and floods are once again making headline news in Australia’s major mining territories, and we all know what impact this can have on both iron ore and coking coal prices.

0.7t of coking coal is used to make a tonne of steel.  

Scrap



As expressed in previous steel bulletins Turkish imported scrap prices are always the most reactive to supply and demand and other world steel events.

The graph therefore naturally depicts general steel price movement and little explanation is required to where steel prices appear to be trending.

Clearly iron ore and scrap prices are currently moving in tandem, so both electric arc and BOS route steelmakers both face the pressure of rising costs.

Unsurprisingly, Europe and UK scrap prices are generally moving in the same upward direction, so there is no geographical immunity to such increases in steel-making costs.

We also picked up news yesterday that the Chinese are reappearing in the world market buying up scrap and this could cause a serious uplift in scrap prices.

1.1t of scrap is used to make a tonne of steel.

Exchange Rates



The £ sterling recovered quickly from the initial shock of the Covid-19 outbreak, but it still remains weaker than its year opening position especially against the Euro.  Such an outcome only serves to firm up imported steel and steel-making raw material costs.

In an environment where we have American elections and Brexit negotiations closer to home it will be a volatile time for the £ sterling, and we would shortly expect to see some significant movement, but the direction is currently too difficult to call.

If you look at the value of the £ sterling against the Euro in particular, which is most relevant to the UK, the devaluation of the £ sterling here has added circa £36 per tonne to imported steel costs from mainland Europe since the start of the year.

All shipping and road transport for deliveries to the UK are also Euro based, so this is also adding additional costs to imported prices from the EU.  

Oil Prices 



 As is usually the norm the oil price mirrors the world’s general economic trends.

It is certainly reflective of what we have seen in the UK, with June and July showing the strong bounce back we have seen in steel demand.

It equally shows some confusion in recent months as the Western world wrestles with further uncertainty of the Covid-19 second wave.

On balance, we would say it shows improved confidence in the economy.

Whilst all these graphs convey a positive message for strengthening steel prices the same health warning applies again here that the Covid-19 pandemic could return to ultimately bite more severely as we progress through the cold winter months ahead.

In the section below, we have tried to give a short overview on each product group.  The underlying message however is that from the selection of graphs above is that everything is pointing towards a necessity for steel prices to keep on increasing, especially when you combine this with the knowledge that virtually all steelmakers are still losing money.  Evidence would therefore suggest that we will continue to see mill price increase announcements. 

PRODUCT REVIEWS

Merchant Bar 

Merchant bar prices are now firmly up by £40 per tonne with all the major domestic and European players having successively implemented a second round of increases since the summer.  Rising raw material costs are the main drivers, but the tightness in supply is continually forcing buyers to source many infill purchases from the wholesale market and consequentially radically increasing their costs by an extra measure.  Looking at the overall picture you basically get the impression that all mills cut back shifts and associated labour to deal with the early impact of Covid-19 and whilst demand has returned there has been a reluctance to re-recruit in fear of further Covid-19 pandemic setbacks.  The effects of the Covid-19 pandemic have also forced the closure of another producer i.e. an Italian merchant bar producer (Cogeme) and the resurgence of the Covid-19 pandemic is again creating disruption to manufacture.  Even our own Bromford mill is currently taking some necessary manufacturing time out due to a small-scale Covid-19 outbreak and this issue is evidently most likely to become an even bigger manufacturing impediment for all EU producers.

We have certainly never witnessed supply being so tight on merchant bar, and at present we simply cannot see any immediate change in this situation.  Against this background if we do see the slightest uptick in scrap prices, as anticipated, further price increases have to be on the agenda especially when you consider that the increases applied to merchant bar to date fall some distance behind the movement we have seen on both hollow sections and structural sections.

As a business our own merchant bar stock for infill supply to stockholders has been heavily depleted, and we are struggling to replenish at the desired pace, and nothing on the horizon is going to allow us to correct this situation.  Container shipments out of Turkey also remain extremely dangerous due to the Safeguard issues with no practical solution to bonding the boxes should quotas get exhausted.  We therefore cannot see a simple solution for quickly filling our stock gaps.

Hollow Sections 

As mentioned in August imports have always largely satisfied the UK market and whilst the new quarterly quota system was introduced to better stabilise the spread of imports throughout the year it has added another complexity and risk to hollow sections traders.  The quota for the October to December period was actually exceeded on the first day of this trading period by 6,000t and all importers could be subjected to a retrospective HMRC C18 post clearance demand.  This demand could, by all accounts, be inflicted by HMRC at any time over a three year post the initial clearance follow on period.

Needless to say, availability is tight and bonding has once again had to be used by many importers’ ships that arrived after the 1st October to avoid duties.  Such constraints will be an ongoing problem and arguably the new individual UK Safeguard quota will tighten up supply even further with new measures coming into effect on EU imports of the product.  At present the limit for EU imports is set at only circa 10,000t per quarter and with many EU deliveries being made on trucks supplying the UK from the 1st January 2021 will become extremely arduous and high risk never mind deterring many suppliers away from the UK.  Some of the quotas set for mills outside the UK and Turkey also appear to have been set at very low levels especially for the likes of the UAE, which has been a significant supplier to the UK market over recent years.

The perfect storm on hollow sections supplies is therefore likely to worsen and the prices in the marketplace from domestic mills and dock stock sellers reflects what is an unbelievably tight situation.  Price increases since the summer of over £200 per tonne are commonplace and whilst some traders will no doubt sell forward at cheap rates they will be potentially playing with fire with respect to HMRC imposing a C18 regulation.  Another additional problem is that with so much hollow sections being bonded in preparation for clearance on the first day of each month dockside warehousing is in real short supply and simple economics is forcing up the cost of such storage for the traders.

With such huge obstacles and trading risks in play a number of traders have already called it a day and very few imports will escape some duty charges over the quarters ahead.  As a trader, we are trying to minimise the risk for our customers by heavily bringing in supply well in advance of each quarter and accordingly bonding material for customer clearance on the first day of each quarter.  Warehousing however restricts the volumes we can trade and therefore our own sold stock positions are being greatly reduced.  On the price front it will be availability more so than raw material price movement that will influence price movement and with availability being set to remain in very short supply it is logical for prices to remain exceptionally high.  Hence, there is really no ceiling as to where prices could go given the immediate circumstances.

Structural Sections 

The National Association of Steel Service Centres sales statistics on structural sections strongly reaffirms that “The Get Britain Building Campaign” is a reality with September daily sales being in line with the average for Q1, Covid-19 pre-pandemic.  Similar to all other products mill supplies are all running late and there is serious confusion for the EU mills on how to service the UK post the 1st January 2021 following our separation from the EU.  Customs clearance becomes a new requirement in the process, but the bigger concern is that EU Safeguards becomes a new obstacle and whilst these have been tabled in the event of a Brexit Deal the EU has still not reciprocated with quota arrangements for UK exports to the EU.  In the event of a no-deal Brexit the proposed UK Safeguards immediately get thrown out of the window, so at this very late hour nobody is clear on the terms of engagement with EU section mills.  With such lack of clarity, it is possible that EU suppliers will take a trade break for supplies to the UK during January or until such time that we get further clarity. 

With regard to price, we have seen £60 per tonne of price increases since the summer months (2 x £30 per tonne) all of which appear to have been fully implemented, but prices have still not got back to levels seen this time last year even though raw material prices are higher.  It therefore seems apparent that the mills still need to make further price increases and with supply remaining tight and raw material prices appearing to be still driving upwards it is highly likely that another sizable official price increase will be announced shortly.

Please note that these are only All Steels’ views, which we have generally been asked to share.  However, we hope this provides you with some useful guidance on how things are in our professional opinion most likely to unfold.

All Steels' CARES Quality System Certification!

Dear All Steels Customers,

We are delighted to inform you that we have recently attained CARES quality system approval in regard to being certified by the Authority to purchase and supply steel products for the reinforcement of concrete.

For your convenience, a copy of All Steels’ valid CARES quality system certificate can be found by clicking on the hyperlink provided directly below:
A PDF copy of All Steels' CARES quality system certificate can be found here 

Hence, we are also very pleased to announce that as from the week commencing Monday 2 November 2020 we will have the following range of CARES approved REINFORCING BARS available for immediate ex-stock delivery:
SIZES: 10mm, 12mm, 16mm, 20mm & 25mm
LENGTH: 6/6.3m
GRADE: B500B
BND WGTS: 2-2.5T

Such material can of course be readily ordered in full bundles as part of a composite load (utilising the highly comprehensive All Steels stock range) – or in standalone full loads.

For further details about this new All Steels product supply option then please do not hesitate to contact your relevant All Steels sales contact.

All Steels Welcomes Alex McDougall!

Alex joins All Steels Trading shortly after achieving a first-class honours degree in Economics from Durham University.

It goes without saying that Alex will be called upon to utilise his strong mathematical and analytical skills on a daily basis in collaborating effectively with other members of the AST head office accounts department.

Alex’s key responsibilities will include processing group company payments for approval, assisting with the preparation of group company month end accounts including accruals and prepayments for review. He will also assist the head office accounts department with the preparation of group company VAT returns and year-end audits. Alex is also simultaneously studying hard to try to attain ACCA postgraduate certified professional membership asap as part of his planned continuing professional development.

As you can appreciate Alex’s group finance department appointment represents another very pleasing and key step in helping to secure the long-term and sustainable future of the All Steels group of UK family owned businesses!

Current UK Steel Trade Evaluation

Dear All Steels Customers,

It was certainly a difficult second quarter for all steel producers, and our own rolling mills took their fair share of lockdown time as demand sharply fell away.  Thankfully both Bromford Iron and Special Steel Sections have been back in business since the start of July and demand continues to slowly improve.  On the trading side of our business many customers are asking for our view on the market as a multi-product trader, so here it is based on the usual fundamental hard facts that normally drive steel prices.

When I looked back at my last circulation I mailed out in mid-March I was pleased to see that I logically opened my message with the following statement:
“Everything said below has to be tempered with a belief that demand will slow down and it could even fall off a cliff edge if forced self-isolation and social distancing measures continue for most of 2020”. 

Understandably the same health warning applies again, but hopefully we are on the road to recovery in most respects.

My opening section below really just addresses the raw material cost fundamentals on steelmaking.  As you can see from the selection of graphs everything is pointing towards a necessity for steel prices to increase, especially when you combine this with the knowledge that virtually all steelmakers are losing money.  Evidence would therefore suggest we must be hitting a bounce back point.

Iron Ore


Mining commodity prices fell nowhere near the levels anticipated, primarily because of China’s quick economic recovery. Moreover, Chinese demand has continued to strengthen at a time when Brazilian mines have almost ground to halt as a result of large Covid-19 outbreaks amongst the mining communities.

Brazilian output will eventually return but in the short to mid-term the maths is simple to do.

A $30pt iron ore cost increase is just not possible for a steel producer to absorb so BOS route steel prices must rise.

1.7t of iron ore is used to make a tonne of steel.


Coking Coal



As more metallurgical coking coal production has been concentrated in Australia, prices have been more influenced by extreme weather over the last decade rather than supply and demand.  The onslaught of Covid19 however did take its toll on coking coal prices, but the dip was clearly short lived as the graph shows.

Evidently coking coal prices are now within $2p/t of pre-crisis levels.  There is also a lot of new speculation pointing towards rising prices off the back of many mining giants’ decisions to significantly cut capacity.

0.7t of coking coal is used to make a tonne of steel.

Scrap



Turkish imported scrap prices are always the most reactive to supply and demand and general world events.  Clearly, we are seeing a common theme with scrap prices having hit rock bottom in early April followed by a sharp recovery.

Against expectations of a July scrap price fall the opposite now seems to be the reality. 

The same outcome is also being mirrored in both the UK and mainland Europe.  Scrap route melters are therefore facing equal cost pressures to that of the BOS route steelmakers!

1.1t of scrap is used to make a tonne of steel.

Exchange Rates






As Covid-19 took a stranglehold in the UK at the end of March the £ took a thumping and lost circa 12% of its value.

Again, the recovery here was relatively quick, but it still remains much weaker against both the Euro and the US$ than its position at the start of the year.

Whether it is raw materials for UK steelmakers or imported finished steel this devaluation is significant.  Since the start of the year the currency effect alone is adding circa £35-£40 per tonne to steel imported from mainland Europe.

All shipping and road transport for deliveries to the UK are also Euro or US$ based, so this is also adding additional costs to imported prices.

Oil Prices


A notorious rule of thumb is to use oil price trends as a barometer for steel price movements.

Despite our move to green steel oil generally still has a bearing on steelmaking energy costs, so this again has an impact on prices.

In general, however oil prices are usually just a reflection of the economic world and without surprise this is pointing to a position of improvement.

PRODUCT REVIEWS

The pricing dynamics by product are quite varied, so in this second section I have tried to give All Steels’ true view on how we see trade.

Merchant Bar

Domestic over capacity for today’s UK market remains a constant problem and the imbalance on supply and demand has already taken its toll once again on merchant bar prices.  As we have all seen in the media the mills have been pushing hard for Government loan assistance and some support has been granted, but these are loans at a cost that have to be paid back.  On a positive note, I am sure the weak value of sterling will be assisting exports, but current domestic prices cannot be sustainable for the mills. 

At the outbreak of Covid-19 most of the mills took the brunt of the costs as they were left with the financing of stock as many stockholders/consumers simply closed.  The mills naturally cut back capacity and discounted prices to encourage some sales, but the balance now seems to have been addressed.  Stockholders have called in the mills’ aged stocks, mills and traders dock stocks have been heavily depleted, and we have finally reached the mills’ extended summer shutdown periods.

Everything therefore suggests a tightening in supply and a much busier period on their return from summer breaks.  Given all the other steelmaking cost factors referenced above price increases must be on the mills’ agendas.

Hollow Sections

As EU Safeguard quotas became exhausted mid-February it was almost guaranteed that hollow section investors were going to get a very nice margin return in Q2.  Once again this was another one of those lessons that nothing is guaranteed in the steel industry.

Demand fell off a cliff and Turkish prices collapsed, and the new July Safeguard quota window quickly opened.  As buyers have understandably returned in a cautious mode there has been a reluctance to forward order.  Mill stocks and dock stocks have suddenly become heavily depleted and shortages are now evident on many popular sizes.  This coincides with Tata UK announcing a £50 per tonne price increase on HRC that logically must wash through into hollow section prices.  From All Steels’ experiences we are also seeing similar changes in our Turkish buying prices especially when you factor in the adverse foreign exchange.

Hollow sections has always been one of those products of feast or famine with consequential dramatic price swings, and at present it looks like we are entering a window of famine!

Structural Sections
The Jingye Group’s acquisition of British Steel literally happened as UK manufacturing slammed on the brakes and went into lockdown.  Miraculously British Steel Sections has managed to plough on regardless and appear to have spanned the world to find the necessary sales to keep their mills rolling.  This was clearly a set out intent of Jingye to maximise plant utilisation as a first priority to improve competitiveness, and I am sure they will have recovered UK market share.  Even with such efficiency gains however the rising costs of steelmaking ingredients have surely reached a point where they can no longer be ignored. 

It also has to be recognised that “The Get Britain Building Campaign” appears to be a top priority Government initiative, so this has to bode well for structural steel demand.  The coming together of these developments would therefore appear to be good timing for a recovery in steel prices, and British Steel has already formally announced a €30 per tonne price increase to its European customers.  An increase on structural section prices for the UK therefore has to be just around the corner!

These are only All Steels’ views, which we have generally been asked to share.  However, we hope this provides you with some useful guidance on how things are most likely to unfold in what will hopefully prove to be a time of recovery for all concerned in our industry.

Keep staying safe!


Lee Harrison's ACCA Examination Success!

All Steels is delighted to announce that our accounts department colleague Lee Harrison has passed his final accounting exam with flying colours and become a member of the ACCA.

We think it’s fair to say that Lee’s motivation during studying was the knowledge that the qualification would enable him to further assist All Steels' group of businesses and wide range of respective suppliers/customers through the highly valuable experience and expertise Lee has so very successfully and well-deservedly gained.

Many congratulations Lee!

UK Steel Market Evaluation

Dear All Steels Customers,

A fair number of you have recently been asking for All Steels’ opinion on market developments based on our international trade experience and contacts. Hence, rather than potentially repeating the same current message many times over here is our view on trying to make sense of steel trade in the UK in these unprecedented times.

Everything said below has to be tempered with a belief that demand will slow down and it could even fall off a cliff edge if forced self-isolation and social distancing measures continue for most of 2020.

My opening section really just addresses the raw material cost fundamentals on steelmaking, but as we all know it is supply and demand that always has the hardest bearing on steel prices.

As you can see from the selection of graphs below iron ore, coking coal and scrap prices remain relatively high, and with the knowledge that virtually all steelmakers are losing money we can take some comfort that steel producers simply can’t afford to cut prices:

Iron Ore


Prices clearly remain firm and the recent stabilising in price is reportedly resulting from the Chinese heavily returning to buying as they resume normal production.

The acceleration on prices at the start of 2019 leading to the June 2019 peak was primarily caused by major output cuts in Brazil following the collapse of a major dam at Vale’s Córrego do Feijão mine. This followed with closure of many other Brazilian mines due to concerns over the structure of their tailings dams. Production has remained slow to recover, so over supply has been avoided.
1.7t of iron ore is used to make a tonne of steel.

Coking Coal


Whether you are looking at Australia or China, metallurgical coking coal prices all follow a close trend.

The peaks usually arise at the time of monsoon weather conditions and resulting heavy floods in Australia.

Over the last few years prices have been in a more stable band of $160-185 per tonne and have remained relatively flat since the start of this year.
0.7t of coking coal is used to make a tonne of steel.

Scrap


Turkish imported scrap prices are always most reactive to supply and demand and whilst prices have tumbled circa $35-40 per tonne over recent weeks, they still remain much higher than the early October 2019 position. The downwards trending of scrap was expected to continue, but the tightening up of availability from US Ports as they go on lockdown is now becoming a constraint on supply, so this trend could reverse.
1.1t of scrap is used to make a tonne of steel.

Another big influencer of UK steel prices is obviously exchange rates and the message here is clear to see.

Exchange Rates



Since the onslaught of the coronavirus the value of the £ has taken a tanking with the loss of circa 10% of its value.

Whether it is raw materials for the UK steelmakers or imported steel this movement is dramatic adding circa £50 per tonne of price growth to steel with a typical price tag of £500 per tonne.

All shipping and road transport for deliveries to the UK are also Euro or US$ based, so this is again adding big additional costs to imported prices.

PRODUCT REVIEWS
The pricing dynamic by product are quite varied, so in this second section I have tried to give All Steels’ true view on how we see trade.

Merchant Bar
In the UK we are blessed with a good volume of domestic mills including Bromford Iron, Celsa UK, Liberty Merchant Bar, etc, but all these mills have the reverse benefit on exchange rates with a 10% sterling return gain on Euro selling prices.

Moreover, two of the most prolific producers of merchant bar in Europe (Beltrame Italy & LME France) are both on coronavirus lockdowns for manufacture and despatches. There are also many other small family merchant bar mills in southern Europe that are also known to be closed. This is creating a huge mainland European demand for our domestic mills whilst a hole is left in import supplies to the UK from Beltrame and LME. This has resulted in Celsa UK applying £50 per tonne of increases on deliveries this coming week (£25 per tonne on Monday 23-3-20 + £25 per tonne on Thursday 26-3-20). 

Our other domestic mills are also applying increases, but demand is really tight and providing demand holds up more dramatic increases seem inevitable. We also can’t rule out the risk of the domestic mills suffering the same fate as LME/Beltrame. The chances of the latter has to be high as it does not take too many key operatives to be absent for a mill / steel plant not to function.

Hollow Sections
There has been an abundance of hollow section availability with so many purchasers buying so heavily to beat EU Safeguards against the Turkish supply quota that got exhausted much quicker than anticipated in mid-February. Dock stocks do remain relatively high and All Steels also heavily front loaded to beat Safeguard quotas, but the holes are just starting to appear in our hollow sections stock range.

With no prospects of Turkish imports being possible until the new Safeguard quota window opens on the 1st July supply has to tighten up as we step through each month in Q2. It is also worthy of note that Italian imports will clearly become more difficult with the coronavirus constraints on both production and logistics. With respect to replacement prices out of Turkey current prices are high due to the weak value of the £, so domestic prices in the UK have to rise over the next three months, but this will be somewhat curtailed by an anticipated weakening in demand.

Structural Sections
This is another product where stocks have remained high in the UK as everyone bought heavily in anticipation of price increases pre-Christmas and then demand suddenly weakened. The price increases had all failed by the time we entered February, but two factors will come into play on forward supplies.

1. Virtually half the UK supply is satisfied by EU imports and the 10% devaluation of sterling against the Euro must end up being reflected on import prices.

2. Over the weekend ArcelorMittal has declared a force majeure on raw materials supplied to its European steel mills. This signals a strong message on the likelihood of further mill closures. The likes of Duferdofin Nucor, Italy’s largest section producer is already closed and more must follow. When one of these mills goes down it leaves a huge hole in the supply chain. When more than one mill goes on lockdown availability will become analogous to trying in vain to purchase a fair share of necessary toilet rolls from one of Britain’s supermarkets!

These are only All Steels’ views, which we have generally been asked to share. However, we hope this provides you with some useful guidance on what is most likely to unfold in these difficult business times.

Stay safe.

Best regards,

Laurence McDougall
Managing Director

UK Steel Market Evaluation

Dear All Steels Customers,

A fair number of you have recently been asking for All Steels’ opinion on market developments based on our international trade experience and contacts. Hence, rather than potentially repeating the same current message many times over here is our view on trying to make sense of steel trade in the UK in these unprecedented times.

Everything said below has to be tempered with a belief that demand will slow down and it could even fall off a cliff edge if forced self-isolation and social distancing measures continue for most of 2020.

My opening section really just addresses the raw material cost fundamentals on steelmaking, but as we all know it is supply and demand that always has the hardest bearing on steel prices.

As you can see from the selection of graphs below iron ore, coking coal and scrap prices remain relatively high, and with the knowledge that virtually all steelmakers are losing money we can take some comfort that steel producers simply can’t afford to cut prices:

Iron Ore


Prices clearly remain firm and the recent stabilising in price is reportedly resulting from the Chinese heavily returning to buying as they resume normal production.

The acceleration on prices at the start of 2019 leading to the June 2019 peak was primarily caused by major output cuts in Brazil following the collapse of a major dam at Vale’s Córrego do Feijão mine. This followed with closure of many other Brazilian mines due to concerns over the structure of their tailings dams. Production has remained slow to recover, so over supply has been avoided.
1.7t of iron ore is used to make a tonne of steel.

Coking Coal


Whether you are looking at Australia or China, metallurgical coking coal prices all follow a close trend.

The peaks usually arise at the time of monsoon weather conditions and resulting heavy floods in Australia.

Over the last few years prices have been in a more stable band of $160-185 per tonne and have remained relatively flat since the start of this year.
0.7t of coking coal is used to make a tonne of steel.

Scrap


Turkish imported scrap prices are always most reactive to supply and demand and whilst prices have tumbled circa $35-40 per tonne over recent weeks, they still remain much higher than the early October 2019 position. The downwards trending of scrap was expected to continue, but the tightening up of availability from US Ports as they go on lockdown is now becoming a constraint on supply, so this trend could reverse.
1.1t of scrap is used to make a tonne of steel.

Another big influencer of UK steel prices is obviously exchange rates and the message here is clear to see.

Exchange Rates



Since the onslaught of the coronavirus the value of the £ has taken a tanking with the loss of circa 10% of its value.

Whether it is raw materials for the UK steelmakers or imported steel this movement is dramatic adding circa £50 per tonne of price growth to steel with a typical price tag of £500 per tonne.

All shipping and road transport for deliveries to the UK are also Euro or US$ based, so this is again adding big additional costs to imported prices.

PRODUCT REVIEWS
The pricing dynamic by product are quite varied, so in this second section I have tried to give All Steels’ true view on how we see trade.

Merchant Bar
In the UK we are blessed with a good volume of domestic mills including Bromford Iron, Celsa UK, Liberty Merchant Bar, etc, but all these mills have the reverse benefit on exchange rates with a 10% sterling return gain on Euro selling prices.

Moreover, two of the most prolific producers of merchant bar in Europe (Beltrame Italy & LME France) are both on coronavirus lockdowns for manufacture and despatches. There are also many other small family merchant bar mills in southern Europe that are also known to be closed. This is creating a huge mainland European demand for our domestic mills whilst a hole is left in import supplies to the UK from Beltrame and LME. This has resulted in Celsa UK applying £50 per tonne of increases on deliveries this coming week (£25 per tonne on Monday 23-3-20 + £25 per tonne on Thursday 26-3-20). 

Our other domestic mills are also applying increases, but demand is really tight and providing demand holds up more dramatic increases seem inevitable. We also can’t rule out the risk of the domestic mills suffering the same fate as LME/Beltrame. The chances of the latter has to be high as it does not take too many key operatives to be absent for a mill / steel plant not to function.

Hollow Sections
There has been an abundance of hollow section availability with so many purchasers buying so heavily to beat EU Safeguards against the Turkish supply quota that got exhausted much quicker than anticipated in mid-February. Dock stocks do remain relatively high and All Steels also heavily front loaded to beat Safeguard quotas, but the holes are just starting to appear in our hollow sections stock range.

With no prospects of Turkish imports being possible until the new Safeguard quota window opens on the 1st July supply has to tighten up as we step through each month in Q2. It is also worthy of note that Italian imports will clearly become more difficult with the coronavirus constraints on both production and logistics. With respect to replacement prices out of Turkey current prices are high due to the weak value of the £, so domestic prices in the UK have to rise over the next three months, but this will be somewhat curtailed by an anticipated weakening in demand.

Structural Sections
This is another product where stocks have remained high in the UK as everyone bought heavily in anticipation of price increases pre-Christmas and then demand suddenly weakened. The price increases had all failed by the time we entered February, but two factors will come into play on forward supplies.

1. Virtually half the UK supply is satisfied by EU imports and the 10% devaluation of sterling against the Euro must end up being reflected on import prices.

2. Over the weekend ArcelorMittal has declared a force majeure on raw materials supplied to its European steel mills. This signals a strong message on the likelihood of further mill closures. The likes of Duferdofin Nucor, Italy’s largest section producer is already closed and more must follow. When one of these mills goes down it leaves a huge hole in the supply chain. When more than one mill goes on lockdown availability will become analogous to trying in vain to purchase a fair share of necessary toilet rolls from one of Britain’s supermarkets!

These are only All Steels’ views, which we have generally been asked to share. However, we hope this provides you with some useful guidance on what is most likely to unfold in these difficult business times.

Stay safe.

Best regards,

Laurence McDougall
Managing Director

UK Steel Market Evaluation

Dear All Steels Customers,

A fair number of you have recently been asking for All Steels’ opinion on market developments based on our international trade experience and contacts. Hence, rather than potentially repeating the same current message many times over here is our view on trying to make sense of steel trade in the UK in these unprecedented times.

Everything said below has to be tempered with a belief that demand will slow down and it could even fall off a cliff edge if forced self-isolation and social distancing measures continue for most of 2020.

My opening section really just addresses the raw material cost fundamentals on steelmaking, but as we all know it is supply and demand that always has the hardest bearing on steel prices.

As you can see from the selection of graphs below iron ore, coking coal and scrap prices remain relatively high, and with the knowledge that virtually all steelmakers are losing money we can take some comfort that steel producers simply can’t afford to cut prices:

Iron Ore


Prices clearly remain firm and the recent stabilising in price is reportedly resulting from the Chinese heavily returning to buying as they resume normal production.

The acceleration on prices at the start of 2019 leading to the June 2019 peak was primarily caused by major output cuts in Brazil following the collapse of a major dam at Vale’s Córrego do Feijão mine. This followed with closure of many other Brazilian mines due to concerns over the structure of their tailings dams. Production has remained slow to recover, so over supply has been avoided.
1.7t of iron ore is used to make a tonne of steel.

Coking Coal


Whether you are looking at Australia or China, metallurgical coking coal prices all follow a close trend.

The peaks usually arise at the time of monsoon weather conditions and resulting heavy floods in Australia.

Over the last few years prices have been in a more stable band of $160-185 per tonne and have remained relatively flat since the start of this year.
0.7t of coking coal is used to make a tonne of steel.

Scrap


Turkish imported scrap prices are always most reactive to supply and demand and whilst prices have tumbled circa $35-40 per tonne over recent weeks, they still remain much higher than the early October 2019 position. The downwards trending of scrap was expected to continue, but the tightening up of availability from US Ports as they go on lockdown is now becoming a constraint on supply, so this trend could reverse.
1.1t of scrap is used to make a tonne of steel.

Another big influencer of UK steel prices is obviously exchange rates and the message here is clear to see.

Exchange Rates



Since the onslaught of the coronavirus the value of the £ has taken a tanking with the loss of circa 10% of its value.

Whether it is raw materials for the UK steelmakers or imported steel this movement is dramatic adding circa £50 per tonne of price growth to steel with a typical price tag of £500 per tonne.

All shipping and road transport for deliveries to the UK are also Euro or US$ based, so this is again adding big additional costs to imported prices.

PRODUCT REVIEWS
The pricing dynamic by product are quite varied, so in this second section I have tried to give All Steels’ true view on how we see trade.

Merchant Bar
In the UK we are blessed with a good volume of domestic mills including Bromford Iron, Celsa UK, Liberty Merchant Bar, etc, but all these mills have the reverse benefit on exchange rates with a 10% sterling return gain on Euro selling prices.

Moreover, two of the most prolific producers of merchant bar in Europe (Beltrame Italy & LME France) are both on coronavirus lockdowns for manufacture and despatches. There are also many other small family merchant bar mills in southern Europe that are also known to be closed. This is creating a huge mainland European demand for our domestic mills whilst a hole is left in import supplies to the UK from Beltrame and LME. This has resulted in Celsa UK applying £50 per tonne of increases on deliveries this coming week (£25 per tonne on Monday 23-3-20 + £25 per tonne on Thursday 26-3-20). 

Our other domestic mills are also applying increases, but demand is really tight and providing demand holds up more dramatic increases seem inevitable. We also can’t rule out the risk of the domestic mills suffering the same fate as LME/Beltrame. The chances of the latter has to be high as it does not take too many key operatives to be absent for a mill / steel plant not to function.

Hollow Sections
There has been an abundance of hollow section availability with so many purchasers buying so heavily to beat EU Safeguards against the Turkish supply quota that got exhausted much quicker than anticipated in mid-February. Dock stocks do remain relatively high and All Steels also heavily front loaded to beat Safeguard quotas, but the holes are just starting to appear in our hollow sections stock range.

With no prospects of Turkish imports being possible until the new Safeguard quota window opens on the 1st July supply has to tighten up as we step through each month in Q2. It is also worthy of note that Italian imports will clearly become more difficult with the coronavirus constraints on both production and logistics. With respect to replacement prices out of Turkey current prices are high due to the weak value of the £, so domestic prices in the UK have to rise over the next three months, but this will be somewhat curtailed by an anticipated weakening in demand.

Structural Sections
This is another product where stocks have remained high in the UK as everyone bought heavily in anticipation of price increases pre-Christmas and then demand suddenly weakened. The price increases had all failed by the time we entered February, but two factors will come into play on forward supplies.

1. Virtually half the UK supply is satisfied by EU imports and the 10% devaluation of sterling against the Euro must end up being reflected on import prices.

2. Over the weekend ArcelorMittal has declared a force majeure on raw materials supplied to its European steel mills. This signals a strong message on the likelihood of further mill closures. The likes of Duferdofin Nucor, Italy’s largest section producer is already closed and more must follow. When one of these mills goes down it leaves a huge hole in the supply chain. When more than one mill goes on lockdown availability will become analogous to trying in vain to purchase a fair share of necessary toilet rolls from one of Britain’s supermarkets!

These are only All Steels’ views, which we have generally been asked to share. However, we hope this provides you with some useful guidance on what is most likely to unfold in these difficult business times.

Stay safe.

Best regards,

Laurence McDougall
Managing Director

All Steels' New Export Sales Director

We are delighted to announce that Lee White will assume the role of All Steels’ new Export Sales Director effective as from 1 April 2020.

Going forward Lee will naturally become even more focused on developing export sales primarily for All Steels, but also for our two main sister manufacturing businesses i.e. Special Steel Sections and Bromford Iron.

This is a very well-deserved All Steels promotion for Lee, and we are sure that our export customers in particular will also recognise that he has achieved this new All Steels executive board position as a result of his impressive ability to adeptly maintain and develop existing and new export sales accounts coupled with his unwavering enthusiasm, commitment and strong collaborative skills.

We trust you will all wish Lee all the very best in his new All Steels Export Sales Director role.

Bank of England Collaboration!

We are very pleased to report that All Steels’ Finance Director (Matthew Rhodes) has recently accepted an invitation to take part in a highly relevant and important Bank of England initiative!

The vote to leave the European Union is of course likely to have significant implications for the UK economic outlook and it will take time for those implications to become clear. In light of this, the Bank has launched a new Decision Maker Panel of finance directors from across industries and from around the UK.

The Decision Maker Panel of key/selected finance directors will have immediate policy relevance for:

1. Assessing the likely implications of the Brexit referendum on corporate decision making (for example investment and hiring) and hence the broader economic outlook.

2. Assessing the sectors, regions and firm types (for example small, young) most affected by uncertainty, where more immediate action to offer policy or institutional solutions may be required.

Naturally, All Steels is very appreciative of being given the opportunity via Matthew Rhodes to participate in/contribute to this significant new Bank of England initiative. It’s also always very nice to be especially recognised as being a strong and influential UK based international exporter of steel long products.

Santa Says 48 Days Left!

It’s certainly been a very exciting day here at All Steels because our large outside Christmas Tree is now up and beautifully adorned with its usual sparkling red & gold baubles! The tree’s many festive fairy lights, and including its large tree top star are all also shining very brightly too! We hope that all of our Thirsk neighbours will really enjoy seeing and sharing this seasonal sight with us throughout the next couple of winter months.



Can you believe that there’s now only 48 days left until Christmas Day 2019! However, All Steels feels it’s perfectly acceptable now to start getting into the festive spirit and sharing some good cheer all around! We’re sure that you will agree our wonderful 2019 Christmas Tree is a very pretty sight to behold, and one that will no doubt put a smile on your face too each time you pass by it.

With special thanks to Freddie (our Credit Controller Emily’s little boy) who officially picked out our tree this year. It’s never that easy picking the perfect shape, height plus a truly straight looking Christmas Tree is it, so what a truly great job he did?!

Freddie understands that there are no presents under the tree yet because Santa only delivers presents on Christmas Eve and of course only to those who have been good all year!

AST's Acquisition of Bromford Iron & Steel

All Steels Trading is delighted to announce that we have recently completed the acquisition of Bromford Iron & Steel in West Bromwich.

With a history spanning well over 200 years, Bromford Iron & Steel has a widespread and highly positive reputation as being a leading producer of hot rolled long products. Its rolling mills currently employ 38 people at the Oldbury site where activity in iron and steel processing can be traced back as far as 1610. The company has benefitted from regular and extensive investment in new plant and technology to ensure that Bromford’s product quality, flexibility and ability to produce small tonnages notoriously matches world best standards.

As well as being a leading producer of hot rolled steel profiles for horseshoe manufacture, the company is a major supplier to other sectors including oil and gas and chain-making. In addition to Bromford’s standard and non-standard range of flat bars and sections, the business specialises in producing tailor made hot rolled profiles for countless applications that can eliminate time, labour and expensive machining costs. Bromford also provides a number of secondary steel processing services such as pickling and oiling, cold side straightening and heat treatment.

The exciting acquisition of Bromford Iron & Steel offers excellent synergy with All Steels Trading's other UK steel related businesses, but especially with our Wolverhampton-based Special Steel Sections re-rolling mill. As a bulk international steel trader, we have the critical mass to obtain extremely competitive raw materials prices and these price savings will inevitably enable Bromford to sustainably grow and fulfil capacity.

This major acquisition also confirms All Steels Trading's commitment to supporting and investing in traditional British industries, and safeguarding a significant number of UK jobs. We believe British companies in this industry sector are more than capable of not just supporting domestic steel requirements but successfully competing on the world stage – and the support of All Steels Trading and our duo of UK steel manufacturing companies will no doubt help Bromford to successfully continue to do just that.

Bromford's mill number 1 cooling bed is shown in the image displayed directly below.


All Steels' Build Project is on Target!

All Steels is delighted to report that the construction of our new dedicated 300,000+ square foot warehouse at Groveport is now well underway!

The exciting new All Steels warehouse project build is scheduled to be completed on target, so we’re confidently aiming to have literally all of our circa 40,000 tonnes of steel housed inside our new purpose-built warehouse at Groveport by the end of November 2019! All Steels’ new warehouse at Groveport will have the added benefit of direct quay access and the use of four fully automated large overhead cranes, thus bolstering All Steels’ already highly renowned ability to provide our customers with short delivery lead-times and excellent value for money.

It’s also great to report that as you might expect All Steels’ new warehouse at Groveport is being built of a steel frame structure wherein, All Steels has supplied a significant part of the quality steel products required for this multi-million-pound new warehouse build. We’ll certainly keep you updated with the continued timely progress of this exciting All Steels 2019 warehouse building expansion project.


All Steels' new expanded warehouse building project at Groveport

Multi-million Pound Expansion!

PD Ports/AST's Multi-million-pound Warehouse Expansion!



PD Ports has announced a multi-million-pound investment at Groveport in partnership with one of Europe’s fastest growing international steel traders and long-standing customer, All Steels Trading.

This new long-term contract represents the largest single investment in the last decade at Groveport and signifies the next step in PD Ports’ growth strategy as the Port gears up for further expansion to support its growing reputation as the UK’s market leader for handling long steel products.

Construction on the new six-month build programme, which offers direct quay access, started in March and will see All Steels Trading’s footprint at Groveport expand from 166,000 sq. ft to over 300,000 sq. ft.

Once operational, PD Ports’ skilled and experienced team will handle, store and prepare the steel trader’s products ensuring they are available on demand; bolstering All Steels Trading’s customer commitment to short delivery lead-times and value for money.

Laurence McDougall, All Steels Trading Managing Director believes the partnership with PD Ports works because of the unique working relationship.

“PD Ports understands what we need to keep our customers on track, it’s an invaluable partnership. Having the ability to centralise all of our operations at Groveport enables us to deliver an unrivalled service for our customers, reaffirming our market position as the number one choice for long steel products in the UK.

“There is no other port in the UK that can offer the unique combination of capacity, infrastructure and exceptional service levels that we require. This new facility will streamline our entire business model.

“We often have to respond quickly to fluctuations in demand and knowing we can rely on PD Ports to handle, store and have our steel products available on demand adds real strength to our customer offer in terms of efficiency and value for money.”

Geoff Lippitt, PD Ports’ Group Business Development Director, sees this new contract as a further testament to the Company’s steel handling expertise and highly regarded reputation for deliverable logistics services.

“We are incredibly proud to have further strengthened our long-standing relationship with All Steels Trading as UK port of choice beyond 2035.

“The length of the contract with All Steels Trading shows a true partnership and demonstrates the trust and confidence the Company has in our market knowledge and our ability to understand as well as respond to their needs.

“Our skills and experience complemented by our central UK location for transport distribution to key UK steel processing sites and backed by a dedicated haulage fleet has positioned Groveport as the UK’s market leader for handling long steel products.

“We have seen transformational change in the global steel industry in recent years which has brought challenges but also real opportunity for some of our customers and we are continuing to invest and support that customer growth.”

https://youtu.be/3XYJ-M4y2RI

Final Day Made in Steel 2019!

It's the final day of Made in Steel 2019.  The All Steels Milan exhibition team has certainly enjoyed meeting up already, at this three day international trade fair, with an interesting plethora of fellow steel aficionados!  It's still not too late to come and visit the All Steels exhibition booth.  We're conveniently located in Hall 22, Stand I15.  See you here soon!

Made in Steel 2019

Fieramilano Rho – Milan – Italy

14–15–16 May 2019

Held every two years, Made in Steel brings together under one roof key steel industry players – from producers to users – to take stock of where the sector is going.  Hence, All Steels Trading is delighted to be exhibiting once again at Made in Steel.  We’re almost ready for the doors to open tomorrow, so please come and see us if you’re attending.  We’re located in Pavilion 22, Stand I15.

AST Reaching New Heights!

We’re so very proud to say that every single member of the AST National Three Peaks Team climbed the mighty Snowdon this morning, after ascending/descending both Ben Nevis and Scafell Pike on Saturday/yesterday – wow! 


Ben Nevis Summit

With sheer determination, focus, accountability, true grit and of course great camaraderie the AST Team has now successfully accomplished what it set out to achieve.  Yes, they’ve each climbed around 3,050 metres and have walked approximately 40km in circa 13 hours (excluding transfer times)! 


Scafell Pike Summit

An old-fashioned photo album will be created of AST's mountaineering National Three Peaks Challenge adventure and left in AST’s office reception area for your interest etc.  However, far more importantly, as a consequence of taking on the gruelling/not for the faint-hearted challenge AST has managed to raise over £5k for The Prince’s Trust youth charity, and the sponsorship level is still growing – thank you all so very much for your kind/wonderful support!  

Snowdon Summit

 https://www.justgiving.com/fundraising/allsteels

10 Days Left!

Dear All Steels Customers/Business Partners,

It’s only 10 days left and counting now to AST’s Three Peaks Challenge 11-12 May 2019!

The harsh reality of what this triple mountain B2B/in 48 hours climbing challenge truly entails is now very much on our minds!  However, it’s fair to say that the AST Challenge team is as physically fit/prepared as possible and we’re also feeling mentally strong too! 

Here are a few facts about this AST event in aid of The Prince’s Trust youth charity for those of you who are interested/following our charity story:

1. Saturday 11 May 2019 – 7.30am climb Ben Nevis.  (Highest mountain in Scotland, at an elevation of 1,345 metres above sea level).

2. Saturday 11 May 2019 – circa 7.30pm climb Scafell Pike.  (Highest mountain in England, at an elevation of 978 metres above sea level).

3. Sunday 12 May 2019 – circa 5.30am climb Snowdon.  (Highest mountain in Wales, at an elevation of 1,085 metres above sea level).

On Friday 10 May 2019 the AST Thirsk office will be open for business as usual, albeit with a reduced number of AST colleagues readily available to respond to landline directed calls, as the AST Three Peaks Challenge members will be travelling up to the Scottish Highlands in preparation for the first early Saturday morning Ben Nevis mountain climb.  However, it’s anticipated that the AST colleagues in transit will still be readily available to assist you if you call during Friday on an AST colleague’s work mobile number.

The AST Three Peaks Challenge members will include: Adam Grant, Anna Clarkson, Jon Jacobs, Karolina Florek, Lee White, Laurence McDougall/me, Sandra Malecka, Sarah Pritchard and Tom McDougall.  The AST Challenge members will of course all be back at AST Thirsk/work first thing on Monday 13 May 2019 ready to tell you their mountain climb stories blisters and all!

We would like to take this opportunity to sincerely thank all of our AST customers/business partners who have already generously made a sponsorship support pledge.  It’s great to know that by completing the gruelling Three Peaks/Prince’s Trust Charity Challenge we will all be helping to make a difference to the lives of young disadvantaged people.

Once again, thank you so much for the kind and generous donations given and all your supportive words of encouragement.  It’s very much appreciated especially by the AST Three Peaks Challenge members/The Prince’s Trust.  We will let you know in due course, with picture evidence included, just how quickly and successfully we completed the mission!  If you haven’t already made a sponsorship donation and you would like to do so then please simply follow the All Steels JustGiving web page link provided directly below here: 

https://www.justgiving.com/fundraising/allsteels

Many thanks.

Cheers

Laurence McDougall
Managing Director

Bauma (Munich) April 2019

 

All Steels Trading is currently exhibiting at Bauma 2019!

The Bauma exhibition is only held every three years at Munich’s trade fair centre but lasts for seven days. It's essentially the leading trade fair for construction machinery, building material machines, mining machines, construction vehicles and construction equipment. In terms of exhibition space Bauma is certainly the world's largest trade show. We would love to meet you in All Steels Trading's exhibition booth (Hall 5 349/9) if you're attending!

Global Awards 2019 Winner!

All Steels Trading is delighted to announce that we have very recently received a beautiful/new large glass trophy to proudly display in our Thirsk Head Office Boardroom!

The CEO Today Global Awards are in essence dedicated to recognising strong and innovative leadership amongst business leaders operating around the world.

CEO Today magazine works with and features some of the most innovative, forward-thinking, thought-leading CEOs in business today.

Featuring CEOs from across every region and from all of the key business sectors, CEO Today magazine is ideally placed to recognise and applaud those CEOs that have clearly disrupted their industry’s status quo and taken their company to new heights of innovation and growth.

It is fantastic news that All Steels Trading's Managing Director/CEO has been identified and honoured as a worthy winner by the CEO Today Global Awards 2019 judging panel.