Steelmakers to Benefit as EU Moves to Drop Barriers to Imports From Ukraine

The suspension of duties on imports of Ukrainian products won approval in a European Parliament session May 19, with the measure next needing to be endorsed by the European Council for it to take effect, a European Commission spokesperson told S&P Global Commodity Insights.

Final approval is expected during the next Foreign Affairs Council meeting in early June, according to the spokesperson.

To help boost war-ravaged Ukraine’s exports to the EU, the European Commission proposed April 27 suspending for one year its import duties on all Ukrainian exports to the bloc, including on Ukraine’s major revenue item — steel.

The move would see the suspension of all EU anti-dumping and safeguard measures in place on Ukrainian steel, as well as the drop of all rolled steel product-specific quotas, which Ukraine has had to pay 25% customs charges for exceeding, in line with the existing system that full trade liberalization is coming to temporarily replace.

In theory, the biggest effect from the lapse of duties and quotas should be on the exports of hot-rolled coil, or HRC, and plate, as the EU removes the Eur 60.5/mt antidumping duty on Ukraine’s HRC, and drops the quota for plate, which allows the export of 1 million mt/year, the equivalent of roughly a third of the 2.8 million-2.9 million mt/year plate output by Metinvest. However, that total was before Feb. 24, when Russia attacked Ukraine.

Unlikely to fully take advantage of move

Now, with Metinvest’s two major steelworks — Ilyich and Azovstal — remaining disabled indefinitely in Mariupol, the scene of intense fighting, and other mills in the country that have resumed operations still somewhat hamstrung by difficulties with inbound and outbound freight, Ukrainian industry looks too scarred by the war to use the duty-free regime to the maximum.

As a result of the war and production stoppages, Metinvest’s steel output, at 1.96 million mt in the January-March quarter, dropped by 25% on the quarter, with most of this made before the war.

In early April, Ukraine’s major long rolled steel producer, ArcelorMittal Kryviy Rih put back into operation one of its four blast furnaces, all halted in late February. It is gradually ramping up operations but still has little to sell.

“Our production has been on hold for most of the first quarter,” said a spokeswoman for ArcelorMittal Kryviy Rih, which in 2021 accounted for 23% (4.9 million mt) of Ukraine’s steel production.

“We do export exclusively to the EU, because we are cut off from other markets by broken logistics, and because we are linked to the EU by the railway, but everything we managed to ship in January-March were small batches of remaining inventories and iron ore concentrate,” she said, adding that these sales are burdened with long lead times and high delivery costs.

“EU import quotas allow duty-free imports of steel products in volumes equal to our average annual imports,” the spokeswoman said, and the EU has recently even increased the quota for Ukrainian mills via redistributing the volumes of steel imports from Russia and Belarus that the block banned as part of sanction, she added.

Significant help for Ukrainian steelmakers

The blockade by Russia of Ukraine’s sea ports and Ukraine’s severely depressed current demand for steel has left the nation depending effectively on only one market — the EU — so lifting these barriers is without doubt a big aid for struggling Ukrainian steelmakers.

And 4 million mt/year hot- and cold-rolled coil and sheet producer Zaporizhstal, 49.99% owned by Metinvest, seems to be in a stronger position to make the most of the scrapped duties and quotas. Since its restart 1.5 months ago it has already exceeded 50% of its full capacity.

Metinvest’s fully owned billet and long rolled steel producer, Kamet Steel in Kamianske, in the Dnipropetrovsk region, is another one to benefit right away; in Q1, it increased output to 607,000 mt, with a good part of this shipped as billet for further processing to Bulgarian sections and bar mill Promet, also part of Metinvest. Billet exports are not quota-regulated, but removing quotas from Kamet’s rolls should help maximize their sales.

The US suspended the Section 232 25% tariffs May 9 on steel imports from Ukraine for one year, amounting to partial relief because of a few product-specific duties staying in place.

Story courtesy of Ekaterina Bouckley and Annalisa Villa – S&P Global Platts via Eurometal

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Document Management System (DMS) Features

DMS allows you to store any digital document, such as a scanned, PDF, Word, Excel or CAD file, and link it to any MCMS entity, such as a customer, vendor, order or part number. Instead of heading to a file cabinet to retrieve these key documents, they can be viewed, printed, faxed, or emailed from any workstation where the entity appears on the screen. If allowed, the document can also be edited.

The document can come from an outside source (e.g. email, web site, internal scanner) or from a report or form generated by MCMS. Further, MCMS forms can automatically create, store and link a PDF document during the normal printing process.

Below are the common uses for DMS:

• Save printed forms, such as sales orders and invoices, under the associated customer.
• Save scanned or emailed forms, such as signed delivery tickets, PO’s or vendor invoices, under the customer or vendor.
• Save scanned or digital forms, such as contracts and tax exempt forms, under the customer or vendor.
• Store month-end reports that can later be reprinted.

Below are some less common uses for DMS:

• Attach stored documents to emailed forms.
• Store drawings or assembly instructions linked to customer parts.
• Store correspondence with customers and vendors.
• Store customer or vendor notes that can be viewed and changed.
• Store a spreadsheet that can be used to calculate unique pricing for specific customers.
• Enter notes about an inventory item or lot using a predefined template.
• Display collection notes for any customer displayed on your screen with one keystroke.
• Documents can be added to DMS that are not related to files within MCMS.

Here are some of the existing features that you may not know about:

• With the MCMS Forms package, documents stored in DMS can be automatically attached to emailed forms. For example, a copy of the PO stored in DMS can be attached to an emailed invoice. This can also be linked to our MTR storage system, MCFile, to attached test reports.
• Scanned forms can be automatically linked to the associated order or invoice by printing a barcode on the form.
• You can drag and drop files onto the DMS application to add them.
• Sensitive documents, such as receivable collection notes, can be stored, but added, viewed and updated only by those who have permission to do so.
• Reports can be set up to automatically save to DMS under the report name, so they can be reviewed later.
• Documents that are not related to an entity in MCMS can be still added and maintained.

Here are some NEW features in the latest DMS that you may not know about:

• You can set up templates for adding new documents. For example, you could create a Word document that has headings for different types of special instructions for an order, then when entering an order, a user can call up DMS and select this template to automatically be copied and linked to this order and the user will be placed in Word to make the necessary changes. These templates can be set up to be linked to orders, quotes, customers, vendors, parts and more.
• You can set up a hotkey to automatically bring up a specific type of document for an identifier that is displayed on the screen. For example, a hotkey could be defined to automatically bring up collection notes for the customer displayed on the screen. This could be subject to security settings so only those with permission to do so would be able.
• MCMS reports that are saved to DMS now show the report headings in the description instead of just the program description. This can make it easier to identify reports that were run for different ranges of information.

Simplify your reporting by utilizing all of the tools in your DMS package.

Image courtesy of Beatriz Pérez Moya via Unsplash

As War Wages On in Ukraine, Global Steel Industry is Impacted

For more reasons than we can count, war is an ugly and devastating ordeal that wreaks economic havoc. The Russian invasion of Ukraine has induced pain and suffering not just for the Ukrainian people, but for the whole world. Destruction, trauma, and potential food shortages extend through the Middle East and Africa which receive large agricultural exports from Ukraine.

With the hardships of war, economic struggles are expected. Among the supply chain disruptions prompted by the conflict is its effect on the steel industry. One of the largest metallurgical plants in Europe is located in Ukraine. Most industrial production in Ukraine has been suspended, including most steel plants. Restarting the damaged facilities could take months or even years. GMK Center, a Ukrainian-based and steelworking-focused analytics group, estimates that 90% of Ukrainian steelmaking capacities are no longer operational. On the other side of the conflict, Russia’s steel production continues; however, many countries are boycotting trade with Russia. As a result, steel prices are rising and commodities such as nickel are trading at a tremendous price. Could steel turn into a luxury commodity?

Ukraine is the eighth largest steel producer in the world, while Russia is the third. Combined, they are the second greatest steel exporter globally, only falling behind China. With these steel titans struggling, the industry suffers greatly. 

In Europe, about 40% of steel production is a result of electric-arc furnaces, rather than blast furnaces. As the name suggests, these furnaces are powered by electricity. Production through the electric-arc furnaces is much cleaner and is considered by many to be the future of steel production. With the war, however, electricity prices are rising at frightening rates due to the similar rise in gas prices. As a result, this cleaner means of production is becoming less convenient. 

As Ukraine and its people continue to suffer through the war, so, too, does the steel industry. Steel is an essential aspect to many industries (automotive, construction, infrastructure, etc.); these ramifications faced by the steel industry will have global implications.

Story via:

Javier Blas – Bloomberg via The Washington Post (Story)

Stanislav Zinchenko – GMK Center via gasworld (Story)

Image courtesy of Noah Eleazar via Unsplash

The JMS Team Grows Bigger

On March 16th, 2022, the JMS Team was fortunate to welcome aboard Amlan Borkakati as a software support analyst. Amlan joins the team with a great deal of experience in ERP and technology consulting. Amlan earned his Bachelor’s degree at Visva Bharati University in Calcutta, India in 2007. Not long after, in 2018, he hit the books yet again and earned his Master’s degree from the University of Waterloo in Ontario. Amlan is a talented and accredited individual – he is PMP (Project Management Professional) certified, a Scrum Product Owner, and an SAP Business Objects Access Controller.

Amlan is from the beautiful yet underappreciated Indian state of Assam. Through his professional career, he was joyous for the opportunity to work in Brazil where he attended the 2014 World Cup, the 2016 Rio Olympics, and music festivals such as Rock in Rio and Lollapalooza. He enjoyed his time in Brazil and, now that he has moved away, he still is learning to perfect Brazilian Barbecue.

In his free time, Amlan enjoys supporting Brazilian soccer club Atlético Mineiro (or Galo), attending live concerts, cooking, being outside, and spending time with his wife and Golden Retriever.

We hope you will join us in extending a warm welcome to Amlan, as we are elated to have him join our growing family!

Image courtesy of Charles Deluvio via Unsplash

Ukraine War to Delay Automotive Sector Recovery: Worldsteel

The expected recovery of the global auto industry is still being hampered by the microchip shortage. The situation was expected to ease by the second half of this year; however, the war in Ukraine is likely to delay the return to normal of the supply chain, especially in Europe. So said worldsteel director general Edwin Basson during Thursday’s short-range outlook conference attended by Kallanish.

“Last year was disappointing for the automotive sector. The microchip shortage led to reduced demand and increased prices,” the executive commented. “It had been expected that the supply bottlenecks would dissipate in the second half of 2022. However, the war in Ukraine is likely to delay the recovery.”

Automotive production in China is estimated to continue to grow between 2022 and 2023, after rising 4.8% on-year in 2021. Meanwhile, the recovery in the US market in this period is likely to be driven by higher demand for light vehicles. Both markets are in line with the global increasing production share of electrical vehicles in developed economies.

“EVs will continue raising their presence in 2022. The new technologies and materials used in their production do not threaten the consumption of steel in the automotive industry. We see a positive development in the sector, which is already anticipating an evolution from EVs towards fully automated vehicles,” Basson explained.

Global sales of EVs in 2021 reached 6.6 million units, almost 100% higher on-year. Their share in overall shipments increased from 2.5% in 2019 to almost 8.6% in 2021.

Story courtesy of Todor Kirkov via Kallanish

Image courtesy of Carlos Aranda via Unsplash

Aluminum Associations Representing G7 Nations Joint Statement On Ongoing Russian Invasion Of Ukraine

April 6, 2022 – The Aluminum Association, European Aluminium, the Aluminium Association of Canada and the Japan Aluminium Association released the following statement on the ongoing Russian invasion of Ukraine:

“Our organizations join the rest of the free world in condemning the Russian invasion of Ukraine in the strongest possible terms. The recent images to emerge suggesting ongoing crimes against humanity in the region are frankly appalling. We support the use of economic sanctions and other measures as a diplomatic tool to combat Russian aggression. NATO and its allies are engaged in the highest level of conflict diplomacy on a global security and humanitarian emergency with far reaching impacts across many industries. As representatives of aluminum companies around the world, we also recognize that the conflict is challenging our industry – like many others – in a profound way. Russia is a significant global supplier of aluminum so it is likely that these challenges will continue to compound over time. Our organizations will work with our respective governments to provide relevant industry data and a clear-eyed assessment of what sanctions and similar measures might mean for aluminum producers, users and end consumers. For now, our primary concern is for a speedy and peaceful resolution to the current crisis.”

Charles Johnson, President & CEO
The Aluminum Association

Paul Voss, Director General
European Aluminium

Jean Simard, President & CEO
Aluminium Association of Canada

Yasushi Noto, Executive Director
Japan Aluminium Association

Story via Modern Metals

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Ukraine temporarily loses 40% of steel capacity amid Russian invasion: Metinvest

Ukraine has temporarily lost up to 40% of its overall steelmaking capacity following Russia’s fierce shelling of Mariupol in the last three weeks in an attempt to seize the port city, Yuriy Ryzhenkov, the general director of Metinvest, said in an interview with Ukrayina-24 television aired late March 29.

Mariupol, a strategic port on the Sea of Azov, is home to Metinvest’s Azovstal and Ilyich steel works.

Ilyich is Ukraine’s second-largest steelmaker followed by Azovstal.

“Mariupol plants represent more than a third of Ukraine’s overall steel output,” Ryzhenkov said. “In other words, Ukraine has lost between 30%-40% of its steelmaking capacity.”

Metinvest indicated that it would rebuild the steelmaking facilities, but only if Mariupol survived the assault and remained in the hands of Ukraine.

The company is seeking to restart its Zaporizhstal steel works, which has shut operations due to disrupted logistics, as all Black Sea ports remain blocked.

Metinvest also accounts for about 60% of Ukraine’s overall iron ore output, which remains unaffected, and has increased its iron ore exports via rail to Europe almost twofold and plans to supply at least 1 million mt of iron ore to Europe in March.

The group controls three major Ukrainian iron ore producers in the Kryviy Rih region — Pivnichniy HZK, Tsentralniy HZK and Inhuletskiy HZK — and these remain operational, as does its Dneprovsky iron and steel works.

However, Metinvest is finding alternative slab suppliers for its mills in Italy and the UK, after supplies from Mariupol were halted.

“The most difficult situation will be at our Italian and British plants, as they were completely dependent on slabs supplied from Azovstal,” Ryzhenkov said.

The company plans to arrange supplies of slabs at its European plants from China and Brazil, but it will take up to two months to readjust the supplies, according to Ryzhenkov.

“This is a serious shock for European steel industry, which was integrated with the Ukrainian one,” he said.

Metinvest is in talks with the state-owned railway company UkrZaliznytsia to supply raw materials and to ship steel products for exports.

The company increased output of steel by 15% on the year to 9.53 million mt in 2021, while output of iron ore concentrate and pellets rose 3% on the year to 31.34 million mt, it said in a Feb. 1 statement.

Metinvest is not the only steelmaker impacted by the conflict, with ArcelorMittal Kryvyi Rih previously having halted underground operations on Feb. 24 and idled steelmaking on March 3.

No impact to Ferrexpo operations

However, other miners in central and western Ukraine are continuing to work normally.

Iron ore pellet producer Ferrexpo has not had any impact to its operations, which are located near Kremenchuk in central Ukraine, although has experienced some logistical disruptions.

“Initially … our operations continued, but we saw a lot of supply lines and even the services that were being provided either stop momentarily for some days as people assessed what was going on, but we haven’t really seen anything significant in terms of supply of our regular materials that we use,” a Ferrexpo spokesperson told S&P Global Commodity Insights.

Although some of Ferrexpo’s materials have come through the Black Sea, most of its suppliers had found alternative routes or the company was actively sourcing alternatives for certain items, the spokesperson said, such as using rail or road from other unaffected ports.

“We haven’t really seen any disruptions as such – we’ve seen some delays initially, but most of those have been rectified now and we have no real concerns at the moment around the supply of anything that we need for our operations and that’s in terms of gas, power and diesel down to consumables that we’re using in the process,” the spokesperson added.

The company has also had some issues getting products out.

“Approximately half of our materials went out via the Black Sea and we were regularly railing across the border every day and that’s continued, so we’ve been able to get our material across into western Europe and deliver to our customers and some additional material has gone that way as well,” the spokesperson said.

Keeping industry operating and revenues and salaries as normal was also important for the defense of Ukraine, the Ferrexpo spokesperson said.

“We keep the business operating … we keep paying our taxes, we pay those suppliers that are continuing to support Ferrexpo and we support through the humanitarian effort,” he added.

Miner Avellana Gold’s operations had also continued normally as they were situated at Beregovo in far west Ukraine, a spokesperson told S&P Global.

“Our biggest problem is restrictions on imports – only critical is allowed and that halted some of our projects in that we were caught in the middle of modernization and underground mining preparation,” they said.

Meanwhile, Volt Resources’ Zavalievsky Graphite division suspended its graphite mining and processing operations at Zavallya on Feb. 24 as a caution and also relocated management, accounting and marketing personnel from Kyiv to Lviv.

The company did not respond to S&P Global’s request for a comment.

Story courtesy of Jacqueline Holman, Alexander Bor – Eurometal

Image courtesy of @lifeinkyiv via Unsplash

U.S., U.K. Reach Deal to Ease Tariffs on Steel and Aluminum

The U.S. and U.K. reached a deal to ease tariffs on British steel and aluminum, resolving a longstanding irritant as the nations work to strengthen trade and integration.

The deal will allow 500,000 metric tons of steel annually to be imported duty free, with higher amounts subject to tariffs, starting June 1, the Commerce Department said in a statement. The U.K. also will end retaliatory tariffs on more than $500 million worth of U.S. exports, including distilled spirits, agriculture products and consumer goods.

The deal will require that steel qualifying for duty-free treatment be melted and poured in the U.K., although some processing in the European Union is allowed. It also mandates that any British steel company owned by a Chinese entity must undergo an audit of financial records to assess influence from China’s government and share the results with the U.S.

The deal came after a meeting between U.K. International Trade Secretary Anne-Marie Trevelyan and Commerce Secretary Gina Raimondo on Tuesday in Washington. Raimondo said that the deal will help to counter unfair trade practices by countries like China and will ease inflationary pressures.

“By allowing for a flow of duty-free steel and aluminum from the U.K., we further ease the gap between supply and demand for these products in the U.S.,” Raimondo said.

The Trump administration imposed a 25% steel tariff, along with a 10% duty on aluminum imports, in March 2018 on a range of nations, using a national-security provision in a 1962 trade law. The European Union and the U.S. in October brokered a deal for Washington to ease those tariffs, but the tariffs remained on the U.K. due to the nation’s exit from the bloc.

The U.S. also reached a similar accord with Japan in February.

Trevelyan had been in Baltimore this week meeting with U.S. Trade Representative Katherine Tai

Tai said in a statement that the nations also have agreed to keep engaging on the threat posed by carbon intensive non-market excess capacity in the steel and aluminum industries — an area where China is seen as the biggest culprit.

Steel imports from the U.K. totaled 246,893 tons, or slightly less than 1% of all steel imported by the U.S., during 2021. This compares to an average of 635,830 tons that came from the country annually in the five years before the Trump administration implemented Section 232 tariffs.

Story courtesy of Eric Martin and Joe Deaux– Authors at Bloomberg

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