The average US price for HRC increased during March and April at the beginning of the Ukraine War. This was due to uncertainty surrounding steel producers finding replacement feedstock as both Russia and the Ukraine are significant steel exporters.

In 2022, the average US HRC price peaked in April at US$1,469/t, but then declined for seven consecutive months to November. The decline came on the back of the steep rise in inflation, resulting in central banks increasing interest rates. This has dampened consumer spending and weakened economic confidence, flowing into a reduction in steel demand. 

The average US price for rebar decreased moderately during the 11 months to November, ending at US$1,018/t, down 10.3% since the beginning of the year. In the same period, rebar prices in Europe, China and Asia followed the same pattern and ended at US$777/t, down 11.5%; US$460/t, down 31.7%; and US$549/t, down 23.6%, respectively.

Rebar prices in both US and Europe experienced a ‘roller coaster’ year due to the prices jumping in March with the start of the Ukraine war and subsequently falling again by June. China had the greatest volatility in average rebar prices due to its zero covid policy and ongoing property crisis.

In December, China began to ease harsh lockdown measures, but new outbreaks have occurred. In the US, average rebar prices gained slightly during September, up 3.8% and October, up 2%, on the back of the federal government’s US$1.2tn infrastructure bill.

Steel demand will also be supported by the Inflation Reduction Act (IRA), signed into law in August. Investments of US$370bn are earmarked for energy security and climate change programmes over the next 10 years. The initiative is expected to reduce US greenhouse emission by 40% in 2030, from 2005 levels.

Imports and Exports

Monthly US steel imports have continued to fall since the middle of 2022. For the first 11 months of 2022, monthly US steel imports averaged 2.34Mt, down 4.9%. compared to 2.46Mt for 2021. Alternatively, this equates to imports of 25.7Mt for the January-November period, down 4.4%, compared to a year earlier. Canada was the country’s top steel importer with a 21.8% share, followed by Mexico (17.1%), South Korea (9.1%) and Brazil (8.6%), with remaining 43.6% from other countries.

Notably, in 2018, the US determined that steel imports posed a significant risk to national security and imposed a tariff on certain products under Section 232 of the Trade Expansion Act of 1962. President Trump imposed 25% tariffs on US$16bn worth of imported steel. In 2022, President Biden reached a deal with the EU, UK, and Japan to replace tariffs with quotas.

The Peterson Institute of International Economics suggests the Section 232 tariffs raised aggregated income in the steel industry by US$2.4bn in 2018. Consequently, this increased the cost to steel consumers by US$5.6bn.

Monthly Chinese steel exports increased from their recent trough of 5Mt in September to 5.6Mt in November. During the first 11 months of 2022, China’s steel exports totalled 62Mt, slightly up by 0.3% year on year. Exports during March and April were impacted by the Ukraine war along with pandemic led restrictions, interrupting logistics at major ports. The rebound from May was caused by continued strength of the US dollar, which increased by 10.4% during May to November 2022.

Another contributing factor to the increase of steel exports towards the end of the year was POSCO’s steel plant being impacted by typhoon Hinnamnor. This resulted in a shortage of HRC with South Korean buyers increasing their imports of Chinese steel.

Due to seasonality, exports are generally lower during January and February where factories shut down for the Chinese New Year for up to 16 days. By early to mid-January suppliers will begin to stop production. By 11^th February most employees have returned to work, and from 18^th February operations are generally back to normal. 

In 2021, Russia’s net exports of steel totalled 27.6Mt (ranked #3). In the same period, Ukraine’s net exports were 14.4Mt (Ranked #5). Semi-finished exports from Ukraine were approximately 70% lower for the 11 months of 2022 from the prior year. During the first half of 2022, Russian steel exports were down a mere 5% on year. The small decline was due to the significant changes in Russia’s product sales portfolio, with rising demand for semis and pig iron shipments. In 2022, Russian exports are expected to fall by about 10%.

Curtailments/Closures

Curtailments during 2022 were related to increasing electricity and natural gas prices in Europe and Turkey, truck drivers’ strike, China’s zero Covid-19 policy, and subdued steel demand due to the Ukraine war along with rising global interest rates.   

Italian steel producer Pittini Group suspended its operations at Ferriere Nord Plant, Osoppo due to higher energy costs. The 1.4Mtpa capacity electric arc furnace melt shop temporarily seized operations from 29th August to 2nd October. Energy prices in Italy surged by 45% during August making the steelmaking operations unsustainable. By September, Italian average electricity prices sky-rocketed to US$745MWh, compared to US$288MWh in June.

Turkish authorities increased electricity and natural gas prices for industry by 50% and for households by 20% as of 1st September 2022. Rising costs made the Turkish steel industry uncompetitive, forcing some producers to reduced shifts at plants and temporary halt production. Consequently, the Turkish Steel Producers Association has indicated steelmaking utilisation rates have declined to 60%, from 70% towards the end of 2022 compared to the prior year. 

In July, a trunk drivers’ strike in South Korea resulted in Hyundai Steel curtailing its EAFs in Incheon and Pohang plants for around 10 days. Shipments were cancelled which caused inventory to build up. By December, drivers were still striking, and the government intervened with ‘back to work’ orders. The government believes the recent 12-day strike in December has cost the economy US$2.7bn and steel shipments are currently at only 50% of normal levels.  

China’s zero Covid policy resulted in various steel mills around the country temporary curtailing production as the country’s manufacturing sector came to a halt during April and May. This led to supply disruptions in Shanghai, which accounts for 20% of the country’s foreign trade. Lockdowns were also experienced in Suzhou, Hangzhou, Ningbo, Jiaxing, Huzhou and Beijing. 

In early November, Hoa Phat Group announced the shut down of a least four of the blast furnaces at Dung Quat and Hai Duong plants. Due to inventory building up and a continued decline in steel demand, the company shut down blast furnace operations during November and December. Hoa Phat Group was unable to find additional buyers of its steel products due to weak demand in both domestic and international markets.

New Capacities and Expansions

Steel Dynamics commenced full scale operations of its Sinton plant in February 2022 when the company produced its first hot rolled coil manufactured via the 2,314mm mill. The greenfield facility has a 2.72Mtpa melt shop capacity, with the opening being delayed by several months due to heavy flooding in Texas.

The company is yet to ramp up production due to technical issues with power at its substation in July. Consequently, the facility operated at around 50% capacity during September and October. Steel Dynamics believes its maximum capacity will be achieved during the second half of 2023. 

In June 2022, Nucor completed is expansion and modernisation of Gallatin Steel in Ghent, Kentucky. The US$650m project included a new high-performance 1.27Mtpa capacity melt shop and twin ladle furnace commissioned in April.

Subsequently, the company commenced operation of the 1,829mm wide hot band pickle galvanised line in June. This will enable Nucor to expand into a new product range for advanced high strength steel (AHSS). The company will also add a 0.23Mtpa tube mill in 2023 for production of API line pipe grades.

In April 2022, BlueScope Steel completed an expansion project at its North Star plant in Ohio, US. The commissioning of new equipment includes a 195t electric arc furnace, a ladle furnace and a single-strand thin-slab continuous casting machine. The company’s first slab was produced shortly after its commissioning. Investment in the new melt shop was US$700m and has increased its steelmaking capacity by 0.85Mt, to 3.05Mt.

In October 2022, Tata Steel recommenced operations at the 0.9Mtpa Neelachal Ispat Nigam Limited (NINL) steel site. Tata Steel acquired the facility via its subsidiary Tata Steel Long Products (TSLPL) in July for US$1.55bn, which cost an addition US$126m to restart operations at the neglected site.

The mill was acquired via the government’s privatisation process after it had remained closed for almost two years. Tata Steel plans to significantly expand crude steel capacity of NINL to 10Mpta in the long term by 2033. Capacity is expected to reach 4Mtpa by 2026. The facility is situated on 10km2 of land and has 100Mt of iron ore reserves. The acquisition will enhance the existing infrastructure of Tata Steel at Kalinganagar.

Further new crude steel capacity expected into 2023 includes National Mineral Development Corporation (NMDC) Limited in Nagarnar (3Mtpa), ArcelorMittal and Nippon Steel in Calvert (1.5Mtpa) and Commercial Metals Company in Mesa, Arizona (0.5Mtpa). NMDC Nagarnar is expected to be privatised once steelmaking operations are commissioned. Approval for the company to demerge the steelmaking facility was approved by the Ministry of Corporate Affairs in October 2022. The greenfield site is located on 8km2 of land with investment of US$2.5bn.

Mergers and Acquisitions

China’s Baowu Steel Group has acquired a 51% stake in XinSteel, the largest steelmaker in Jiangxi province, for US$630m. XinSteel’s subsidiary, Xinyu Iron and Steel, is a major steel producer with a crude steel capacity of 10Mtpa. The remaining 49% stake will be held by the Jiangxi provincial government. The move will transfer controlling ownership of Xinyu Steel to the central state-owned Assets Supervisions and Administration Commission (SASAC). Steelmaking equipment include a 1Mtpa EAF with the remaining BF/BOF.

In June 2022, Ansteel Group announced its intention to acquire Lianyuan Iron and Steel (Lingyuan Steel). The deal is not yet finalised. Lingyuan Steel has five blast furnaces ranging in 420–2,300m3, with a total capacity of 5.06Mt. Its steelmaking complex includes three 35t and three 120t basic oxygen furnaces with a total capacity of 5.7Mt. Ansteel Group has a 53Mtpa ironmaking capacity and a 63Mtpa steelmaking capacity, following its merger with Benxi Iron and Steel Group.

In October 2022, Shagang Group acquired a 60% interest in Nanjing Iron and Steel United Co (NISCO/Nangang) from Fosun International. The transaction was worth US$2.1bn. In 2021, Shagang Group’s crude steel output was 44.2Mt and Nanjing Iron and Steel’s output was 11.6Mt. 

In February 2022, Nippon Steel finalised the acquisition of G Steel GJ Steel integrated steel mills in Thailand. The total transaction cost Nippon Steel US$480m and gives an ownership of 60.23% in G Steel and 57.6% in G J Steel. G/GJ Steel has a total EAF melt shop capacity of 3Mtpa and a hot strip mill capacity of 3.4Mtpa.

In July 2022, Tata Steel acquired Neelachal Ispat Nigam Ltd (NINL) via its subsidiary Tata Steel Long Products (TSLPL), for an ownership of 93.7% and investment of US$1.6bn. The NINL facility currently has 0.9Mt crude steel capacity and 10km2 of land and 100Mt of iron ore reserves. NINL’s sale to Tata Steel was part of the government’s divestment plan of unprofitable steel operations.

At the start of 2022, ArcelorMittal acquired Scottish steel recycling business John Lawrie Metals (JLM). JLM has three sites in north-east of Scotland, plus a main base in Aberdeen. The steel recycler has access to diversified high quality scrap steel with approximately 50% processed from the oil and gas industry via the decommissioning of wells.

In May 2022, ArcelorMittal acquired several steel scrap recycling facilities from ALBA International Recycling. The acquisition includes 10 scrap yards located in southern Germany. Specifically, these consist of three different companies, ALBA Electronics Recycling, ALBA Metall Sud Rhein-Main and ALBA Metall Sud. The companies source its material from broad range of suppliers and various contracts with local municipalities, whom have contracts with industrial clients.

In December 2022, ArcelorMittal announced it would acquire Riwald Recycling – a ferrous scrap metal recycling business in the Netherlands. The transaction is not yet finalised. It operates two metal yards in Almelo and Beverwijk, and both have direct port access. Collectively, the three acquisitions of steel recycling operations of JLM, ALBA International Recycling and Riwald have processed over 1Mt of scrap steel in 2021.

In June 2022, BlueScope finalised the acquisition of coil coating business, Cornerstone Building Brands (CBB) for US$500m. CBB has a total capacity of 0.9Mtpa across seven facilities and mainly serve commercial and industrial construction applications. BlueScope’s metallic coating and painting capacity is now approximately 1.375Mt, from its previous 0.475Mt.

Steel Dynamics finalised its acquisition for equity interest in ROCA ACERO SA de CV (ROCA) as part of its North America raw material procurement strategy. ROCA operates a ferrous and nonferrous scrap metals recycling business. Specific operations include four scrap processing facilities positioned near high-volume industrial scrap sources located throughout Central and Northern Mexico. These combined facilities ship approximately 0.575Mt of scrap annually and have a processing capability of 0.85Mtpa.

Nucor acquired Summit Utility Structures LLC—which produces a variety of steel structures such as, custom-engineered tubular poles for a wide variety of industries including utility, lighting, transportation, and communication industries. The acquisition is now a new business unit—Nucor Tower & Structures.

Nucor believes the market for utility infrastructure has been stable in the past and now is the time for increased growth due to the replacement of ageing infrastructure and increased penetration of renewable energy and energy storage.

Nucor recently announced plans to expand its Towers and Structures business by building two new tower production plants. The two new greenfield facilities will be determined within the next few months, will be highly automated and utilise the best available technology which include hot-dip galvanised operations.

Tenaris intends to acquire 100% shares of Benteler Steel & Tube Manufacturing Corporation from its holding company, Benteler North American Corporation (Benteler). The transaction is yet to be finalised. The transaction value is US$460m, with Benteler producing seamless steel pipe for the oil and gas markets. The facility is in Shreveport, Louisiana, and has rolling capacity of 0.4Mtpa, with the current owner successfully completing a ramp-up of the plant in 2020.

ArcelorMittal plans to acquire Brazilian steel complex Companhia Siderurgica do Pecem (CSP) in Ceara state. The producer has already reached an agreement with CSP’s shareholders—Vale (50%), Dongkuk (30%), and POSCO (20%). The acquisition is yet to be finalised.

The investment will cost ArcelorMittal US$2.2bn. CSP has crude steel capacity 3Mtpa with access via conveyors to the Port of Pecem and a large-scale deep-water port located 10km from the plant. The facility has expansion opportunities to add a DRI plant and electric arc furnace with crude steel capacity of 3Mtpa with the site covering 5.7km2.

In November 2022, ArcelorMittal Nippon Steel (AMNS) India finalised the acquisition of Essar Group’s port and power infrastructure assets for US$2.4bn. The two companies have signed a definitive agreement and will support AMNS India’s steelmaking facility located in Hazira, Gujrat state.

The agreement includes an equal joint venture partnership to build a 4Mtpa capacity liquefied natural gas terminal at Hazira. The ownership of the port assets has been in the courts since December 2020. ArcelorMittal and Nippon Steel acquired to steelmaking assets of Essar Steel of US$5.7bn in December 2019 under the Insolvency and Bankruptcy Code.

The transaction will be fully funded by AMNS India, with agreement of the assets that are captive, which includes ports assets in Gujarat, Andhra Pradesh, and Odisha. This were not part of the insolvency resolution process for Essar Steel. The signing marks a significant milestone as the facility aims to expand its crude steel capacity from 10Mtpa to 18Mtpa by 2030.