1. Nippon Steel announced its acquisition of U.S. Steel
On December 18, Nippon Steel announced plans to buy U.S. Steel in cash and turn it into a wholly-owned subsidiary at a transaction price of $55 per share, for a total amount of about $14.9 billion. Based on the closing price of U.S. Steel shares on Dec. 15, the premium is about 40%. Affected by the news of the high price acquisition, U.S. Steel shares rose 26% on the day, to $49.59 / share. Nippon Steel didn’t explain why it was willing to pay a hefty premium for U.S. Steel. As the world’s fourth largest steelmaker, Nippon Steel’s acquisition of U.S. Steel will greatly improve its crude steel production capacity and significantly increase its production capacity in the United States. The acquisition is expected to close in the second or third quarter of 2024, subject to CFIUS approval.
In addition, Japan Steel promised to respect all collective bargaining agreements reached by US Steel and the United Steelworkers union, but the latter still resisted the takeover. Under its agreement with U.S. Steel, the United Steelworkers has no right to block a takeover if the acquirer commits to upholding the existing labor agreement.
2. The EU carbon border adjustment mechanism has officially entered the transition period
UK “carbon tariffs” will follow
From October 1, 2023, the EU Carbon Border Adjustment Mechanism (CBAM) officially entered the transition period, according to the provisions of the transition period will last until the end of 2025, and gradually fully implemented from 2026 to 2034. The first reporting quarter of the transition period will be from October 1 to December 31, 2023, and importers will need to submit their reports to the EU CBAM Transition Registry by the end of January 2024 to benefit from the policy. On December 22, the European Commission published the default values that can be used to determine the implied emissions of imported goods (except electricity) covered by the CBAM transition period, which will be revised periodically after the end of the first reporting period in the fourth quarter of 2023.
On December 18, the British government officially announced that it will implement the UK carbon border adjustment mechanism from 2027, and the initial product categories covered include aluminum, cement, steel and so on. The rules for implementing the UK’s carbon border adjustment mechanism are similar to those of the EU, and goods imported into the UK from countries with low or no carbon prices must pay carbon tariffs. The UK government will launch a further consultation on the design of specific terms of the carbon border adjustment mechanism in 2024.
Setting up “carbon barriers” in the name of curbing carbon emissions is becoming a common practice in developed countries and regions. In September, Chinese Commerce Ministry spokesman He Yadong said in response to the EU CBAM that relevant policies should comply with the basic principles and rules of the WTO and avoid constituting protectionist measures and green trade barriers.
3.COP28 publishes the latest version of the Steel Standard Principles
On December 5, the latest version of the Steel Standards Principles was officially released at the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28), “Steel Standards Principles: Unlocking Decarbonization, Trade and Global markets.” This demonstrates a deepening global commitment to advance the measurement and tracking of emissions from steel production. At present, 42 advanced standard-setting organizations, enterprises, industry associations and international organizations have formally endorsed the new steel standard principles. The main content of the latest version of the steel standard principles includes that the near-zero carbon emission measurement method of the steel industry should be fair and just, and reflect the actual situation of different countries.
4. The pace of investment and development of the Simandou project in Guinea was accelerated
In the second half of 2023, the Simandou Project in Guinea was further promoted.
On August 10, the Government of the Republic of Guinea, Rio Tinto Simfer and Win Union, as members of Trans-Guinea, signed the Agreement on the Joint development of Port and Railway Infrastructure of the Simandou Iron Ore Mine, marking a key step in the development of the Simandou project.
In late August, Wrigley Minerals revealed that it would participate in the Simandou project to strengthen its position in West Africa. Foreign media reported in mid-December that the company has restarted field work and plans to start drilling in March 2024.
On October 7, Baowu Resources and Simandou Win Alliance signed the shareholder agreement confirmation letter of the mining joint venture company of the northern block project of Simandou in Baowu Building. Since the beginning of this year, China Baowu and Simandou Win Alliance have earnestly cooperated, successively signed the mine and infrastructure cooperation agreement of the northern block project of Simandou, and jointly promoted the relevant partners to sign the “Joint development Agreement” and other important cooperation documents, laying a good foundation for the integrated collaborative development of the mine, railway and port of Simandou Project.
On Dec. 6, Rio Tinto announced it was bringing forward the start of production at its Simandou iron ore project in Guinea to 2025 and plans to spend about $6.2 billion on infrastructure.
5. Hydrogen metallurgy helps the global steel industry to deeply reduce carbon
In 2023, the global steel industry continues to promote the transformation of “carbon metallurgy” to “hydrogen metallurgy” and accelerate the low-carbon transition.
On March 1, Thyssenkrupp and Simark signed a contract in Duisburg, Germany, under which Simark will design and build a hydrogen direct reduction plant for ThyssenKrupp’s Duisburg steel plant, scheduled to be completed by the end of 2026. On July 7, ThyssenKrupp’s hydrogen energy business unit, ThyssenKrupp New Era, was listed on the Frankfurt Stock Exchange (Premium Market).
On May 31, India’s Steel Ministry allocated about $55 million to its steel industry to support research into hydrogen metallurgy and the construction of pilot plants.
On July 19, ArcelorMittal’s Seto plant in Spain, in cooperation with Sarayo and Japan Natural Gas Company, used Sarayo’s technology to launch a ladle preheating system that can use 100% green hydrogen as fuel.
On September 5, Swedish steelmaker Ovako officially launched the world’s first fossil-fuel-free electrolytic hydrogen production plant in Hovers, Sweden.
In mid-October, the U.S. Department of Energy announced a $7 billion investment to launch seven regional clean hydrogen centers in the country, which are expected to produce 3 million tons of hydrogen per year, with the goal of seven centers accounting for nearly one-third of total U.S. hydrogen production by 2030.
On November 6, Africa’s first industrial-scale zero-carbon steel production project using green hydrogen broke ground in Namibia, with production scheduled to begin by the end of 2024.
On November 27, the Korea Economic Daily reported that the Posco Holding Group of South Korea plans to build three sets of hydrogen direct reduction systems in the Posco steel plant and the Gwangyang Steel Plant by 2050.
In addition, the hydrogen metallurgy practice project of Chinese steel enterprises represented by China Baowu and He Steel Group has attracted widespread global attention, and Edwin Basong, Director general of the World Steel Association, praised it for “promoting the formation of green and low-carbon development advantages of China’s steel industry.”
6. Accelerated research and development of global advanced steel products and production technologies
In 2023, the production and development of global steel enterprises continue to accelerate.
In early January, the German subsidiary of Swiss Steel Group announced the development of the XTP process for the production of ultra-fine grain, ultra-high strength steel without the need to add alloys or undergo special heat treatment. The process can produce extremely fine-grained steel with a grain size of less than 5 microns, which can increase the tensile strength of the steel to 2,050 mpa.
In June, PoSCO Group launched its first carbon emission reduction brand product “Greenate Certified steel” in South Korea, achieving carbon emission reduction through the introduction of low-carbon production processes and the use of low-carbon iron source materials. In late November, it successfully developed a stainless steel lining technology using duplex steel with excellent corrosion resistance and erosion resistance, and used duplex stainless steel as the lining material of the water tank, improving environmental protection.
On October 31, Kobe Steel commercialized the “EX-Facter” steel plate, a fatigue resistant steel plate that inhibits cracking, for the first time in the industry, using optimal composition design and TMCP technology.
At the end of November, Dongguk Coated Metal Company, a subsidiary of Dongguk Steel’s cold rolling business, successfully developed the world’s first technology to produce color steel plates using recycled waste plastics – Reborn Green PCM color steel plates (Reborn Green PCM).
In addition, in 2023, Chinese enterprises also achieved a number of advanced steel products global debut. For example, Baosteel only in the first half of this year to achieve 1500 mpa DP ultra-high strength automotive plate and other seven products global debut.
7. The European Union extended the suspension of retaliatory tariffs on US products
On Dec. 19, the European Union said it would suspend its dispute with the United States over steel and aluminum tariffs until March 31, 2025. In exchange, the US agreed to provide further tariff exemptions for EU exporters.
In 2018, then-US President Donald Trump imposed tariffs on steel and aluminum imports from the EU on the grounds of “safeguarding national security”. After several unsuccessful negotiations, the EU appealed to the World Trade Organization and imposed retaliatory tariffs on US imports to Europe. After several rounds of negotiations, the EU and the US Biden administration reached a two-year “truce” agreement in October 2021, announcing the re-establishment of steel and aluminum trade relations and the suspension of mutual taxation. The US has partially lifted its restrictions, imposing tariffs only on some goods that exceed certain quotas, while the EU has “frozen” all its restrictions.
8. Scrap steel began to be regarded as a strategic resource by many countries (regions)
Since the beginning of this year, a number of countries (regions) have introduced a series of measures around scrap steel, treating scrap as a strategic resource.
On January 17, the European Parliament voted to amend the Waste Transport Regulation to prohibit the transport of all waste for solid waste disposal within the EU unless authorised. According to Eurostat, scrap accounts for 59% of all EU waste exports.
In early October, the UAE government issued an extended ban on scrap exports to ensure sustainable access to raw materials for local producers. The UAE Ministry of Economy, in accordance with Ministerial Resolution No. 06 of 2023, announced the temporary suspension of the export of scrap steel and paper as required by the public interest. The measure runs until December 19, 2023, extending a previous ban that was set to expire on September 21.
Kazakhstan’s Interfax news agency on October 26, Kazakhstan from November 7 to extend the ban on the export of ferrous and non-ferrous metal scrap for another six months.
In mid-November, Russia planned to extend the tariff quota period of scrap steel exported to countries outside the Eurasian Economic Union until June 30, 2024.
Scrap steel has gradually become “sweet cake”. According to incomplete statistics, at present, more than 60 countries (regions) have adopted or plan to adopt measures to prohibit or restrict the export of recycled steel.
9. Ukraine resumes some steel production
In 2023, Ukraine resumed some steel production and redirected trade flows to the European market. Despite the ongoing threat of geopolitical conflict, steel production in Ukraine has started to pick up this year. The latest data from the Ukrainian Steel Trade Association show that in the first 10 months of 2023, Ukraine’s crude steel production was 5.16 million tons, pig iron production was 4.91 million tons, and steel production was 4.37 million tons.
In January, Ukrainian Prime Minister Sergei Shmegar again called on the West to provide $70 million in reconstruction aid. On June 21-22, the International Conference on the Reconstruction of Ukraine was held in London, UK. According to the Voice of America radio station reported on the same day, the British government said that the focus of the meeting included calling on about 60 countries to provide assistance to Ukraine in terms of technology, logistics and infrastructure.
Some scholars said that although Ukraine’s steel industry has made a certain recovery, a full recovery still faces multiple challenges.
10. Production stoppage and strike incidents occurred frequently in overseas steel and mining enterprises
Against the backdrop of slowing global economic growth, soaring energy prices and production costs, and high inflation, workers’ strikes and steel mill stoppage occurred frequently in various overseas regions this year.
From May 24 to October 5, the labor and management of POSCO Group held 24 negotiations on wages and benefits, but failed to reach an agreement. During the mediation process, the union members of PoSCO Group approved the strike with 75 percent of the votes. On October 30, the chairman of the South Korean Central Labor Commission made an exception to participate in the mediation of the dispute between PoSCO Holding Group’s labor and management. In the early morning of the next day, the labor and management of the group reached a tentative agreement, which was approved in a vote on November 9, introducing benefits such as a four-day workweek.
On November 17, ArcelorMittal decided to temporarily halt production at its steel mill in Amzenica, Bosnia. On November 28, its South African company announced that it would begin winding down its long products business in January 2024 and lay off around 3,500 employees. Its Brazilian subsidiary also announced in mid-November that it would temporarily halt production at three steel mills in southeastern Brazil until the end of December.
On November 24, hundreds of train drivers at a BHP mine in Western Australia went on strike.
On November 27, ThyssenKrupp’s Spanish subsidiary announced that it would close its Sagonto plant.
About 68,000 steel workers in the western German states of North Rhine-Westphalia, Bremen and Lower Saxony went on strike for 24 hours on December 12, shutting down major steel mills operating in the country, including ThyssenKrupp and Stahl.
Post time: Jan-03-2024