Challenging EU market forces ArcelorMittal to reduce production

Posted on 07 May 2019

Source: Kallanish

ArcelorMittal will reduce steel production across Europe by some 3 million tonnes/year due to the many challenges facing the continent’s steel sector, Kallanish learns the steelmaker. The move will primarily affect flat steel supply.

Production will be idled at steelmaking facilities in Krakow, Poland, and will be reduced in Asturias, northern Spain. The steelmaker will also slow down the relaunch of production in Italy at the former Ilva plant in Taranto.

This decision was taken due to “…a combination of weakening demand, rising imports coupled with insufficient EU trade protection, high energy costs and rising carbon costs,” the company explains.

The Polish operation has been selected as the local market has been particularly hard hit due to an increase in Russian imports and high local electricity costs (see related story). Similar reasons were behind the decision to lower production in Spain, as imports into southern Europe increased last year and energy prices remain among some of highest in Europe.

In Italy the group is set to slow “…the planned increase of shipments at ArcelorMittal Italia to a six million tonne annual run-rate, following a decision to optimise cost and quality over volume in this environment,” ArcelorMittal observes.

“Despite the introduction of the permanent EU safeguard tariffs in February 2019 there has been a continued and consistent rise in flat steel imports into Europe,” the firm comments. “Flat steel imports into Europe are currently at record highs, with imports of hot rolled coil up 37 per cent this year from 2017, on an annualised basis. In addition, the price of carbon has risen by approximately 230 per cent since the start of 2018, placing further competitive pressure on European steelmakers.”

The company is engaging with authorities to request that safeguard measures are strengthened.

“We are engaging with stakeholders to request that the safeguards are strengthened to prevent a further increase in imports as a result of continued global overcapacity and a weakening economy in neighbouring countries including Turkey,” says Geert van Poelvoorde, ceo of ArcelorMittal Europe – Flat Products and Eurofer president.

“We will also continue to make our case for a green border adjustment to be introduced to ensure that imports into Europe face the same carbon costs as producers in Europe,” he continues. “The steel industry in Europe can have a strong future but there must be a level playing field to ensure that an unfair advantage is not given to competitors outside the region.”

Market sources have welcomed the news as it could support flat product prices going forward. Across Europe coil markets have been under pressure since the beginning of the year, despite attempts by suppliers to raise prices.

According to worldsteel data, first-quarter crude steel production at European mills declined on-year by some -2%, or almost 1mt.


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