Posted on 21 Nov 2023
ArcelorMittal’s Bosnia-based Zenica long steelworks has temporarily paused production, due to weak market conditions.
“After carefully considering and evaluating all available options, ArcelorMittal Zenica temporarily idled its blast furnace on 11 November and production is being gradually suspended in other facilities, like the rolling mills, which stopped on 2 November,” a spokesperson tells Kallanish. “The plant intends to resume normal operations as soon as there is a demand recovery at a level that allows the business to operate sustainably.”
The European steel market is currently in a downcycle, with the downturn in EU apparent steel consumption having begun in the second quarter of 2022. This was due to the war in Ukraine, and unprecedented rises in energy prices, production costs and inflation, all amid growing economic uncertainty, the firm adds.
According to the company, demand conditions have significantly worsened in the second half of 2023, and this negative cycle is expected to continue, driven by ongoing economic uncertainty resulting from high inflation.
“ArcelorMittal Zenica started facing business challenges in the middle of last year, due to global trends in the steel and raw materials market. Coking coal prices have increased by 300% since 2021, electricity price has increased by 44% and natural gas price by 80%. Rail transportation cost has also increased by 25% since 2021,” it observes.
“In the same period, the Fe content of the ore in the mines that supply ArcelorMittal Zenica has dropped from 53% to 47%, meaning that more ore has to be purchased for the same steel output,” the enterprise claims. “In addition, sales quotas to the EU market are restricted, due to the safeguard regime imposed by the EU, and we are faced with cheap imports of steel products from Turkey, produced from the electric-arc furnace route using scrap.”
This will also affect the group’s supplies of iron ore, since ArcelorMittal Zenica has stopped the delivery of ore from its Prijedor mines during the production suspension.
ArcelorMittal Zenica is the largest producer of long products in the Balkans with a production capacity of 700,000 tonnes/year. The basic product range includes rebar in bars and coils, wire rod, mesh and lattice girders.