Day: 19 March 2020

Volkswagen and other German carmakers are temporarily suspending production in response to the accelerated rate of coronavirus infections, the resulting interruption in supply chains, and the rapid decline in demand on the automotive markets.

The VW Passenger Cars brand is gradually suspending production at its European plants, which will also affect components plants of the larger VW group, Kallanish learns from a corporate announcement.

The duration of the measure will initially be for two weeks, concerning car production facilities in Wolfsburg, Emden, Dresden, Osnabrück, Zwickau (all Germany), Bratislava (Slovakia), Pamplona (Spain) and Palmela (Portugal).  Also affected are German components plants at Brunswick, Chemnitz, Hanover, Kassel, and Salzgitter.

“The spread of coronavirus in Europe is increasingly having an adverse impact on the demand situation. At the same time, it is becoming increasingly difficult to supply our plants with outsourced parts,“ says Ralf Brandstätter, coo of the Volkswagen Passenger Cars brand. For this reason, and in the interest of the health of its workforce, VW will run production down in a coordinated way from the end of the late shift on Thursday.

In Italy, Automobili Lamborghini has intensified measures against the coronavirus, in support of new government directives, closing its premises from 13 March until 25 March, according to a VW statement.

The Daimler group has also decided to suspend the majority of its production in Europe, for an initial period of two weeks. The suspension applies to Daimler’s car, van and commercial vehicle plants in Europe, and will start this week. Connected to this is an assessment of global supply chains, which currently cannot be maintained to their full extent, the carmaker says.

French car makers have stopped production this week, closing down most of their plants to carry out sanitisation procedures, Kallanish learns from local car manufacturers.

French car maker PSA is shutting down all its plants in Europe. “Due to the acceleration observed in recent days of serious Covid-19 cases close to certain production sites, supply disruptions from major suppliers, as well as the sudden decline in the automobile markets, the company decided the closure of its production sites in Europe starting on 16 March until 27 March… The closure of the mechanical sites will be adjusted accordingly.” PSA says in a note.

As from 16 March Renault has also shut down its 12 plants in France, Spain, Slovenia, Morocco and Portugal “… until further notice, depending on the evolution of the health situation”, the company confirms in a note. The continuity of production activities at the group’s plants in other European countries depends on the situation in each country.

Renault plans to restart production activities “… as soon as conditions permit and will implement appropriate measures to respond effectively to commercial demand,” the carmaker adds. The factory in Cacia, Portugal is closed from Wednesday 18 March while the company’s Moroccan sites in Tangier and Casablanca will be idled as from Thursday 19 March. The site in Revoz was also idled on 17 March.

Spanish seamless tube makers, Tubacex and Tubos Reunidos (TR), have joined the growing number of Spanish steel companies halting production due to the coronavirus outbreak, Kallanish notes.

The two companies are closing their plants in Llodio, Amurrio and Trapaga in the Basque Country in a controlled way, local trade union sources reveal.

The measures were initiated by the Tubacex and TR workforces, despite the fact that the two companies had guaranteed all health and safety conditions, unions say. “The most convenient thing was to stop production as a preventive measure. We hope that both companies take advantage of the measures that the Spanish government is taking and that there is no unemployment in this exceptional case,” a workers’ representative comments.

Tubacex has “… shown an attitude both open to dialogue and the search for solutions to maintain production activity, aware of the impact of this decision on the future of the plant and employment in the region,” the company says.

TR, meanwhile, confirmed that has decided to temporarily halt its production plants ahead of the Saint Joseph’s Day, holiday starting 19 March. It also intends to have a conversation with unions during the four-day Basque-country holiday to find the most reasonable way to restart production as soon as possible and reduce any impact on its workers.

Similarly the special steel supplier Sidenor is also halting production this week, at least until the beginning of next week, Kallanish understands.

Spanish-headquartered stainless producer Acerinox has also reportedly taken all necessary steps to maintain production. The company, however, is prepared to cut its output and to take decisions on restrictions according to how the pandemic evolves, trade unions add.

ArcelorMittal has confirmed in statements to Kallanish that its European flat products’ operations will reduce production due to the coronavirus outbreak. Among others, the biggest operations impacted so far are set to be those in Italy and France.

“Given the extent of the outbreak, and particularly the impact it is having on several European countries in which ArcelorMittal operates, as an initial response the company intends to reduce production from its European Flat Products operations. We will continue to monitor the evolution of the coronavirus and its implications for steel demand in each of our operating markets,” the company says.

The halting of a number of ArcelorMittal production units has already been implemented in Italy this week, including the temporary idling of a blast furnace, but the situation is in constant evolution.

In France the company is confirming output reductions due to the fall in demand, with the exception of that linked with the packaging industry. In the south of the country the company will halt a blast furnace and a steelmaking unit for a period of seven days. Some rolling mills in Fos-sur-Mer will also be halted, starting from this week.

In Dunkirk, in the north of France, one blast furnace will also be halted from next week, while finishing lines will reduce output there and also in Florange.

In Spain the local unions at the company’s integrated sites in the north of the country have requested that the steelmaker considers output reductions or stoppages to protect workers. In Sagunto some rolling lines are already planning to stop production due to the expected fall in automotive demand.

Since the end of last week, a number of major European steelmakers have decided either to stop or drastically reduce output due to the spread of coronavirus and emergency measures taken by different countries.

The first stoppages were witnessed in northern Italy, but now the trend is becoming more widespread in Europe. Companies in Spain, the second-most impacted country in term of coronavirus spread have now also begun to take preventative action. More of the same is expected in key steel-producing countries such as France and Germany.

While stoppages are intended to protect the health of the workforce at the mills, the market is expected to benefit from reduced output at a time of market uncertainty and lower demand. Going forward nevertheless, some availability issues could arise, putting even more stress on the existing European Commission’s steel safeguard measures.

The biggest challenge can be seen in the rebar market. A number of producers in northern Italy announced production halts and some are part of groups with activities in other countries such as Spain, France and Germany.

The lower availability of rebar will not pose an immediate problem, but difficulties may arise when demand returns. Imported product is not widely available due to the safeguard measures. Almost all the quotas for Turkey, Russia and Ukraine for rebar have been used up. From the beginning of April until the end of June only around 40,000 tonnes of quotas for each of the countries will remain available.

“It is still too soon to say, but if the coronavirus emergency continues for longer than expected there could be the possibility for Turkey and other key importers to put pressure for a change or revision of the safeguard measures in Europe,” a trader tells Kallanish. “Turkish, Russian and Ukrainian mills are expected to be much less impacted by the virus and they could become important suppliers in a period of emergency going forward. Not to mention Asian producers that have undergone the impact of the virus before Europe and the US have done.”

In addition to rebar, other quotas either exhausted or at a critical level include merchant bar, hollow sections and gas pipes. In the flats’ sector, metallic coated coils both in the 4a and 4b classifications from Asia have also mostly been taken up. These sectors could well be impacted by the ongoing growth in the number flats suppliers halting production in Europe.

Spanish seamless tube makers, Tubacex and Tubos Reunidos (TR), have joined the growing number of Spanish steel companies halting production due to the coronavirus outbreak, Kallanish notes.

The two companies are closing their plants in Llodio, Amurrio and Trapaga in the Basque Country in a controlled way, local trade union sources reveal.

The measures were initiated by the Tubacex and TR workforces, despite the fact that the two companies had guaranteed all health and safety conditions, unions say. “The most convenient thing was to stop production as a preventive measure. We hope that both companies take advantage of the measures that the Spanish government is taking and that there is no unemployment in this exceptional case,” a workers’ representative comments.

Tubacex has “… shown an attitude both open to dialogue and the search for solutions to maintain production activity, aware of the impact of this decision on the future of the plant and employment in the region,” the company says.

TR, meanwhile, confirmed that has decided to temporarily halt its production plants ahead of the Saint Joseph’s Day, holiday starting 19 March. It also intends to have a conversation with unions during the four-day Basque-country holiday to find the most reasonable way to restart production as soon as possible and reduce any impact on its workers.

Similarly the special steel supplier Sidenor is also halting production this week, at least until the beginning of next week, Kallanish understands.

Spanish-headquartered stainless producer Acerinox has also reportedly taken all necessary steps to maintain production. The company, however, is prepared to cut its output and to take decisions on restrictions according to how the pandemic evolves, trade unions add.

Steelmaker Liberty is halting production at its Italian Magona plant in Piombino after having discovered a case of coronavirus, Kallanish notes.

A union source says the company will shut down until 24 March and that sanitisation procedures will be carried out at the plant. Magona produces galvanized and pre-painted thin-rolled coil products. It was acquired by Liberty from ArcelorMittal last year as part of the reorganisation of Italian production following the latter’s purchase of Ilva.

This adds to a growing list of long and flat steelmakers and service centres that have shut down production in the country this week. Steel makers Alfa Acciai, Iro, Feralpi, Riva, Valsabbia and Duferdofin are stopping production while ArcelorMittal Italia, Arvedi, Acciaierie Venete are reducing their output (see Kallanish passim).

ArcelorMittal has confirmed in statements to Kallanish that its European flat products’ operations will reduce production due to the coronavirus outbreak. Among others, the biggest operations impacted so far are set to be those in Italy and France.

“Given the extent of the outbreak, and particularly the impact it is having on several European countries in which ArcelorMittal operates, as an initial response the company intends to reduce production from its European Flat Products operations. We will continue to monitor the evolution of the coronavirus and its implications for steel demand in each of our operating markets,” the company says.

The halting of a number of ArcelorMittal production units has already been implemented in Italy this week, including the temporary idling of a blast furnace, but the situation is in constant evolution.

In France the company is confirming output reductions due to the fall in demand, with the exception of that linked with the packaging industry. In the south of the country the company will halt a blast furnace and a steelmaking unit for a period of seven days. Some rolling mills in Fos-sur-Mer will also be halted, starting from this week.

In Dunkirk, in the north of France, one blast furnace will also be halted from next week, while finishing lines will reduce output there and also in Florange.

In Spain the local unions at the company’s integrated sites in the north of the country have requested that the steelmaker considers output reductions or stoppages to protect workers. In Sagunto some rolling lines are already planning to stop production due to the expected fall in automotive demand.

Europe’s largest merchant steel bar producer, the Beltrame group, has temporarily closed its French operation, Lamines Marchands Europeens, in Trith Saint Leger until the end of March because of the coronavirus pandemic, a Beltrame spokesperson said Wednesday.

The LME plant in northern France has an electric arc furnace with a capacity of 850,000 mt a year and two rolling mills. Beltrame is based in Vicenza in Northern Italy.

Beltrame’s works in Vicenza has one EAF with a capacity of 1 million mt/year crude steel capacity and two rolling mills. In Vicenza, the company will suspend production at its EAF but only for few days until the middle of next week, while the rolling mills were halted Wednesday also for a few days to sanitize the area.

This is the second time the company has done so to comply with all the new measures on coronavirus. Beltrame has also reduced operations at its re-roller units, in San Giovanni in Tuscany and in San Didero in Piedmont.

Beltrame was continuing to deliver orders across Europe but there were delays because of the restrictions now in force on the borders, the spokesperson said.

— Annalisa Villa

Please find below a Cicero/AMO overview on the latest measures being taken to tackle the COVID-19 outbreak, detailing the response of the EU and its Member States and key global economies (UK, US, China, Hong Kong and Japan).

Click here to access Cicero/AMO’s overview of the latest measures being taken to tackle the COVID-19 outbreak.