Day: 2 April 2020

Steelmaker ArcelorMittal said Wednesday that it will temporarily shut down Blast Furnace A at its site in Austurias in Spain on May 7 because most of its customers have suspended production due to the coronavirus pandemic.

The Asturias site has two blast furnaces with a combined capacity of 4.2 million mt a year of crude steel. Blast Furnace A has a capacity of around 2.7 million mt/year, according to S&P Global Platts data.

ArcelorMittal also said it was suspending operations at its electric-arc furnace in Sestao to balance supply and demand. Sestao has a design capacity of around 1.4 million mt/year but a company spokesman said that since last year it had only been producing 300,000 mt/year of crude steel. The company produces materials for the automotive and general industry sectors.

The spokesman said the company had suspended production at its rolling mill in Lesaka which produces organic coating coils for the construction sector with an annual capacity of 250,000 mt/ year. Also the Sagunto rolling mills have been stopped as the mill produces 70% of its flat and longs materials for the automotive sector. Sagunto has a capacity of around 600,000 mt/year of galvanized steel. The 1 million mt/year Olaberria-Bergara lines for the automotive and construction sector are being kept in operation for the moment.

ArcelorMittal’s plans come as Spanish steel industry association UNESID said it was seeking clarification from the Industry Ministry about what counts as an essential industry. Under tighter measures to combat coronavirus only “strategically important sectors” will be allowed to continue operating.

A number of steel-consuming plants, such as auto factories, have been closed for the duration of the measures.

According to power demand data, consumption by the Spanish steel sector on Tuesday was 184 MW and metallurgy was 587 MW out of a total 843 MW of demand from interruptible consumers.

That marked a sharp drop from 842 MW for steel and 635 MW for metallurgy on March 3, before the measures, and compared with the last Tuesday in March 26, the drop, particularly for steel is even steeper, with figures of 1.589 GW for steel and 686 MW for metallurgy.

— Annalisa Villa, Gianluca Baratti

Major Turkish integrated long steel producer Kardemir, based in the Karabuk region of northern Turkey, has decided to partially reduce output due to adverse market conditions in the market arising from the globally expanding COVID-19 outbreak, S&P Global Platts learned.

“In line with the evaluations made, reducing employee density and with the aim of maximizing occupational safety and sustainable production; considering the adverse market conditions in the sector, it is decided to partially reduce the daily production level across the company by bringing forward various planned maintenance and repair activities,” the company said in a statement Wednesday evening, without giving further details about the level of the output cut.

All the necessary precautions have been taken for the supply/procurement safety of our stakeholders and additional precautions will be taken according to the pandemic/market developments to be faced, the company noted.

Kardemir currently has 2.5 million mt/year of liquid steel production capacity. Within the scope of the 3.5 million mt/year steel production capacity target as well as the performance increase and productivity, the company is targeting to start to build a new blast furnace with a capacity of 1 million mt/year.

Some Turkish longs producers have been similarly pausing their output while some have been reducing their capacity usages in recent days.

Turkey’s largest integrated steel producer Isdemir, Erdemir Metalurji Group’s Iskenderun-based mill, will also pause one of its blast furnaces for maintenance in the coming week, as S&P Global Platts has reported.

— Cenk Can

Polish steel billet, bar and rebar producer Cognor warned Wednesday that the fallout from the coronavirus pandemic such as greater sickness rates, customers shutting down or going bankrupt, problems with supplies or administrative measures might mean it having to reduce or halt operations.

In 2020, Cognor expects demand in all segments of the steel market to fall, with rebar hit the least. The steelmaker is even forecasting a temporary rise in steel demand from the Polish construction sector in the second quarter.

Due to the coronavirus pandemic, it expects GDP to fall in Q2 and the whole of 2020 both in Poland and the EU. However, last year there was no correlation between economic growth and steel production. In 2019, Polish GDP grew 4.0% year on year, while the country’s steel output fell almost 11%. The EU-28’s GDP inched up 1.5%, but its steel production was 5% lower, according to data provided by Cognor.

Cognor does not rule out the cost of electric arc furnace production becoming less competitive than blast furnace production this year despite the likely drop in power prices because of the economic slowdown. During the most of 2019, EAF feedstock was cheaper than that for blast furnaces due to ferrous scrap prices falling more than those of iron ore and coking coal since Q2 2018.

The steelmaker said it used its capacity to the maximum last year, with sales volumes only 1% lower year on year, but revenue dropped 8.7% to Zloty 1.9 billion ($455 million), which was partly a result of a greater share of billet and a lower share of value-added products in the company’s portfolio. Its EBITDA almost halved last year to Zloty 101 million.

In 2019, Cognor sold 141,850 mt of scrap, down 18% year on year. Its steel billet sales soared by 32% to 185,000 mt, while rolled steel sales fell 4.5% to 476,000 mt. Cognor sold almost 70% of its steel products (billets and rolls) in Poland. Germany was its second largest market on a 14% share. A quarter of its output was absorbed by the automotive, 30% by the construction and 11% by the engineering sectors.

— Ekaterina Bouckley