ArcelorMittal Kryvyi Rih (AMKR) is in an extremely difficult situation, which is likely to last beyond year-end if the military situation does not improve, according to AMKR chief executive Mauro Longobardo.
“This is unfortunate, given that we were one of the most competitive plants in the ArcelorMittal Group,” Longobardo noted in an interview with Germany’s Stahl-Punkt. “At present, the steel plant operates only one blast furnace, producing 100,000 tonnes of products per month and operating at 20-25% capacity. We are now shipping our products to the ports of Poland and the Baltic countries, from where they are sent to our customers.”
“However, these ports are not equipped for our product type and quantity we ship,” he adds. “Even with a favourable market situation, the entire system can only provide about 50% of our capacity. The company’s logistics costs have increased significantly – by $100/tonne.”
This means that transportation costs are higher than the market price of the goods, preventing the company from starting a second blast furnace, the ceo noted. “However, if the situation improves and ports open, our losses could quickly approach zero, as we will immediately save on additional logistics costs and this would be enough to launch another blast furnace and reach maximum capacity,” Longobardo concluded.
According to him, another problem is the supply of coking coal, the consumption of which is typically 300,000 t/month. It was usually delivered to Ukraine from several countries, including Australia and the US, but this is no longer possible. The enterprise now depends on coking coal which goes through Polish ports.
“Since Metinvest, another large Ukrainian steel company, has lost its factories in Mariupol, we can use coking coal that could have been consumed there. But none of this will provide us with the necessary capacity utilisation,” Longobardo observed.
AMKR announced earlier it is counting on growth of export deliveries of its steel products to EU countries in the fourth quarter (see Kallanish passim). The company plans to fill the gap in the European market, which was formed due to the temporary stoppage of some EU steelmakers amid rising electricity costs.
Svetoslav Abrossimov Bulgaria