ArcelorMittal halts coke production in Poland, suspends steelworks in Bosnia

Author Katya Bouckley
ArcelorMittal has continued downsizing production in Europe, announcing output halts at its sites in Poland and Bosnia-Herzegovina, as it tries to adapt to weak demand for steel and steelmaking raw materials in the region.

The company said in a statement Nov. 22 that it has decided to adjust coke production to the difficult economic conditions at its ArcelorMittal Poland division, preparing to put the coke oven battery in Krakow on standby.

The decision is largely down to low coke demand, which is set to decline by 36% this year, according to company estimates. But it has also been triggered by coke’s falling premium to coking coal, which ArcelorMittal Poland said no longer justifies in-house conversion.

“The demand for coke has dropped significantly, but we are also dealing with an unprecedented situation — the price of coking coal fluctuates around the price of coke, which makes production unprofitable,” ArcelorMittal Poland CEO Wojciech Koszuta said in the statement.

The Krakow battery provides only a small part of the company’s coke production in Poland though. The majority of its coke supply comes from its plant in Zdzieszowice, which continues to run as normal, with all six batteries in operation, a spokesperson for ArcelorMittal Poland said. With its 4.2 million mt/year maximal capacity, Zdzieszowice is the largest coke plant in the EU.

Previously, ArcelorMittal Poland said it stopped production at its Sosnowiec wire rod mill due to a lack of demand.

January-October saw an 8.8% year on year decline in the EU-27’s crude steel production to 106.8 million mt, according to worldsteel’s Nov. 22 report.

Bosnia halt

The weak market conditions have also forced ArcelorMittal to temporarily halt production at its 1 million mt/year ArcelorMittal Zenica steel mill in Bosnia, the spokesperson confirmed to S&P Global Commodity Insights Nov. 22.

ArcelorMittal Zenica is equipped with one blast furnace and one basic oxygen furnace, as well as two rolling mills to manufacture wire rod and rebar. But it has idled its blast furnace and production is being gradually suspended in the other facilities, with the rolling mills already halted too.

The Bosnian plant is not expected to resume normal production until demand recovers to a level that would allow the business to operate sustainably, it said.

The downturn in EU apparent steel consumption began in the second quarter of 2022 with the conflict in Ukraine, unprecedented rises in energy prices, production costs and inflation. However, it has worsened in the second half of 2023, with the negative cycle fueled by ongoing economic uncertainty, according to ArcelorMittal Zenica.

Since 2021, coking coal prices have gone up by 300%, the price of electricity has increased by 44% and that of natural gas by 80%. At the same time, rail transportation costs have jumped by 25%, the company said, adding that, in the last three years, it has had to lift workers’ wages by 32% because of inflation.

The Bosnian mill has also been affected by a deterioration in iron ore quality, entailing more spending on additional volumes.

ArcelorMittal has not specified the proportion of its installed steel capacity in Europe that has been halted, but it has confirmed that it has temporarily idled blast furnaces No. 2 and No. 3 at its Bremen site in Germany, and blast furnace A at its plant in Ghent, Belgium. It also said it is planning to close a furnace at its Fos-sur-Mer site in France.

Earlier this month, ArcelorMittal said that its steel production in Europe in January-September fell by 11% or by 2.7 million mt on the year to 22.2 million mt and that since the beginning of Q3 the spread between European spot prices of hot-rolled steel coil and raw materials costs had fallen to unsustainable levels moving lower than seen over several quarters in 2019-2020.