ArcelorMittal halts Romania longs mill on energy costs, market

Steelmaker ArcelorMittal said Wednesday it has temporarily stopped both crude and finished steel production at its Hunedoara mini-mill in Romania in response to market conditions and high domestic energy prices.

Part of the company’s ArcelorMittal Europe – Long Products division, Hunedoara makes products including sections, billets and merchant bars, and currently employs 640 people and 200 contractors. The mini-mill produced 300,000 mt of crude steel in 2018 and is understood to have a rolling capacity of at least 400,000 mt/year. Output was suspended on December 1, ArcelorMittal said.

Electricity and gas prices have risen significantly for industrial users in Romania in recent years, with Romanian prices significantly higher than those in other European countries with major steelmaking operations, such as France and Germany, the steelmaker said in a statement.

“With European steelmakers also struggling to compete due to high levels of imported steel and weak domestic demand, the Hunedoara plant – which operates using an Electric Arc Furnace, with energy therefore representing a major cost – is no longer able to compete,” ArcelorMittal said. “The company hopes that a solution can be found to address the issue of high electricity and gas prices, and to allow the Hunedoara plant to have a sustainable future.”

ArcelorMittal acquired the Hunedoara plant in 2003, and has since invested RON550 million ($128 million) to make technical and environmental improvements to the plant.

Employees will be asked to consume their remaining annual leave, with the company granting workers “economic unemployment” for the remaining days, it said.

Sources close to the company indicated that the stoppage is expected to last until the end of the year.

ArcelorMittal announced in May that it was temporarily reducing its European flat steel production by 4.2 million mt on an annualized basis, equivalent to 10% of its European flat products capacity, with cuts to be effected in the second half of 2019. The cuts were designed to bring supply into line with demand: the company said last month that it expected overall European steel demand to be 3% lower this year than in 2018 due to weakness in the automotive and construction sectors.

— Diana Kinch and Viral Shah