French steel demand has halved over the last decade, meaning ArcelorMittal’s Dunkirk facility could not operate fully if it were reliant solely on domestic demand. Stringent and costly EU decarbonisation policies meanwhile force steelmakers into a “competitiveness race”, diminishing margins and volumes, says ArcelorMittal France chief Alain Le Grix de la Salle.
Unions asked the French government to nationalise the company in May in response to it announcing 600 job cuts and the offshoring of certain functions to India (see Kallanish 15 May).
“We have to ask the question whether a French facility in France still has a value and can stay in a country where there is no longer a market,” de la Salle told the “commission des affaires économiques” economic affairs commission at the Senate in Paris last week, in a televised hearing seen by Kallanish.
The firm’s French sites sell 60% of their products to other EU countries. “Ten years ago, Italy’s market was twice that of France; currently, Italy’s market is four times larger than France’s. Deindustrialisation in France is a fact. Even if you nationalise the company with the intention of reselling it you have a site [Dunkirk] which is the largest facility in Europe on a market where there is no market,” De la Salle warned. ArcelorMittal has adjusted its European capacity in response to the declining demand resulting from deindustrialisation.
In 2008, total steel demand in Europe was approximately 160 million tonnes. Today, demand has reached 120mt, showing a 25% decline. This downward trend is associated with the challenges faced by the automotive and construction sectors.
The automotive sector is currently experiencing significant structural changes, particularly with the transition to electric vehicles, an area where the company possesses limited visibility. The automotive sector in Europe accounts for an annual consumption of 13mt, which constitutes 20% of the total European demand for flat products. The figure accounts for 35% in France.
“Today, we can no longer compensate the activity decrease in France and Europe with exports … Even if we have CO2 quotas, they do not cover the totality of our emissions, so we pay for CO2. It has become practically impossible to export commodity-grade products due to our costs and global overcapacity. We pay for CO2, unlike other [non-EU] countries. The rules are not the same for everyone,” De la Salle continued.
He estimates the current global overcapacity is four times greater than Europe’s capacity. The ongoing situation is likely to continue as India and Southeast Asia allocate substantial investments in the forthcoming years. ArcelorMittal’s customers are also facing a significant challenge due to a substantial increase in the volume of imported finished products.
The firm operates 11 blast furnaces across Europe. One to two electric arc furnaces are needed to replace each BF to reduce emissions. The scale of the investment is substantial. De la Salle asserts the company lacks the financial capacity to decarbonise its European facilities.
Expenses associated with CO2 continue to be notably elevated. Failure to decarbonise its facilities by 2030 will result in CO2 costs accounting for 25% of the production cost of a single coil. Europe must implement a funding mechanism to facilitate decarbonisation initiatives. ArcelorMittal nevertheless previously confirmed it is investing in its inaugural EAF in Dunkirk (see Kallanish 19 May).
Natalia Capra France
