Dunaferr restarts blast furnace amid market uptrend: sources

Dunaferr has restarted one of its two idled blast furnaces after months of completely suspended production. Coking coal feedstock for the troubled Hungarian steelmaker’s coking plant, the shortage of which was a major factor behind the production stoppage, has been supplied by Liberty Steel, informed sources tell Kallanish.

Iron ore feedstock has been sourced from stock, according to one source, and is sufficient to ramp up production, but significant fresh supplies must follow to ensure its continuation, especially considering logistical problems and the Ukraine war.

Liberty Steel is said by various sources to be managing Dunaferr’s restart, having signed a short-term contract to run the steelmaker. This is, however, yet to be confirmed by Liberty, which also owns and operates the Galati, Ostrava and Czestochowa mills in Romania, Czech Republic and Poland respectively.

“In this configuration, Dunaferr should generate significant losses,” says a source of the latest development. “But the [Hungarian] government ensured six months of salary as well as free electricity and natural gas, so it’s pretty much a warm bath for Liberty, who may later take over assets against cash they spent for coal.”

Hungarian Prime Minister Viktor Orbán said earlier this month that besides paying the salaries, the government will also work to find a reliable new owner for the troubled steelmaker. Ukraine’s Metinvest recently expressed its interest in acquiring the insolvent mill.

Some sources also suggest Dunaferr plans to restart its hot strip mill in March and supplement captive slab feedstock with slab sourced from Liberty Galati. Dunaferr’s BF1 will remain out of operation, possibly permanently if it has sustained irreparable damage as a result of its prolonged shutdown.

Liberty Steel declined to comment.

Now is an opportune time for Dunaferr to come back onto the hot rolled coil market, with European producers increasing prices consecutively since December. Market leader ArcelorMittal raised its HRC quote this week to €820/tonne ($878) delivered across Europe. Coated coil is also reported to be in strong demand.

Regional sentiment has improved following the peak of destocking, coupled with reduced supply in the fourth quarter last year. Contrary to fears, Europe also managed to avoid recession in Q4, while inflation has eased and energy prices fallen.

Adam Smith Poland