Hungarian steelmaker Dunaferr is counting on government support to ensure its long-term survival amid the energy crisis in Europe. In the short term, it is in urgent need of coke to restart the blast furnaces and prevent them from getting damaged, the firm says in its latest newsletter.
The producer shut down one blast furnace in late August and then the second in mid-September due, it said, to the “unexpected” refusal by supplier Donau Brennstoffkontor GmbH to deliver coke feedstock (see Kallanish passim).
“Dunaferr continues to try to persevere, intends to fulfil its contractual obligations and continues to employ staff,” the firm says. “In the short term, the resumption of coke delivery is an essential condition for this, but in the medium and longer term, the only possibility of survival in the industry crisis situation may be state intervention.”
Despite the firm’s unsettled ownership situation, it has ensured its operation and financing through several partnership agreements in the last two years. After the downturn caused by the Covid crisis, it was able to hold on and take advantage of the market recovery “to the best of its ability”, the company states. “However, the Ukrainian-Russian war, the energy crisis affecting Europe, and logistical difficulties have now put Dunaferr in a situation that the group of companies is unable to cope with alone.”
Electricity prices rose to €700/MWh in August and the price of natural gas rose more than tenfold in 1.5 years. “In order to be able to manage this drastic increase in energy prices, the company would have to sell a tonne of hot rolled steel products at a price of €1,200-1,300, while the current market price of €750/tonne is significantly below that,” the steelmaker says.
Adam Smith Poland