European plate market set for tough year with Dillinger on short-time working

The European steel plate market was expecting a challenging year as capacity cuts will not be enough to tackle excess volumes, sources said in the wake of Germany’s Dillinger starting short-time working.

The introduction of reduced working hours at plate mill Dillinger at the beginning of the year will help the pricing situation in the market but will not be a long-term solution to general overcapacity, according to the sources.

“We hope that short-time working will have a positive impact. But for commodity material, it is necessary that volumes are being taken out of the market,” a German mill source said.

Dillinger said it had reduced working hours from January 1 following “a strong decline in demand” in the second half of 2019.

The northern European plate price dropped by around Eur70/mt last year, according to the Platts TSI North European plate assessment, seeing the biggest drops in the latter half of the year.

“The heavy plate market continues to be seriously affected by global overcapacity and continued high imports from third countries into the EU,” Dillinger said in a statement.

A Dillinger spokesperson told S&P Global Platts it was not be possible to say now how long the measure would be in place, adding it would not disclose any output numbers.

However, sources said that once the mill was back trading more actively, it would be expected to offer on the lower price side.

“Dillinger will be searching aggressively for volumes on the market again after [short-time working],” the mill source said.

Semis producer Hüttenwerke Krupp Mannesmann — jointly owned by Salzgitter, Thyssenkrupp and Vallourec and which produces slabs for plate production — has also been under special measures and in a hiring and spending freeze.

Plate mill Ilsenburger Grobblech — owned by Salzgitter — also had a brief cut in working hours late last year, according to sources.

“The biggest problem in Europe is overcapacity. We have 16 million mt supply, but only 11 million mt demand. Cost pressure is high,” said another source at a European mill.

“2020 is going to be more difficult,” the source said, adding that the future of other plants such as Thyssenkrupp’s plate mill would be questioned following the cancellation of Tata and Thyssenkrupp’s European steel merger last year.

— Laura Varriale