German steelmaker Salzgitter is extending its production cuts and will reduce shifts from May onwards as the company sees a drop in orders, the company said in a note on its website.
The cuts are primarily affecting the flat steel division, which is the largest business of Salzgitter and heavily affected from the recent automotive shutdowns.
Salzgitter will formerly apply for the short-time working scheme, which entails financial support from the German government for worker salaries.
“The significant impact of the coronavirus epidemic only filtered through to our order situation in mid-March, with the result of the first three months therefore largely remaining unaffected. The coming quarters will nevertheless be determined by global restrictions on economic activity,” said Salzgitter, adding that the measures will be in place until the economic environment improves.
According to preliminary figures, Salzgitter generated an external sales loss of Eur31.4 million in the first quarter of 2020 compared to a pre-tax profit of Eur125.9 million in Q1 last year.
The company also revised its outlook for 2020, saying it would anticipate a negative pre-tax result in a three-digit million Euro range.
“The scope of feasible scenarios is so extensive that precise quantification would be pure speculation from a current standpoint,” the company said.
Although lockdown restrictions have started to ease across Europe and the automotive industry starting to ramp up again, steel mills are still facing weak demand resulting in extended production curtailments.
ArcelorMittal said last week it would halt No.2 blast furnace at the French Fos-Sur-Mer works in addition to already implemented cuts across its European sites.
European steel association Eurofer confirmed last week that current crude steel production would be cut by 50% and new order bookings dropped by 70-75% at mills.
The European Union produced 38.3 million mt of crude steel in the first quarter this year, down by 10% year on year, according to worldsteel.
— Laura Varriale
