On Monday November 25, the company said it will adjust steel production levels to match actual steel shipments achieved over the past three years.
Thyssenkrupp’s Duisburg facility has a designed production capacity of around 11.7 million tpy of pig iron from four blast furnaces (BFs) and produces around 11 million tpy of crude steel per year.
But steel shipments from Thyssenkrupp’s steel assets amounted to around 9 million tonnes over the past three years.
Thyssenkrupp therefore plans to reduce production capacity to 8.7-9 million tonnes per year “due to market conditions and thus to adapt it to future market expectations,” the company said.
A central element in the capacity reduction is the separation from German plate and billet producer Hüttenwerke Krupp-Mannesmann (HKM). Hüttenwerke Krupp Mannesmann (HKM).
Thyssenkrupp plans to sell its shares in HKM and if that is not possible, the company said it will hold talks with the other shareholders about closing operations.
And Thyssenkrupp will shut down the steel processing facility at Kreuztal-Eichen, which is focused on coil slitting, coating and pickling operations.
Rising production costs, increased import pressures from Asian countries and ongoing deterioration of the steel demand-supply balance were the key factors undermining the competitiveness of steel produced in Europe, Fastmarkets understands.
“Overcapacity and the resulting increase in cheap imports, particularly from Asia, are placing a significant strain on [our] competitiveness,” the steelmaker said.
The changes will result in the loss of around 5,000 jobs by 2030 through the adjustments to production and administration, with 6,000 additional roles either transferred to external service providers through outsourcing agreements or the direct sale of business activities, the company said.
Market situation in Europe
After a short-lived rebound in apparent steel demand in January and February 2024, mostly related to restocking, the European flat steel market has been deteriorating, with prices contantly under pressure from lower-cost imports.
In September, the average HRC price dropped to €567.22 ($591) per tonne, with the tendency continuing in October, with the daily index for HRC in Northern Europe fell to €549.25 per tonne – its lowest level since the beginning of the year.
HRC prices in Northern Europe started to stabilize at the beginning of October, when ArcelorMittal and other first-tier mills announced increases to their offer prices for HRC of about €40 per tonne.
But buyers refrained from bookings, amid weak real demand from the key consuming industries, with many waiting to see how the market develops in December-January, Fastmarkets understands.
Overcapacity in Europe
According to the Organisation for Economic Co-operation & Development (OECD), the nominal crude steelmaking capacity in Europe is well over 200 million tonnes, but the actual output volumes have been lagging far behind that in recent years.
In 2022, crude steel production across Europe amounted to 136.30 million tonnes, down from 152.60 million tonnes in 2021, according to data from the World Steel Association (worldsteel). The decline was due to massive output cuts that were implemented by European mills in the third and fourth quarters of 2022, due to deteriorating demand and falling steel prices.
In 2023 steel output fell further still, even considering the low comparative base of the previous year, and amounted to 126.30 million tonnes, according to worldsteel.
Steel production in Germany, which is the Europe’s largest steelmaker, fell to its lowest level since 2009 in 2023, to about 35.40 million tonnes – down 3.9% year on year, due to challenging market fundamentals and high production costs.
And several market participants told Fastmarkets that this tendency was likely to prevail in the years to come.
“Steelmaking capacity massively [outweighs] actual production [in Europe and] is representative, in a way, of what needs to be done [more generally] – shutting down redundant capacity,” a trading source told Fastmarkets.
“EU [steelmaking] capacity will be reduced – it’s as simple as that,” the source added.
Commitment to green steel
Despite ongoing challenges, Thyssenkrupp once again reaffirmed that it remains committed to the green steel transformation of its Duisburg site and intends to complete the direct reduction plant already under construction there.
By 2030, two of Duisburg’s four blast furnaces (No8 and No9) will have been replaced by the DR plant and the two planned innovative smelters with a total shipping capacity of 2.2 million tons per year, with another blast furnace expected to be replaced with a modern electric-arc furnace after that.
“A decision on [the EAF] will only be made at a later date and under the economic, technological and political conditions that apply at that time,” the company said.
Published by: Julia Bolotova
