Hungary’s Dunaferr steel mill remains idled amid lack of materials

Hungary’s sole flat steel producer Dunaferr has so far this month been unable to restart output, as had been planned, due to a lack of raw materials, market sources told S&P Global Commodity Insights Feb. 9.

At the start of this month market sources had told S&P Global Commodity Insights that the steelmaker was looking to restart, using slab from Romanian steel producer Liberty Galati, which belongs to UK-registered Liberty Steel Group.

But market sources said this week that, so far, the Romanian company has only provided limited volumes of coking coal to maintain operation of coke batteries, with no deliveries of iron ore or other raw material made.

Liberty Steel, which has previously been named by market sources as a potential buyer of the Hungarian steelworks, declined to comment Feb. 9.

Dunaferr wasn’t immediately available for comment.

A municipal court in Dunaujvaros ordered the liquidation of Dunaferr in December and appointed a temporary administrator, with the steelworks previously idled since the third quarter.

“Main raw materials — in the amount necessary for stable and continuous operation of the blast furnace and steel shop — have not yet been received, and there is a very low probability that it will be received in the coming days,” one Central European source close to the mill said.

The Dunaferr plant’s two idled blast furnaces have a total capacity of 1.2 million mt/year.

One market source said that Liberty Steel was planning to ship limited volumes of hot-rolled coil from its mill in Romania for downstream processing at Dunaferr, although this couldn’t be confirmed with the company.

At the beginning of February, Hungarian Prime Minister Viktor Orban announced that the government would pay the wages of Dunaferr’s workers for the next six months, with a sum of Forint 16 billion ($45.4 million) earmarked for this. During the six-month period, the government said it expects a new owner to be found for the plant.

Ukraine’s Metinvest has previously said it would also be interested in buying Dunaferr.

“We have been one of the main suppliers of raw materials for Dunaferr plant over the past few years,” a spokesperson for Metinvest told S&P Global. “If these deliveries continue, it will allow us to resume operations at our mining and processing sites in Kriviy Rih.”

The spokesperson said that the company remains interested in purchasing Dunaferr, adding that this was communicated to the government during a recent visit by the company to the Hungarian Ministry of Economic Development.

Metinvest said that it hoped for a fair and transparent tender for the sale of Dunaferr, but that it was too early to be more specific about the process.

— Maria Tanatar, Ekaterina Bouckley