Marcegaglia is purchasing Outokumpu’s long division, including a meltshop in the United Kingdom, to secure material that would otherwise be subject to European import duties via safeguarding measures, anti-dumping duties, and the carbon boarder adjustment mechanism (CBAM), a company source told Fastmarkets on Friday December 16.
On Wednesday, the European competition authorities approved the acquisition, which was originally announced on July 13. Outokumpu said it expected to complete the transaction ‘in the beginning of next year’ and that it was subject to the ‘customary closing conditions.’
Along with stainless steel bar rolling operations in Richburg in the United States, and a wire rod mill in Fagersta, Sweden, the purchase will include an electric-arc furnace (EAF) scrap melting facility and long product rolling operations in Sheffield, UK.
It will be the first time in its roughly 60-year existence the company has owned an operating melting shop, the source confirmed.
“There are two reasons [we’re buying the meltshop]. The first: we consume about 500,000 tonnes of [stainless steel] coil per year. In Sheffield, they can melt about 250,000 tonnes per year. It’s getting more and more difficult to import [to the EU]. There are safeguard measures, anti-dumping duties,” the source said.
There are also European Union safeguard import quotas for hot- and cold-rolled stainless flat products, for example coil, and for stainless wire rod, but there is no country-specific quota for the UK. Currently, the majority of stainless imports to the EU originate from Asia, with various country-specific quotas being quickly exhausted each quarter, resulting in duties being applied.
In addition, material from Asia is produced from nickel pig iron, the processing of which is carbon intensive.
“The second reason is environmental: materials with carbon [emissions] will be taxed soon [through CBAM], so we need an EAF to melt scrap instead,” the source said.
While facilities in Sheffield are currently used to produce only long stainless steel, the source confirmed that Marcegaglia intends to use the liquid steel produced to make both flats and longs.
Fastmarkets’ stainless steel cold-rolled sheet 2mm grade 304 transaction domestic, delivered North Europe was €3,100-3,200 ($3,298-3,405) per tonne on Friday December 16, narrowing downward by €50 from €3,100-3,250 per tonne one week prior.
Published by: Ross Yeo
