Romania’s largest integrated iron and steel works Liberty Galați has restarted production by reactivating Blast Furnace No. 5, the company, part of Liberty Steel, said on its website June 4.
The restart of operations at the Galați plant nearly a year after the production was idled follows a period of optimizing raw material costs and restoring supply chains.
The first batch of liquid iron was expected on June 5 with steel production set to begin in three to four days. Casting of steel will begin during the June 9-15 week, followed by the reactivation of the rolling mills for the production of plates, galvanized and organic-coated coils and pipes.
The resumption of operations was made possible through the support of Exim Banca Romaneasca and national and local authorities, according to the steelworks’ general manager Radu Ionescu, who also thanked experts from insolvency and business consultancies Euro Insol and Sierra Quadrant “who are helping Liberty Galați continue as a strategic pillar of Romania’s economy and the Galați community.”
In the first two weeks, production is expected to average 3,800 mt/day of liquid iron, equivalent to approximately 4,300 mt/day of steel. This will gradually increase to 5,500 mt/day of liquid iron, equivalent to 6,500 mt/day of steel, which it sees as the break-even point.
Action plan
Parallel to the production restart, negotiations will continue with the company’s 1,200 creditors for the approval of a restructuring plan, which is expected to be validated by the Galați Court by July 5.
Liberty Galați’s action plan aims to achieve a positive EBITDA over the next two years, expand the order portfolio in strategic industries such as defense, infrastructure, construction and shipbuilding, and improve operating costs. The company is also implementing initiatives to preserve the value of Romanian assets, monetize non-core assets, and identify new funding sources, according to Euro Insol’s president, Remus Borza.
“Our business plan includes … a strong energy strategy, considering that energy prices have been the main challenge for steel companies in Romania, which have not benefited from subsidies like most steel producers in Europe,” said Ionescu.
In March, the Galati Court began a court-supervised process for Liberty Galati and its creditors aimed at preventing the mill’s insolvency by restructuring its debts. A consortium formed by Euro Insol and Sierra Quadrant was appointed as the administrator.
Steel demand has started to stabilize, supported by EU trade measures and the incoming CBAM (carbon border adjustment mechanism). It is expected that new EU quotas limiting imports and the future reconstruction of Ukraine will positively influence steel demand, and Liberty Galati’s management expects to be one the main beneficiaries of this. In addition, the EU’s greater focus on the defense industry should further stimulate demand in the medium to long term.
With a nameplate capacity of 3 million mt/year, Liberty Galați is the largest integrated steel producer in Romania and a pillar of the country’s economy, but its highest output in the last 10 years — 2.35 million mt of steel – was last achieved in 2021.
Platts, part of S&P Global Commodity Insights, assessed European domestic plate prices at Eur685 ($784)/mt EXW Ruhr and at Eur625/mt EXW Italy; both came off by Eur15 on the week and by Eur35/mt from their mid-April peaks amid weakening sentiment, lackluster demand and mounting competition. The assessments are now only Eur10/mt above their early January levels.
