Salzgitter declared force majeure on steel deliveries on Monday June 26 due to disruption caused by heavy rains in Germany, sources told Fastmarkets on Tuesday.Heavy rains in the Lower Saxony, Hesse and North Rhine-Westphalia and across other regions on June 22 and 23, directly affected a number of Salzgitter facilities, Fastmarkets understands, with widespread flooding disrupting rail and road movements across Germany.
“The [flooding] damage to many railway tracks throughout Germany resulted in stranded trains and a large number of local roads closures,” Salzgitter told customers in a letter seen by Fastmarkets.
“Due to flooding… production had to be temporarily stopped at some parts of our plant in Salzgitter,” the company said in the letter.
Supplies of raw materials to the Salzgitter mill have also been disrupted and some finished steel stocks have been damaged by flooding, sources told Fastmarkets.
The Salzgitter letter to customers added that “the effect [of the flooding] on production and deliveries [at Salzgitter] are currently been examined but cannot yet be definitely determined… However, it is certain that temporary production restrictions and delays to deliveries will follow.”
The company said that as soon as the impact of the flooding on production and deliveries had been fully checked, it would contact customers.
Salzgitter Flachstahl, located in the city of Salzgitter is the major company’s steelmaking asset in Germany, with three blast furnaces with a combined capacity of more than 4 million tonnes per year of pig iron. The Flachstahl facility produces about 3.7 million tpy of hot-rolled coil, 1.8 million tpy of cold-rolled coil and 1.4 million tpy of coated flat steel.
At Peine in Lower Saxony, Salzgitter has an electric-arc furnace (EAF) with a capacity of 2 million tpy along with a sections mill, but also produces slab for “green” flat steel production, Fastmarkets understands.
At Mülheim an der Ruhr in North Rhine-Westphalia Salzgitter has a 900,000-tpy steel plate rolling will and an SAW tube welding facility.
The company also has a plate mill in Ilsenburg, in Saxony-Anhalt, although that area was less affected by flooding, sources said.
Delivery disruptions from Salzgitter, however, might lend support deteriorating flat steel prices in Northern Europe.
“Supply limitations might help the [HRC] market to stabilize. We need avoid prices moving more to the €600 [per tonne EXW] level, so perhaps, we might now end up at €680 [per tonne EXW],” a trading source in Germany said.
Fastmarkets’ daily steel HRC index, domestic, exw Northern Europe was calculated at €672.50 ($733.42) per tonne on June 26, down by €0.80 per tonne from €673.30 per tonne on June 23.
The latest calculation of the Northern European index was down by €12.25 per tonne week on week, and by €78.33 per tonne month on month.
Published by: Julia Bolotova
