Slovakia’s flat steel producer US Steel Kosice idled one of its three blast furnaces, or BFs, in an attempt to balance supply with low demand, and to preserve prices from dropping further, market sources told S&P Global Commodity Insights.
The steelmaker closed its “smaller BF,” several sources said.
US Steel Kosice did not reply to S&P Global’s multiple requests for comments.
The costs are really high and it is better to idle an asset and sell lower volumes, a big buyer of US Steel Kosice’s HRC said. “Every producer needs to play their part in restricting capacity to control prices,” the buyer added.
“Takes a lot of discipline for a mill to completely mothball an asset. The moves will serve to draw a floor on the market, will bring certainty back, and some demand will come back if certainty comes back,” the buyer said.
The mill had to close a furnace as it relies heavily on automotive sector due to the its location, a German source said. “And demand from carmakers is minimal.”
Demand for flat steel has been weak across the EU due to a combination of lower sales of vehicles on the back of component shortage and high stocks with distributors.
Majority of market participants anticipated announcements of the steelmaking equipment stoppages in the EU due to weak demand and gloomy outlook on consumption.
The mills were expected to try to tackle oversupply and put an end to the downtrend in the EU market by cutting output.
European coil producers were reported running at substantially reduced capacities, in line with ArcelorMittal’s recent announcement to idle its 1.5 million mt/year blast furnace in Dunkirk, France, as well as another furnace in Eisenhuttenstadt, Germany.
Domestic prices for HRC have been declining in Europe since the second half of March due to weak demand. Platts daily assessments for HRC in Northern Europe declined to Eur860/mt ex-works Ruhr on June 23, down by 41% since March 18 when the prices reached their peak, according to S&P Global Commodity Insights data.
— Maria Tanatar, Benjamin Steven