UK longs producer British Steel is delaying deliveries because of a problem with one of its blast furnaces, according to market sources.
The company has moved to one blast furnace, from two, because it is struggling to make pig iron of sufficient quality, the sources said. There are some suggestions that this could be caused by problems with a batch of imported coke. The company recently took its coking ovens off line with a view to reducing its carbon footprint — and the amount of emissions allowances it needs to buy — and has been importing coke since.
“We are taking decisive action to minimise the potential impact on customers’ orders caused by a production issue,” a company spokesperson told Argus. The spokesperson refused to comment further on the nature of the problem or how many blast furnaces are operating.
The company’s sales director has been ringing customers to inform them that deliveries could slip by 3-4 weeks as a result of the issue, multiple large domestic customers of the mill told Argus.
There are also suggestions that the company has insufficient gas for both its sections and wire rod mills, according to workers at the site and sources close to the company. The spokesperson refused to comment.
Senior officials from British Steel recently met with the head of Liberty Steel, Sanjeev Gupta, in Scunthorpe. It is unclear what was discussed, but sources said one topic could have been gas availability for Liberty Merchant Bar, the site previously operated on coke oven offgases from British Steel.
Others said the discussions could have been centred on state aid in light of the government’s £500mn grant to Tata Steel to help it decarbonise its operations. British Steel also has been in talks with the government and is looking to establish electric arc furnaces to reduce the carbon intensity of its production.
Liberty Steel is idling the remaining working blast furnace – no.2 – at Dunaferr because production costs are not economically feasible amid the current low steel prices, informed sources tell Kallanish.
The global steelmaking group acquired the insolvent Hungarian steelworks in an auction last month (see Kallanish passim).
In a letter to Dunaferr employees last week, management wrote: “The mill has been saved, but it should be put in order, to be prepared for a sustainable and green future to provide working places for those working at the mill. We are now working on the plan to switch to the production of GREENSTEEL, and as soon as approval from EU authorities is given, the work can begin.”
The letter also says Liberty will continue to pay the salaries of employees, while it develops retraining programmes, according to its legal obligations. The furnace shutdown is expected to last three months.
Liberty declined to comment.
BF2 was restarted in February after being idled last year amid Dunaferr’s well-publicised financial troubles.
According to reports last month following Liberty’s Dunaferr acquisition, investment exceeding $100 million will be required to regain the steelworks’ environmental protection permits necessary for operation.
In 2020, the last year for which Dunaferr published production data, it recorded crude steel production of 1.18 million tonnes, despite widely reported operational problems in the second half of the year. This was down 19% on-year. The firm’s BF1 remains idle since last summer.
Adam Smith Poland