ArcelorMittal ready to launch Ilva despite threats to steel demand

Italy's budget disputes with the EU, Brexit's potential inaction and trade tensions stifling economic growth are major threats to steel demand growth in Europe. So says the head of ArcelorMittal Flat Steel Europe.

Despite a slowdown in the forecast for 2019, steel production in the EU is still at a vigorous level compared to recent years. Meanwhile, the EU purchasing managers' index (PMI), which is heavily dependent on steel demand, has weakened in recent months, but is still above the long-term average.

The main steel-using sectors are all in the expansion phase of the business cycle, but with lower growth expectations than last year, the official continued. Only the automotive sector is experiencing an exceptional situation resulting in slow growth, and automakers are investing in cleaner engines to meet new EU regulations. Steel demand is returning to a slower but more robust growth pattern.

Meanwhile, EU steel imports are stable at 1.2 million - 1.5 million tons per month. However, the origin is changing. The decline in consumption from China was initially replaced by an increase in imports from India in 2017 and now from Turkey in 2018. The latter has a 17% share in imports of flat metal products in the EU against 13% in 2017 and 7% in 2016.

The EU safeguards are only a temporary measure to prevent a potential surplus of materials entering the unit. They do not specifically target Turkey or any other country and still do not restrict EU imports.

ArcelorMittal is expected to take control of Ilva from November 1st. This is truly a “big fish” - the plant will represent over 25% of ArcelorMittal's production in Europe. Italy is the second largest steel consumer in Europe. The plant has a number of state-of-the-art production lines, including for the production of hot rolled coils, heavy plate, cold rolled coils, galvanized steel, sheet metal and pipes.

ArcelorMittal plans to initially launch Ilva at a production rate of 6 million tons per year, followed by 8.5 million tons per year in 2020 and 9.5 million tons per year in 2023.