Difficult EU market forces ArcelorMittal to cut production

ArcelorMittal will cut steel production across Europe by about 3 million tonnes per year due to the many challenges facing the continent's steel sector, Callanish is studying to become a steelmaker. This step will primarily affect the supply of flat products.

Production will be halted at steel mills in Krakow, Poland, and cut in Asturias, in northern Spain. The steelmaker will also slow down the resumption of production in Italy at the former Ilva plant in Taranto.

The decision was made in response to “… a combination of weakening demand, increased imports, coupled with inadequate EU trade protection, high energy costs and rising carbon costs,” the company explains.

Polish operations were limited as the local market was particularly affected by increased Russian imports and high local electricity costs (see related article). Similar reasons were prompted by the decision to cut production in Spain, as imports to southern Europe increased last year and energy prices remain among the highest in Europe.

In Italy, the group intends to slow down “… the planned increase in deliveries to ArcelorMittal Italia to 6 million tonnes per year, following the decision to optimize cost and quality versus volume in this environment,” notes ArcelorMittal.

“Despite the introduction of permanent EU protective tariffs in February 2019, there has been a steady and consistent increase in imports of flat products to Europe,” the firm comments. “Imports of flat products to Europe are currently at an all-time high: imports of hot rolled products this year are up 37 percent from 2017 year on year. In addition, the carbon price has risen by about 230 percent since the beginning of 2018, putting additional competitive pressure on European steelmakers. ”

The company is working with the authorities to demand stronger protective measures.

“We are engaging with stakeholders to demand stronger safeguards to prevent further increases in imports from continued global overcapacity and weakening economies in neighboring countries, including Turkey,” says Gert van Polvoorde, CEO of ArcelorMittal Europe - Flat Products and President Eurofer.

“We will also continue to justify the need for a green border adjustment to ensure that imports to Europe cost the same as producers in Europe,” he continues. "The steel industry in Europe may have a great future, but there must be a level playing field to provide an unfair advantage to competitors outside the region."

Market sources welcomed the news as they