ArcelorMittal Zenica stops production due to market conditions

ArcelorMittal's Zenica steel plant in Bosnia has temporarily suspended production due to weak market conditions.

“After careful consideration and evaluation of all available options, ArcelorMittal Zenica temporarily shut down its blast furnace on November 11, and production is gradually being suspended at other sites, such as the rolling mills, which shut down on November 2.” “The plant intends to resume normal operations as soon as demand has recovered to a level that allows the business to operate sustainably.”

The European steel market is currently in a downturn: the decline in apparent steel consumption in the EU began in the second quarter of 2022. This was due to the war in Ukraine, as well as unprecedented increases in energy prices, production costs and inflation, all against a backdrop of growing economic uncertainty, the firm adds.

According to the company, demand conditions deteriorated significantly in the second half of 2023 and this negative cycle is expected to continue, driven by ongoing economic uncertainty caused by high inflation.

“ArcelorMittal Zenica began to face business difficulties in the middle of last year due to global trends in the steel and raw materials market. Since 2021, coking coal prices have increased by 300%, the price of electricity has increased by 44%, and the price of natural gas has increased by 80%. The cost of rail transportation has also increased by 25% since 2021,” it notes.

“Over the same period, the Fe content of ore at mines supplying ArcelorMittal Zenica decreased from 53% to 47%, meaning that more ore had to be purchased for the same volume of steel production,” the company says. “In addition, sales quotas for the EU market are limited due to the protective regime imposed by the EU, and we are faced with cheap imports of steel products from Turkey produced through the electric arc furnace route using scrap.”

This will also impact the group's iron ore supply as ArcelorMittal Zenica has stopped supplying ore from its Prijedor mines during the production shutdown.

ArcelorMittal Zenica is the largest long steel producer in the Balkans with a production capacity of 700,000 tons per year. The main product range includes reinforcement bars and coils, wire rods, meshes and lattice beams.