Arcelor-Mittal stops its plant in Bosnia: there is no demand for steel in Europe
A drop in demand for steel across Europe has prompted ArcelorMittal to temporarily suspend production at its plant in Bosnia. The company remains a leading player in the steel industry, producing approximately 700,000 tons of liquid steel each year and employing 2,200 workers . According to this report , the company's management decided to stop production due to declining European demand. The company said the decline began with Russia's invasion of Ukraine in 2022, but added that rising energy prices, rising production costs and rising production costs also contributed to the decision. 'inflation.
This is just the umpteenth confirmation of the crisis in European industrial production which is unable to absorb even the steel produced by its own industries. The news also casts doubt on the resumption of production in other plants, for example Taranto, of the same industrial group.
On November 11, the ArcelorMittal factory located in the central city of Zenica announced the suspension of High Oven operations. Subsequently, the plant systematically reduced production in other units, after carefully evaluating all available options. That said, management held out some hope for its employees, saying it would resume operations when sufficient demand returned to support business operations.
Workers at ArcelorMittal Zenica's long steel products have started a strike to demand a pay increase, local media reported. The company had previously said it has increased workers' salaries by an average of 32% since 2020, taking overall inflation into account.
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Multiple issues underlying the decision
Just a few days ago, ArcelorMittal reported a 6.44% decline in net profit to $929 million in the third quarter. The company attributed the decline mainly to lower steel shipments. It is also important to note that the Luxembourg-based company follows the January-December period as its fiscal year. For example, during the same period last year, ArcelorMittal reported net income of $993 million.
Although it reported a net profit of $1,860 million in Q2 2023, the figure fell in Q3 2023 due to negative price-to-cost effects and a -3.7% sequential decrease in steel shipments at 13.7 tons. The company says this led to a decline in operating profit to $1.2 billion in the third quarter of 2023, $1.9 billion in the second quarter of 2023 and $1.7 billion in the third quarter of 2022 .
On the occasion of the decision to halt operations in Bosnia, ArcelorMittal reported that demand declined significantly in the second half of 2023. Furthermore, forecasts indicated the persistence of this adverse cycle, driven by continued economic uncertainty resulting from high inflation. Furthermore, Arcelor believed that protection measures imposed by the European Union limited sales quotas. The fact that steel producers also had to deal with competition from less expensive steel products imported from Turkey did not help the situation either.
Omarska adds another layer of complications
Another major obstacle has crept into all this: the concentration of the metal in the iron ore obtained from the Omarska mines that supply the plant recently dropped from 53% to 46%. This meant that the company would have to purchase larger quantities of ore to produce the same amount of metal. The company said it had stopped deliveries from iron ore mines for the duration of the production suspension. The Omarska mines, located further north, employ around 850 workers and depend entirely on the sale of ore to the Zenica plant. Although the workers' unions declared a general strike to seek a new contractual agreement, the group considered postponing the stoppage in light of the company's production halt.
ArcelorMittal signs an agreement with Schneider Electric
Meanwhile, ArcelorMittal recently struck a deal with energy management and automation company Schneider Electric. In a press release, the steel company said it will supply Schneider Electric with recycled and renewable XCarb steel for its electrical cabinets and enclosures.
ArcelorMittal produces XCarb, a recycled and renewable steel, at its site in Sestao, Spain. The manufacturing process uses a high base of recycled steel in an electric arc furnace operated using 100% renewable electricity. This results in significantly reduced CO2 emissions. In fact, reports indicate that emission rates were approximately 70% lower than products manufactured without using recycled steel and produced from renewable XCarb sources. Overall, the company's European division hopes to reduce CO2 emissions by 35% by 2030
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The article Arcelor-Mittal stops its plant in Bosnia: there is no demand for steel in Europe comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/arcelor-mittal-ferma-il-proprio-impianto-in-bosnia-manca-la-domanda-di-acciaio-in-europa/ on Thu, 30 Nov 2023 09:58:55 +0000.