Arcelor Mittal, the
world's largest steelmaker said on Tuesday it will extend the closure of its
electric arc furnace in Schifflange, Luxembourg, indefinitely, a measure which
highlights the deep crisis affecting the EU steel sector.
“Unfortunately the construction market, for
which the products at Rodange and Schifflange are made, has not recovered from
the downturn that started at the end of 2008 and there is still no sign of
meaningful improvement,” Nico Reuter, ArcelorMittal's Europe
vice-president for long carbon steel, said in a statement on Tuesday.
This closure extension follows similar ones at
other European sites.
Other high-cost European steel plants are also
likely to be shut in the near future as low steel prices and poor demand make
them unprofitable, analysts and traders said.
“Steel prices are not too spectacular,
underlying demand is not great while costs are rising so there is still
potential for many high cost mills to be shut down in Europe,” said Kaye
Ayub, steel and iron ore consultant at Meps.
Competition from lower-cost producing areas such
as Turkey, Russia and Ukraine, and Asia has also reduced steelmakers' margins.
“This is the beginning of a number of
shutdowns across Europe; Europe can simply no longer compete with the cheaper
material being produced in other parts of the world and consumption of standard-grade
steel is also falling in Europe,” said a source at a UK-based steel
trading house.
“There is only one solution: steel mills
have to shut down. ArcelorMittal is likely to be the leader in this field as
they are so large and diversified, that they are able to shut down one or two
plants and still remain a competitive player. Small mills will either have to
change the type of steel they produce, or eventually go bust.”
At its sites at Rodange and Schifflange,
considered a single operational unit, the
mill will continue to operate on two shifts, the company said.
Source: The Economic Times
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