World’s largest steelmaker ArcelorMittal has announced that it intends to permanently close its primary steelmaking operations at its unit in Kraków, Poland. The shutdown process in the blast furnace and the steel shop will begin in October and will last a few weeks before the operations are permanently stopped.
The blast furnace and steel shop in Kraków were temporarily idled during November 2019, due to the market downturn, coupled with large volumes of steel imports from China. Since then, most of the affected employees have been either redeployed to other ArcelorMittal Poland sites or since March 2020 and the arrival of the Covid-19 pandemic put into temporary unemployment.
The EU steelmaking sector has been hit very hard by the Covid-19 pandemic, with all the steel-using industries reducing their activity, including temporary closures. As the macro-economic indicators now suggest, a fast recovery in steel demand is unlikely.
ArcelorMittal Poland thus said it had to take permanent measures in order to adapt to this lower demand.
In addition to the impact of the pandemic, a number of other structural issues have made the company’s activity economically unviable, including:
– The lack of emergency trade measures, coupled with the European Commission’s recent decision to further increase the quota of tariff-free steel imports from outside the EU, at a time when steel demand in Europe has fallen dramatically
– High energy costs and the introduction of additional capacity market fees coming into force in January 2021
– The lack of a level playing-field in terms of carbon costs between EU and non-EU steel producers; with Emissions Trading System costs continuously rising, and no Carbon Border Adjustment yet in place to equalise carbon costs, this is seriously eroding the competitiveness of European steelmakers
– The cumulative impact of these structural issues is carbon leakage, when steelmaking moves outside Europe, to countries where producers are not subject to the ETS.
ArcelorMittal Poland has said the coke plant in Krakow will continue to operate as well as the downstream operations (two rolling mills, the hot dip galvanizing line and the new organic coating line) in which the company has invested about EUR 110m over the last five years.
The slabs for the rolling mills in Kraków will come mainly from the steel shop in Dabrowa Gornicza, where the company will invest EUR 40 m in debottlenecking projects, and to produce special grades for further processing into grain-oriented steel.