Salzgitter to idle 600,000 t/yr blast furnace

2019-10-28

Oct. 25, 2019 - German steel producer Salzgitter is shutting its 600,000 t/yr blast furnace until steel demand recovers, the company said today.

It is still operating two furnaces at the Salzgitter, Lower Saxony site with a combined capacity of 4mn t/yr. Salzgitter is the latest in a long line of European steel mills reducing production given the depressed environment. Market participants expect others will follow, especially those budget planning for their next fiscal year.

Argus' northwest Europe hot-rolled coil index has fallen from €535/t ex-works on 12 November 2018 to €418.75/t ex-works yesterday, a €116.25/t fall. Over the same period the price of iron ore has risen from $76.25/dry metric tonne (dmt) to $86.75/dmt yesterday, after peaking at $125.20/dmt in early July.

The world's largest steel producer ArcelorMittal has led the way in terms of European output cuts. It has shut blast furnaces in Krakow in Poland, Asturias in Spain and Bremen in Germany, as well as reducing primary steel production in France's Dunkirk and Germany's Eisenhuttenstadt. The run rate of its Taranto plant in Italy has also been reduced.

SSAB announced earlier this week it was shutting another blast furnace, meaning it has now taken out 1.8mn t/yr of capacity from its Raahe and Oxelosund sites in Finland and Sweden. The company has a total capacity of 4.9mn t/yr.

US Steel Kosice said in June it would be idling blast furnace 2 at its site, and a whole host of downstream production cuts are under way. Liberty said yesterday it was extending the 20pc cut at its Ostrava site in the Czech Republic, which has crude steel capacity of 2.7mn t/yr and rolling capacity of around 3.4mn t/yr.

Italian steel producer Arvedi said earlier this week it was reducing output by 70pc across November and December for planned maintenance on its 3.4mn t/yr facilities.