ArcelorMittal to indefinitely idle Spanish steel plant operations

By Paul Ploumis (ScrapMonster Author)

January 28, 2016 07:45:18 AM

ALBANY (Scrap Monster): World’s leading steelmaker-ArcelorMittal has decided to idle its Sestao steel making plant in Spain for an indefinite period. The company has blamed tumbling steel prices as the key reason for the decision. The skyrocketing imports of cheaper steel products from China and escalating electricity costs in the country are also being cited as the other reasons that led to the tough decision.

According to e-mailed statement issued by the company spokeswoman, the Sestao steel making operations has been passing through extremely challenging phase, mainly due to sharp fall in commodity prices and spiraling imports from China. Under current market conditions, the company has arrived at the decision that it is not viable to keep the plant open.

The plunging domestic demand has led to many Chinese producers increasing their steel export volumes. According to trade statistics, the Chinese steel shipments to the EU region have more than doubled over the past two years. Consequently, EU domestic steel prices have plunged by more than 40% during the two-year period. The sharp drop in prices coupled with low demand has resulted in many European steelmakers shutting down production facilities. It must be noted that Tata Steel, during last week, had announced plans to cut over 1,000 jobs at its UK steel operations.

The Sestao steel plant will be idled in February and will remain shut unless market conditions show significant improvement.

The plant is located in the Biscay municipality of Sestao, on the banks of the Bilbao River. The site has a capacity of 1,800,000 tonnes of hot rolled steel coils and 600,000 tonnes of pickled coils per year with a high level of flexibility and a fast turnaround time. The mill employs around 330 people.