2024-01-13 05:15:00
The announcement of a possible shutdown of ArcelorMittal’s blast furnace A in Gijón starting in April if demand does not pick up first has generated concern in the labor, union, political and economic spheres of the region due to its impact on the company’s evolution in the Principality (where million-dollar investments in decarbonization are pending decision) and due to the high impact of the steel industry on the Asturian economy. The company reiterates that the decision has not yet been made, waiting to see how the market evolves. And the Government of the Principality is confident that orders will be recovered before this date.
However, some reports are unflattering. According to a document prepared by Crédito y Caución (a company specialized in business risk), Europe will this year be the only economic area in which metallurgy and steel will continue to contract, with a drop in production of 0.5% in the eurozone while that for the global economy as a whole, an advance of less than 1% is estimated. “The weakening of the global economy and the tightening of credit conditions will have a moderating effect on demand and prices for metals and steel,” the text states.
The month in which ArcelorMittal will stop one of the two blast furnaces if demand does not improve: reactions to the decision
The prospect of a reduction in interest rates by central banks in the first half of the year seems to have been postponed again, according to the latest statements from the large central banks, still cautious about inflation despite the progressive fall in the CPI.
Crédito y Caución points out that, in the case of the euro zone, “although the sector should benefit from public investment”, supported by European Next Generation funds, “the credit restriction is hindering demand from key purchasing industries “steel and base metals. The report also indicates that in Europe, and despite the decline in recent months, “energy prices remain high compared to historical levels” and adds that “the increase in labor and materials will affect business margins in the sector around the world.
In his opinion, although demand for metals is growing from construction companies in emerging markets, this is offset by the fact that at a global level the steel sector continues to have “excess capacity.”
The DRI plant that will replace the ArcelorMittal blast furnace obtains the environmental permit
Eurofer, the European steel employer’s association, forecast a recovery in November for 2024, but subject, it said, to high “unpredictability.” The Purchasing Managers’ Indices (PMI), a highly qualified indicator of economic prospects, predicted contraction on the 4th in the manufacturing industry in Spain and Europe, although less intense in the Spanish case. The vice president of the ECB, Luis de Guindos, said the day before yesterday in Madrid that it is not ruled out that the eurozone (not Spain) has entered a technical recession in the last quarter.
On December 28, Arcelor-Mittal also justified the unilateral extension for one year of the ERTE in force due to the entry of non-EU imports at a lower price. The tariff that will tax steel that does not pay CO2 emission rights in its countries of origin has been officially in force since October 1, but will not be really effective before 2026.
The Gijón blast furnaces are Arcelor’s third in Europe with the lowest costs. This has protected them in recent months from the shutdowns that have occurred in other countries.
Adrián Barbón: “We hope that the market does not paralyze the oven”
M. P., Oviedo
The president of the Principality, Adrián Barbón, trusts that finally “the market will not paralyze the operation of the blast furnace”, but in the awareness that “the international situation is very complex” and that the markets “are very constrained” For this reason, it promises constant, “daily” monitoring of the activity at the Arcelor plant in Gijón. “We are in permanent contact with the company and with the Ministry of Industry,” highlighted the head of the Executive under the general slogan of being “very prudent” in this matter.
Notes
Perspectives. Steel production may still decline by 0.5% this year in the Eurozone, according to a report by the company specialized in business risk Crédito y Caución. The PMI indices continue to reveal contraction in the European manufacturing sector.
Competitiveness. The Asturian blast furnaces are the third Arcelor with the lowest costs in the EU.
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