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Kallanish Kallanish

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November, 29th 2020

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OCT 08
13:13

ArcelorMittal Poland closes Krakow hot-end for good

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ArcelorMittal Poland (AMP) will close its Krakow hot-end for good after demand failed to recover to satisfactory levels, the firm says. It also cites insufficient EU market protection from imports, high energy costs and the burden on EU mills of carbon emissions costs as being behind the move.

The shutdown of the Krakow plant’s remaining operational blast furnace will begin in October and last a few weeks.

The BF was initially idled in November 2019 on account of reduced demand and a large volume of imports into the EU (see Kallanish passim). In March AMP postponed indefinitely the restart of the Krakow hot-end on account of the coronavirus spread in Europe.

Europe’s steel industry has “…suffered greatly” as a result of the pandemic, with almost all end-use sectors limiting activity, AMP says. Moreover, macroeconomic data shows the likelihood of a quick rebound is very small, it adds.

“The Covid-19 pandemic has huge consequences for Europe’s steel industry,” says AMP chief executive and chairman Sanjay Samaddar. “Although we are seeing a slight increase in demand in the last few weeks, mainly on account of restocking, this demand for steel is still significantly lower than before the pandemic.”

Besides Covid-19, AMP says the closure is due to the lack of effective measures to protect the EU from imports and the European Commission’s decision to increase safeguard quotas at a time when demand fell drastically. On top of already high energy costs, moreover, Poland will introduce additional capacity market fees from January 2021. Finally, there is no Carbon Border Adjustment yet in place to equalise carbon costs with non-EU suppliers, thereby eroding EU steelmakers’ competitiveness.

The result of these factors is carbon leakage, meaning the shifting of steelmaking to countries outside the EU that are not part of the Emissions Trading System, AMP observes.

AMP will continue producing liquid steel at the two operational blast furnaces at its flagship Dabrowa Gornicza steelworks.

Krakow's coking plant, hot and cold rolling mills, galvanizing line and organic coating line will continue to operate. Slab feedstock will be sourced mainly from Dabrowa Gornicza. AMP plans to invest PLN 180 million ($47.2m) into its flagship plant to increase capacity and enable production of grades used for grain-oriented steel.

AMP’s Krakow steelworks seems to have drawn the short straw, after ArcelorMittal announced the restart of blast furnace operation at its Fos-sur-Mer, Gijón, Tubarão, Bremen and Vanderbijlpark works in recent weeks.