ArcelorMittal, the world's second-largest steel group and Europe's largest, announced on Friday that it would close some of its capacity at two German plants in the coming months. The company's decision comes against the backdrop of volatile energy prices and uncertainty about the economic outlook.
For a long time, ArcelorMittal was the world's largest steelmaker until it was overtaken by Baowu Steel Group in 2020.
Arcelormittal said it would indefinitely idle a blast furnace at its Bremen plant from the end of September, while it would also reduce production at its Hamburg plant in the fourth quarter. Arcelormittal also announced yesterday that it would close a blast furnace at its Asturias plant in Spain at the end of September.
Reiner Blaschek, chief executive of ArcelorMittal Germany, said high gas and electricity costs were weighing heavily on the company's competitiveness, and that the federal government's planned increase in gas taxes in October would further pressure the company.
The company also said that in addition to energy prices, weak market demand and a poor economic outlook have added to the pressure on its operations.
Heavy industry has also been hit by a drop in orders from manufacturers and builders as the conflict between Russia and Ukraine has sharply pushed up energy prices in Europe. The decline in steel capacity in Europe is also emblematic of the region's worsening economic outlook. It also marks a rapid fall from the peak of the European steel industry, which saw prices soar to record highs last year after economic recovery following the unlockdown of the pandemic and ArcelorMittal's net profit last year hit a post-subprime mortgage crisis high.
In response, the firm is arguing for a change in the design of Europe's electricity market tied to gas, for an accelerated "carbon tariff" and against Germany's gas tax.