ArcelorMittal Kryvyi Rih has announced a production cut due to the deteriorating market situation, as reported by the company's press service.
It is noted that the plant is facing a number of serious challenges, including falling global prices for iron ore, stagnation in steel markets in Europe, and high electricity costs in Ukraine.
CEO Mauro Longobardo stated that despite significant achievements in the first half of 2024, including an increase in production to 50% of pre-war levels and the restoration of logistics routes via the maritime corridor, the situation in external markets has sharply worsened.
The production cut will not lead to layoffs. According to the management, personnel will be involved in repair work, security, and landscaping.
The main reasons for this decision include reduced demand for iron ore from China, stagnation in the steel market in Europe, and high transportation costs due to the war.
“Unfortunately, iron ore prices have fallen below the cost of delivering it to sales markets, making exports unprofitable,” the statement said.
Additionally, the rising cost of electricity in Ukraine, which is imported up to 80%, creates further problems. As a result, energy costs for the metallurgical enterprise are twice as high as those of its European competitors.
It is reported that frequent power outages further complicate production processes.
Despite all these factors, the plant is actively working on measures to minimize the negative financial impact. In the fourth quarter of 2024, the enterprise plans to adjust production levels according to the decline in market demand.
In October-December, the plant plans to operate only one blast furnace (BF-8), while 2-3 sintering machines will be in operation, depending on demand. The converter shop and the continuous casting machine (CCM) will be shut down for 45 days for major repairs. During this time, all pig iron will be poured on the casting machines (CM) of the blast furnace shops.
Moreover, the company plans to conduct a major repair of the small-section mill 250-4, while the blooming mill will be idled until the market situation improves.
“We are ready to quickly increase production volumes if electricity prices in Ukraine become competitive or demand in the European market increases,” concluded Longobardo.
These steps will help “ArcelorMittal Kryvyi Rih” stay afloat during the challenging economic situation and ensure stability in the future, the company believes.
“ArcelorMittal Kryvyi Rih” joins the position of other energy-intensive enterprises in Ukraine, which have previously expressed concern about the unjustifiably high requirement for mandatory electricity imports.
