On Monday November 25, the company said it will adjust steel production levels to match actual steel shipments achieved over the past three years.
Thyssenkrupp’s Duisburg facility has a designed production capacity of around 11.7 million tpy of pig iron from four blast furnaces (BFs) and produces around 11 million tpy of crude steel per year.
But steel shipments from Thyssenkrupp’s steel assets amounted to around 9 million tons over the past three years.
Thyssenkrupp therefore plans to reduce production capacity to 8.7-9 million tons per year “due to market conditions and thus to adapt it to future market expectations,” the company said.
A central element in the capacity reduction is the separation from German plate and billet producer Hüttenwerke Krupp-Mannesmann (HKM). Hüttenwerke Krupp Mannesmann (HKM).
Thyssenkrupp plans to sell its shares in HKM and if that is not possible, the company said it will hold talks with the other shareholders about closing operations.
And Thyssenkrupp will shut down the steel processing facility at Kreuztal-Eichen, which is focused on coil slitting, coating and pickling operations.
Rising production costs, increased import pressures from Asian countries and ongoing deterioration of the steel demand-supply balance were the key factors undermining the competitiveness of steel produced in Europe, Fastmarkets understands.
“Overcapacity and the resulting increase in cheap imports, particularly from Asia, are placing a significant strain on [our] competitiveness,” the steelmaker said.
The changes will result in the loss of around 5,000 jobs by 2030 through the adjustments to production and administration, with 6,000 additional roles either transferred to external service providers through outsourcing agreements or the direct sale of business activities, the company said.
Market situation in Europe
After a short-lived rebound in apparent steel demand in January and February 2024, mostly related to restocking, the European flat steel market has been deteriorating, with prices contantly under pressure from lower-cost imports.
In September, the average HRC price dropped to €567.22 ($591) per tonne, with the tendency continuing in October, with the daily index for HRC in Northern Europe fell to €549.25 per tonne – its lowest level since the beginning of the year.
HRC prices in Northern Europe started to stabilize at the beginning of October, when ArcelorMittal and other first-tier mills announced increases to their offer prices for HRC of about €40 per tonne.
But buyers refrained from bookings, amid weak real demand from the key consuming industries, with many waiting to see how the market develops in December-January, Fastmarkets understands.
Overcapacity in Europe
According to the Organization for Economic Co-operation & Development (OECD), the nominal crude steelmaking capacity in Europe is well over 200 million tonnes, but the actual output volumes have been lagging far behind that in recent years.
In 2022, crude steel production across Europe amounted to 136.30 million tons, down from 152.60 million tons in 2021, according to data from the World Steel Association (worldsteel). The decline was due to massive output cuts that were implemented by European mills in the third and fourth quarters of 2022, due to deteriorating demand and falling steel prices.
In 2023 steel output fell further still, even considering the low comparative base of the previous year, and amounted to 126.30 million tons, according to worldsteel.
Steel production in Germany, which is the Europe’s largest steelmaker, fell to its lowest level since 2009 in 2023, to about 35.40 million tons – down 3.9% year on year, due to challenging market fundamentals and high production costs.
And several market participants told Fastmarkets that this tendency was likely to prevail in the years to come.
“Steelmaking capacity massively [outweighs] actual production [in Europe and] is representative, in a way, of what needs to be done [more generally] – shutting down redundant capacity,” a trading source told Fastmarkets.
“EU [steelmaking] capacity will be reduced – it’s as simple as that,” the source added.
Commitment to green steel
Despite ongoing challenges, Thyssenkrupp once again reaffirmed that it remains committed to the green steel transformation of its Duisburg site and intends to complete the direct reduction plant already under construction there.
By 2030, two of Duisburg’s four blast furnaces (No8 and No9) will have been replaced by the DR plant and the two planned innovative smelters with a total shipping capacity of 2.2 million tons per year, with another blast furnace expected to be replaced with a modern electric-arc furnace after that.
“A decision on [the EAF] will only be made at a later date and under the economic, technological and political conditions that apply at that time,” the company said.
Source:
https://eurometal.net
Julia Bolotova, Fastmarkets
https://fastmarkets.com/
Thyssenkrupp cuts steel production by 2.5 million tons per year, 11,000 jobs likely to be lost
November 27, 2024
Germany’s largest steel manufacturer Thyssenkrupp is planning to drastically reduce its steel production and workforce in order to adapt to the fundamental changes in the European steel market, the company announced this week.
On Monday, November 25, the company announced that it will adjust steel production to the actual steel deliveries of the last three years.
Thyssenkrupp’s Duisburg plant has a planned production capacity of around 11.7 million tons of pig iron from four blast furnaces (BF) and produces around 11 million tons of crude steel per year.
However, steel deliveries from thyssenkrupp’s steel plants amounted to around 9 million tons in the last three years.
Thyssenkrupp is therefore planning to reduce production capacity to 8.7 to 9 million tons per year “in order to take account of market conditions and thus adapt it to future market expectations,” the company said.
A central element of the capacity reduction is the separation from the German heavy plate and billet manufacturer Hüttenwerke Krupp-Mannesmann (HKM). Hüttenwerke Krupp Mannesmann (HKM).
Thyssenkrupp plans to sell its shares in HKM. If this is not possible, the company will hold talks with the other shareholders about closing the plant.
In addition, thyssenkrupp will close the steel processing plant in Kreuztal-Eichen, which focuses on coil slitting, coating and pickling.
Rising production costs, increasing import pressure from Asian countries and the continuing deterioration in the balance between steel demand and supply are the main factors undermining the competitiveness of steel produced in Europe, according to Fastmarkets.
“Overcapacities and the resulting increase in cheap imports, particularly from Asia, are having a significant impact on our competitiveness,” says the steel manufacturer.
The changes will result in the loss of around 5,000 jobs by 2030 due to adjustments in production and administration, with 6,000 additional jobs being transferred either through outsourcing agreements or the direct sale of business activities to external service providers, according to the company.
Market situation in Europe
Following a brief upturn in apparent demand for steel in January and February 2024, which was mainly related to the replenishment of stocks, the situation on the European flat steel market has deteriorated, with prices under constant pressure from cheaper imports.
In September, the average HRC price fell to €567.22 ($591) per tonne, and this trend continued in October when the daily index for HRC in Northern Europe fell to €549.25 per tonne, its lowest level since the beginning of the year.
HRC prices in Northern Europe began to stabilize in early October, when ArcelorMittal and other first-tier mills announced an increase of around €40 per tonne in their offer prices for HRC.
However, in view of the weak real demand from the most important customer sectors, buyers were reluctant to make bookings as many wanted to wait and see how the market develops in December and January, according to Fastmarkets.
Overcapacity in Europe
According to the Organization for Economic Cooperation and Development (OECD), nominal crude steel production capacity in Europe is well over 200 million tons, but actual production volumes have fallen far short of this in recent years.
In 2022, crude steel production in Europe amounted to 136.30 million tons, compared to 152.60 million tons in 2021, according to data from the World Steel Association (worldsteel). The decline is due to the massive production cuts made by European steelworks in the third and fourth quarters of 2022 as a result of declining demand and falling steel prices.
In 2023, steel production fell even further, even taking into account the low comparative basis of the previous year, and amounted to 126.30 million tons according to worldsteel.
Steel production in Germany, Europe’s largest steel producer, fell to its lowest level since 2009 in 2023, to around 35.40 million tons – a decline of 3.9% compared to the previous year, due to difficult market conditions and high production costs.
Several market participants told Fastmarkets that this trend is likely to continue in the coming years.
“Steelmaking capacity massively exceeds actual production [in Europa] and is in some ways representative of what needs to be done [allgemein] – closing redundant capacity,” a trade source told Fastmarkets.
“EU capacities are being reduced – it’s as simple as that,” the source continued.
Commitment to green steel
Despite the ongoing challenges, thyssenkrupp reaffirmed that the company remains committed to converting its Duisburg site to environmentally friendly steel and intends to complete the direct reduction plant already under construction there.
By 2030, two of Duisburg’s four blast furnaces (No. 8 and No. 9) are to be replaced by the direct reduction plant and the two planned innovative smelters with a total loading capacity of 2.2 million tons per year.
“A decision on [den EAF] will only be made at a later date and under the economic, technological and political conditions prevailing at that time,” the company said.
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