ArcelorMittal's China operations unaffected by Europe shutdowns

ArcelorMittal's announcement last week of plans to shut upstream production capacity in Europe in response to soaring costs is unlikely to impact the Luxembourg-based firm's China operations, particularly its automotive sheet joint venture in Central China's Hunan Province.

"We don't expect the partial shutdown of the blast furnaces will affect us or steel production in Chinese market," a staff member at Valin ArcelorMittal Automotive Sheet (VAMA) said Monday, pointing out that Valin is not receiving any intermediate feeds from ArcelorMittal.

The official was commenting on ArcelorMittal's September 2 announcement that it was switching off a blast furnace at its steelworks in Bremen in Germany from end-September until further notice, while also stopping a direct reduction plant in Hamburg from this year's October-December quarter. The day before, on September 1, ArcelorMittal had revealed that it was shutting down a furnace at its Asturias plant in Spain, also from the end of this month.

"The high cost of gas and electricity is a heavy burden on our competitiveness (and) with gas and electricity prices increasing tenfold within just a few months, we are no longer competitive in a market that is 25% supplied by imports," Reiner Blaschek, the chief executive of ArcelorMittal Germany, said in the statement.

The company's challenges in Europe don't appear to be derailing its operations in Asia, though its expansion in China has slipped a little.

In its recent results announcement in late July covering this year's January-June half, ArcelorMittal confirmed that the planned expansion at VAMA, its 50-50 joint venture with Hunan Valin formed in 2014 and making automotive sheet, would proceed as planned.

"The business is performing well and has plans to expand the current capacity by 40% to 2 million tonnes/year over the next two years, financed from its own resources," the statement said. "The investment will allow VAMA to broaden its product portfolio and further enhance its competitiveness." The original schedule was for the expansion to be completed by the end of 2022 however, Mysteel Global notes.

"This will in turn enable VAMA to meet the growing demand of high value add solutions from the Chinese automotive and new energy vehicle market and propel it to be among the top automotive steel players in China by 2025," the statement said.

ArcelorMittal also owns a 37% interest in China Oriental, one of the largest H-Beam producers in China.

Written by Carly Chen, chenziyi@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.