Mechel Suspends Operations at Plants in Romania, Ukraine

Russia-based company cites higher ferrous scrap prices and a drop in demand for finished product as the reasons for temporary closures.

December 3, 2012
Recycling Today Staff
Ferrous Legislation & Regulations

The Russia-based firm Mechel OAO has temporarily halted production at its steelmaking operations in Romania and Ukraine. The company cited unfavorable markets for both the raw materials and finished steel products as the reason for the closure.

In an announcement, the company says that it will temporarily halt production at its Romanian steelmaking facilities due to rising ferrous scrap prices and weak demand for finished products. Mechel notes that the decision was made in order to cut costs and synchronize production with market demands. Despite the shutdown, the company notes that the Romanian plants have already completed their production plans for the year.

The company notes that its electric arc furnace operations at Targoviste, Romania, which has a 75-metric ton capacity, was closed on Nov. 21. Mechel’s Ductil Steel Otelu Rosu EAF, which has a 100-metric-ton capacity, was closed on Nov. 22. Mechel adds that rolling production at its Targoviste facility also will be temporarily suspended starting November 27 once production plans are met, and starting December 15, rolling and hardware production is planned to be temporarily halted at three other Romanian steel operations: Ductil Steel Buzau, Laminorul Braila and Mechel Campia Turzii.

In Ukraine, Mechel has temporarily halted production at its Donetsk Electrometallurgical plant due to rising production costs and reduced profitability linked to a steady increase in prices for the plant’s primary raw material — ferrous scrap — as Ukraine’s steelmakers are making seasonal stock pile-ups.

According to a Mechel release, the expected economic effect from the temporary suspension of production will enable the plants to use their financial resources more efficiently while demand for finished products is low and scrap prices are high. It will enable them to minimize financial risks and ensure protection for the company’s long-term interests in the steelmaking sphere.

Mechel is a low-cost fully integrated mining and steel company focused on the production of mining products, such as coal, iron ore, nickel and steel products.