ArcelorMittal to idle Spanish mill

ArcelorMittal has reportedly sent a statement via email saying it plans to idle Sestao steelmaking complex near Bilbao, Spain. The complex contains two electric arc furnace (EAF) production lines and has the ability to produce up to 1.8 million tonnes of hot-rolled steel coils each year.

A Dow Jones Business Report online article quotes the Monday, Jan 25, 2016, ArcelorMittal email as saying, “Our operations in Sestao are facing such challenging market conditions—caused by a significant increase in cheap steel imports from China and a heavy fall in prices—that keeping the plant open in the current economic environment is not viable.”

The announced closure adds it to a roster of mills in the United Kingdom, Canada and the United States that have been closed in the previous six months, with the accompanying announcements all pointing to overcapacity in China as an underlying reason.

China’s government continues to make pledges that it will cut its steel production, with the most recent one coming from Chinese Premier Li Keqiang Jan. 24.

According to a report on the China Daily website, the State Council, chaired by Li, has announced that “China will cut crude steel production capacity by 100 to 150 million tons.”

The State Council announcement did not specify a timeframe for the cuts. Although China’s production of steel dropped by 2.3% in 2015 compared with 2014, the 804 million tonnes it produced last year is still considered by most steel industry analysts to far outweigh the country’s domestic consumption.