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The top management of ThyssenKrupp Stainless will meet this week to decide the future of the business.
The fate of the company’s Benrath mill near Dusseldorf in Germany is in the balance. And how the company will manage its share in Shanghai Krupp Stainless (SKS), a joint venture with Baosteel, will also be up for discussion. ThyssenKrupp’s stainless steel business has fared better than many others. But the past few years have still been hard. All of Europe’s leading stainless steelmakers are laboring with serious overcapacity.
So it’s no wonder Thyssen is talking about restructuring.
The company’s Benrath facility will probably be shut down. The plant produces predominantly ferritic grades of stainless steel, used to manufacture exhaust systems.
It is also home to one of the oldest sendzimir mills in Europe, according to industry analysts.
If the company does decide to shut down the Benrath plant, it will come at a cost. €240 million, according to German broadsheet Handelsblatt, which said last week that Thyssen would look to move Benrath’s most modern equipment to another of its facilities at Krefeld.
This isn’t a bad idea. The German automobile manufacturing sector is well on the way to recovery and exhaust systems are once again in demand, particularly those built using ferritic grades of stainless steel.
BMW, for example, plans to shorten the Christmas break at its plants due to soaring demand. The company is on track to boost its 2010 car sales close to levels last seen in 2008, when 1.5 million units were sold.
The board will face more difficult decisions when it decides on a plan for SKS, in which it owns a 60% stake.
SKS is a 200,000tpy cold rolled operation, which sources feedstock from Thyssen’s operations in Europe.
Investing upstream will help to improve the efficiency of the plant, industry consultants say. But doing so will require the close cooperation of the company’s local partners.
Should Thyssen decide to sell its stake, analysts point Baosteel out as a natural buyer.
But a spokesman for the company vehemently denied a sale to Baosteel has been discussed. And the company will not sell the stake to another buyer, he said last week.
This is good news for Thyssen’s stainless steelmaking shops in Europe.
By 2014, the company will have commissioned a new meltshop in the USA, originally on track to come onstream in 2012.
The new plant in Alabama will supply Thyssen’s rerolling facility in Mexico. Right now, Mexinox sources its requirements from ThyssenKrupp Acciai Speciali Terni (AST) in Italy.
Given that AST ships about 20% of its output to Mexinox as things stand, news of the Alabama plant commissioning has caused some analysts to question Thyssen’s plans for the Italian plant.
When the Marcegaglia family visited AST earlier this year, rumours started to fly.
Marcegaglia has invested in its stainless steel welded pipe business, and sources some of its requirements from AST.
But the family’s visit was nothing more significant than a normal meeting with a supplier, according to ceo Antonio Marcegaglia.
“We are simply looking at strengthening an already important industrial relationship with ThyssenKrupp Terni in light of our expansion in the stainless steel tube and pipe sector,” he told MB.
The company might increase the amount it buys from AST to feed its plants abroad, but that is all, he said.
Rumours that a sale of the plant had been discussed are “nonsense”, a spokesman for ThyssenKrupp Stainless agreed.