Steel industry seeks clarity on Spanish order for non-essential production shutdown

The Spanish steel industry has demanded clarification from the government following a March 29 decree to shut down all non-essential production as part of the battle to contain the Covid-19 pandemic, Fastmarkets heard on Tuesday March 31.

Spain’s authorities issued a decree on Sunday that all non-essential activities and businesses must be stopped for the period starting March 30 and ending the day after April 9 this year.

Work at steel plants and distribution has not been deemed “essential business” in the decree.

Spanish steel association Unesid has expressed concern that 35-40 out of 60 steel facilities in Spain cannot halt operations within one day, meaning they could be in breach of the regulations.

Additionally, the decree was published late in the evening at the weekend, leaving plants no time to plan production stoppages, Andrés Barceló, general director of Unesid, said.

Quickly stopping blast furnaces (BF) – which some steelmakers in Spain operate – is impossible without damage to the equipment, Unesid added, while steelmakers could be in danger of missing order fulfillments.

“It is not 100% clear [if mills have to stop]. We will know more today,” a Spanish flat steel trader said. “Unesid is talking with the industry minister.”

“The rest of the supply chain can continue working if they have customers that are working in the medical sector. If not they need to close. However next week is Easter in Spain and the majority of them were planned to stop for one or two weeks,” the trader added.

“Yesterday only one [mill] stopped. We still waiting to know today’s status,” a second trader in Spain said.

Mill response
Stainless steel producer Sidenor confirmed that it stopped all operations in compliance with the decree on March 30.

“Sidenor intended on working but the company is implemented the decree from the Spanish government and made an orderly stop yesterday, Monday March 30,” a company spokesman said.

Sidenor’s Basauri plant runs a 900,000 tpy EAF to produce stainless steel bars and rods.

Long steel producer Grupo Megasa has stopped its facilities as of March 30, a company representative told Fastmarkets.

The company runs two plants in Spain. Megasider in Zaragoza operates a 500,000 tonne per year electric arc furnace (EAF) and also merchant bar and sections mills (about 500,000 tpy in total). Megasa Siderurgica in La Coruña runs a 700,000 tpy EAF and also rebar (200,000 tpy), wire rod (200,000 tpy) and merchant bar (250,000 tpy) mills.

Celsa Group, another major steel longs producer, is waiting for clarifications on the decree and is continuing production.

“While waiting for the administration to clarify the scope of Royal Decree-Law 10/2020, resolving whether electro-intensive steel activity is covered by points 4 and 5 of the Annex, Celsa Group is executing the provisions contained therein,” the company representative told Fastmarkets.

Celsa Group runs five plants in Spain. Celsa’s plant in Bilbao has capacity to produce 1.1 million tpy of crude steel and 800,000 tpy of rebar.

In Santander, Celsa runs a 750,000 tpy EAF and 700 tpy wire rod mill. In Nervacera, the company runs a 1 million tpy crude steel and about 1 million tpy billet and bloom facility. Its Besos rebar mill produces 400,000 tpy of rebar. In Castellbisbal, Celsa produces 2.4 million tpy of crude steel. The plant also operates rebar (400,000 tpy), wire rod (400,000 tpy) and hot-rolled sections (500,000 tpy) mills.

ArcelorMittal limits ops
ArcelorMittal is “assessing the impact of the decree on our operations in Spain,” according to the company’s spokesman.

“The company is limiting its activity to maintaining the minimum operations essential to avoid causing damage to our facilities and to ensuring supply of material destined for the sectors classified as essential in this Royal Decree-Law,” the spokesman told Fastmarkets.

“We are preparing to stop our Blast Furnace A in Asturias on 7 April. Other plants in Spain, such as Sestao, Lesaka or Sagunto are stopped. Olaberria-Bergara keeps operating for the moment,” he added.

ArcelorMittal had announced on March 19 that it was planning to idle BF A in Asturias, Spain and some other equipment “in around 15 days” from the date of the announcement.

In Lesaka, the company has capacity to produce 800,000 tpy of cold-rolled coil, 210,000 tpy of hot-dipped galvanized coil and 160,000 tpy of color-coated coil.

In Sestao ArcelorMittal runs a 2 million tpy EAF, a 1.9 million tpy hot-strip mill and 760,000 tpy HDG mill. ArcelorMittal also operates 1.8 million tpy cold-rolling mill in Sagunto. In Olaberria-Bergara the company runs a 850,000 tpy EAF and 770,000 tpy sections mill.

ArcelorMittal Asturias operates two BFs in Gijon with a total capacity of 4.7 million tpy, according to Fastmarkets’ Capex quarterly service.

The steelmaker will also stop operations at one of its two sinter plants in Asturias, the melt shop will work at half capacity – operating only one converter and one continuous casting machine – and the company will also stop galvanizing line No2.

On March 21, the Italian government ordered the closure of all non-essential production operations in the country, including steelmaking, as part of the measures to battle the Covid-19 coronavirus pandemic until April 3.

Three Italian flat steel producers – ArcelorMittal Italia, Arvedi and Marcegaglia – have continued to operate with approval from the government, according to market sources.

Italy now plans to extend its virus-control measures until mid-April, market sources said.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Southern Europe was €440-465 ($486-514) per tonne on March 25, widening upward by €5 per tonne week on week. Offers from a Spanish producer were reported at the upper price end.

Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe was unchanged at €435-445 per tonne on March 25.

Both assessments will next be published on April 1.