ArcelorMittal USA is coming off its best financial performance since 2007, but the multinational steelmaker's business is not faring as well across the pond at its home base in the European Union.
Luxembourg-based ArcelorMittal, one of the Region's largest employers with more than 10,000 steelworkers, announced it will idle a steel mill in Poland and slash production at another mill in Spain. The steelmaker said it would cut European production by 3 million tons, which it described as a "regrettable decision necessary due to a combination of weakening demand, rising imports coupled with insufficient EU trade protection, high energy costs and rising carbon costs."
“The difficult decision to temporarily reduce our European primary flat steel production has not been taken lightly," ArcelorMittal Europe–Flat Products CEO Geert van Poelvoorde said. "We understand the impact this has on employees and the local communities and will be working to ensure social measures are in place to support them during this period. These actions reflect the weak demand environment in Europe today, a situation further compounded by increased imports despite the safeguard measures introduced by the European Commission. High energy costs and increasing carbon costs are adding to the tough environment."
ArcelorMittal pulled in $76 billion in revenue last year after making 92.5 million tons of steel amid a global push toward more protectionism in the steel industry after the worldwide import crisis that peaked in 2015.
The United States has imposed tariffs of 25% on all foreign-made steel, but ArcelorMittal's business elsewhere is still suffering from high imports at a time of elevated overcapacity in the steel industry, driven largely by China's massive state-sponsored steel industry that now makes about half of the steel in the world. The Organisation for Economic Cooperation and Development estimates there's about 425 million tons of steelmaking overcapacity worldwide at a time of little growth in demand.
ArcelorMittal said flat steel imports are at record highs in Europe, with a 37% increase in hot-rolled coil. Imports from Russia into Poland, where ArcelorMittal is idling a mill, have shot up four-fold over the past year.
“We are engaging with stakeholders to request that the safeguards are strengthened to prevent a further increase in imports as a result of continued global overcapacity and a weakening economy in neighboring countries including Turkey," van Poelvoorde said. "We will also continue to make our case for a green border adjustment to be introduced to ensure that imports into Europe face the same carbon costs as producers in Europe. The steel industry in Europe can have a strong future but there must be a level playing field to ensure that an unfair advantage is not given to competitors outside the region.”