Alchevsk Steel postpones restart of third operating hot iron facility

Alchevsk Iron & Steel (ALMK UK) postponed the scheduled restart of blast furnace #4 from September until at least the second half of October or November due to the weak market, Metal Courier reported yesterday. This is the second delay for the relaunch of blast furnace #4, which had previously been set for July. The facility could add 72 kt p.a. of hot iron production capacity, in addition to the mill’s other two currently operating blast furnaces that have a combined capacity of more than 300 kt of hot iron p.a.

Roman Topolyuk: The delay is natural, in our view, with prices falling, steel makers are trimming plans to increase output until market conditions improve, or cutting production. Heavy plate and slab prices, which altogether comprise 53-64% of Alchevsk’s product mix, lost 3% during August (to USD 560/t and USD 478/t). On the bright side, 23-36% of the company’s output is long products, including steel billet, where prices have been stable or even slightly rising. This should allow Alchevsk Iron & Steel to keep its production stable – steel output in 8M12 was down only 1.1% yoy to 2.5 mmt versus the wider Ukrainian industry’s fall of 4.9% (to 22 mmt). We estimate there is a high probability that Alchevsk Iron & Steel will postpone the restart of blast furnace #4 again in November, as the market conditions might not improve significantly by then.