Luxembourg-based steelmaker ArcelorMittal will be able to continue operating Italian steel firm Ilva's blast furnace (BF) 2 after the court of Taranto extended the deadline for the ordered shutdown of the asset.
The local municipality ordered the furnace's shutdown in July and it was expected to stop production on 10 October, which some estimated would have removed around a third of Ilva's crude steel output.
The local court on 20 September accepted Ilva's appeal and granted it a 90-day extension. This would enable the extraordinary administration, which has been the owner of Ilva since the company entered into insolvency proceedings in March 2015, to carry out design and risk analysis of the furnace.
The Taranto public prosecutor ordered the shutdown of BF 2 after it assessed the safety of the furnace had not improved after an accident in 2015 under the previous owners of Ilva. The furnace has a production target of 1.5mn t/yr, while the overall run rate of the Taranto plant is less than 5mn t/yr, as ArcelorMittal decided to slow down its planned production ramp-up in light of weakened European steel demand.
Market participants said the shutdown of the furnace would see a sharp increase in Ilva's costs through the reduction of economies of scale, which would in turn see its losses deepen. Some estimate EU blast furnace-based mills are losing upward of $100 on each tonne of hot-rolled coil at current costs.
With import prices into Italy in decline and no expectations of a pick-up in steel demand until the end of the year in Europe, the extension to Ilva's BF 2 shutdown means there will unlikely be a change to the supply from local Italian mills.
