German steelmaker Salzgitter has declared force majeure on steel deliveries following heavy rain and floods, and warned of production cuts and shipment delays.
Heavy downpours on 22 and 23 June damaged production units at the company's site in Salzgitter, and there was also damage to rail facilities throughout Germany. The steelmaker is assessing the impact on deliveries, but indicated in a letter to customers that delays are inevitable.
Flooding in hangars and cellars and power supply systems caused significant plant damage and short circuiting at Salzgitter's site, meaning certain production units have been "temporarily discontinued", and some raw material deliveries are on hold.
Flooding also damaged freshly produced material.
The declaration comes at an interesting time for the European coil market, with demand low but a number of production restrictions on the cards. Market leader ArcelorMittal has been ordered by local authorities to close part of its Fos-sur-Mer mill in France because of pollution issues.
Low international steel prices and duties into key export markets, such as Turkey, mean EU producers cannot export summer surpluses as easily as in the past. As a result they are planning outages or running furnaces at low utilisation rates to avoid building too much inventory.
Argus' benchmark northwest EU HRC index has fallen continuously in recent months, from €847.50/t at the end of March to €651/t on 26 June, as local mills struggled to compete with lower-priced imports amid weaker apparent and real demand.
