ArcelorMittal sees delivery delays as 'unavoidable'

It could take several weeks for European steelmaker ArcelorMittal to return to "standard production" at its Flat Carbon Europe division after fires at blast furnaces in Gijon, Spain and Dunkirk, France, the company said in a letter to customers.

"We must acknowledge that delays in execution of existing orderbook are likely to be unavoidable and that allocations for fresh orderbook may also be reduced," the customer note said. It added that a "dedicated task force" was in place to reduce the impact of the events.

The incidents took place on 22 and 30 March and come at a pivotal time for the market. Apparent demand has been somewhat subdued in recent weeks but there has been an uptick in the rate of call-offs from automotive producers. German car production rose by 17pc year on year in February, and carmakers are taking more material directly from steelmakers.

ArcelorMittal had planned to offset the shortfall in slab from Gijon with Dunkirk material, but may need to alter this plan.

ArcelorMittal is not the only European mill to be experiencing difficulties. Tata Steel recently declared force majeure on cold-rolled coil and hot-dip galvanised, with other producers toll-rolling on its behalf to enable it to meet contractual requirements with customers.

A number of blast furnaces have restarted in recent months, helped by an uptick in prices, but sources suggest that availability is tight. The Argus daily Italian hot-rolled coil (HRC) index has risen from €646.50/t ($704/t) at the start of this year to €854.50/t at the end of March. The daily northwest EU HRC index rose from €687/t to €847.50/t over the same period.

By Colin Richardson