January 25, 2016 / 4:50 PM / 3 years ago

UPDATE 2-ArcelorMittal idles Spanish plant as EU steel crisis deepens

(adds 330 jobs at risk)

By Maytaal Angel

LONDON, Jan 25 (Reuters) - ArcelorMittal has idled a steel plant in Spain due to “extremely adverse” market conditions, a company spokesman said on Monday, as the world’s biggest steelmaker becomes the latest victim of Europe’s steel sector crisis.

Some 5,000 EU steel jobs were lost late last year, out of a total 330,000 jobs. Steelmakers pin much of the blame on China, whose exports rose to record levels above 110 million tonnes last year.

An ArcelorMittal spokesman said on Monday the company’s steel plant in Sestao, northern Spain, will be idled indefinitely, putting 330 jobs at risk. The plant has a 1.5 million tonne per year output capacity.

“Management has taken the decision in view of extremely adverse conditions ... (namely) falling steel prices caused by record imports from China at prices below production costs,” said the spokesman.

“(It) will be idled from February. (The workers) will be temporarily laid off,” he added.

It is estimated that for every steel job lost, three or four jobs are lost in sectors related to steelmaking. The workers temporarily laid off from the ArcelorMittal plant will get paid until December.

A glut means global steel prices ST-CRU-IDX are near their lowest since 2003, with bankruptcies and capacity closures picking up pace the world over, including in China.

ArcelorMittal cut its 2015 profit forecast last November, saying Chinese exports had hit steel prices and customers were holding off making new orders.

Shares in the company, which produces 5-6 percent of the world’s steel, fell 57 percent last year amid several rating downgrades and have lost 15 percent this year.

China produces half the world’s 1.6 billion tonnes of steel. Its has about 300-400 million tonnes of spare capacity, roughly half of global spare capacity of about 700 million.

Global trade friction with Beijing escalated last year, with scores of anti-dumping duties filed, as slowing growth in China prompted its mills to export record amounts of excess steel.

The European Union is considering granting China market economy status after December, a move that would make it harder to impose anti-dumping measures. Steelmakers say granting that status would kill off nearly the entire EU steel sector.

EU mills struggle to compete with Chinese steel due to weak post-financial crisis demand, energy costs and green taxes that are some of the highest in the world, plus steep labour costs.

ArcelorMittal produces nearly half of Spain’s steel, employing some 9,500 people. The Sestao site is one of 12 Spanish operations which the company owns. (Reporting by Maytaal Angel, editing by Katharine Houreld)

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