ArcelorMittal halts the Gijon Blast Furnace (BF) in Spain, primarily due to the sporadic European Steel market. According to market players, ArcelorMittal will idle the blast furnace at the end of September, noting intense competition from imports amidst a weak Steel demand outlook. According to the manufacturer, the European Steel market's under highly challenging conditions. High import offers from non-EU nations coupled with the subdued demand dynamics have ushered in the decision to implement this measure to fend for the profitability and sustainability of the company's operations in Asturias. Meanwhile, Co-Chief Operating Officer (CCOO) noted that the BF is set to shut down in the fourth quarter of 2022.

According to the suppliers, the Gijon complex has two blast furnaces with roughly 4.2 Million MT/year of production at Aviles site, making it Spain's largest Steel production center. According to market players, production cuts have been accumulating in Spain, with record power prices as a significant contributing factor. Steel manufacturers noted that Spain's adjusted power price closed at USD 375.06/MWh for September 2 delivery, roughly 160% higher year on year.

ChemAnalyst anticipates that the production curtailment intends to stabilize reduced Steel demand and supply. Surging energy and emission costs have also hampered the Steel producer's competitiveness in the bearish market amidst the rising shutdown. Production curtailment is the only option for local Steel manufacturers to balance the episodic demand and supply dynamics. The hampered production activity will prompt limited inventories, further raising the demand. However, market players are waiting and keenly observing the fluctuations in market dynamics. Outages will add further inquiries about Steel products for a seasonal demand recovery, improving demand dynamics from current levels in the upcoming months. Maintenance shutdowns are unlikely to be enough to offset weak demand. As a result, maintenance shutdowns will make little difference for the time being, especially with service center inventories remaining adequate and Steel price recovery expected to be modest in the near term.