Ukrainian steelmaker Metinvest does not expect global steel markets to recover until at least the second half of next year, chief executive Yuriy Ryzhenkov told Argus today on the sidelines of the European Steel Conference convened by World Steel Dynamics in Milan.
Some market participants are optimistic that there will be an improvement over the first quarter of next year, but Metinvest expects a longer-lasting "aftershock" from intensified global trade tensions over the past two years. But the "bottom of the cycle" is nearing, and the company anticipates an improvement in US-China and US-Turkey relations to eventually drive the market up.
"In steel, when we reach the bottom of the cycle, there is always restructuring," Rhyzhenkov said, adding that EU and US producers in particular are facing difficulties, despite the production cuts implemented by many EU mills.
Ukrainian steelmakers, including Metinvest, have also slowed hot-rolling output. Two mills — DMZ and DMK — are practically idled, Rhyzhenkov said, while pig iron and slab production at Mariupol has been reduced in favour of increased iron ore exports.
Metinvest recently undertook a revamp of its hot strip mill 1700 at the Ilyich steelworks, and it rolled the first two slabs at the modernised facility yesterday. The upgrade allows the company to increase production by 1mn t/yr in 2020, and it could boost capacity further in a later phase, depending on market conditions. The recent upgrade will enable Metinvest to enter new markets previously closed to the firm because of coil quality and specification differences. Although southeast Asia is a possibility, its key markets remain the Black Sea, the Mediterranean region and Mideast Gulf countries, Rhyzhenkov said.
In Europe, Metinvest is evaluating merger and acquisition opportunities. "The model we have is to produce high-quality semis in Ukraine, then roll it into finished steel in the markets where our customers are. This is the model we will pursue in the future, which means we will be looking at either buying re-rolling facilities in target markets or building new ones," he said.
The company does not plan to acquire more plate mills in Italy, where it already operates two, but is considering bidding for Polish steelmaker ISD Huta Czestochowa, which is expected to be put up for sale soon. In Italy, Metinvest is looking to increase coil production at its Valsider facility through a modernisation programme. The company is also evaluating certain greenfield projects to produce hot-rolled coil in Italy.
