SARAJEVO (Reuters) - ArcelorMittal (NYSE:MT) said on Friday it had temporarily halted output at its Bosnia steel plant and at mines that supply it with iron ore due to a drop in demand in the European steel market.
The company, which produces about 700,000 tonnes of liquid steel annually and employs about 2,200 workers, said the European steel market has cut demand due to a lower steel consumption that begun in 2022 with the war in Ukraine, the spike in energy prices and output costs, as well as inflation.
The ArcelorMittal plant in the central town of Zenica said that it halted the operation of its High Oven last Saturday and then gradually stopped the output in other drives, after carefully considering all options available.
"ArcelorMittal Zenica plans to continue with normal operation as soon as demand returns to the level that enables sustainable business," it said in a statement to Reuters.
"Conditions of demand have significantly worsened in the second half of 2023, and there are expectations that this negative cycle will continue led by a continued economic uncertainty resulting from high inflation," the statement said.
It also said that sales quotas have been limited due to the protective regime imposed by the European Union, and that steel makers had to compete with cheaper steel products imported from Turkey.
At the same time, the concentration of the metal in the iron ore obtained from the Omarska mines that supply the plant has fallen to 47% from 53%, which means that bigger ore quantities must be purchased for the production of the same quantity of the metal, the company said.
It said that it has also halted the deliveries from the iron ore mines for as long as its output has been suspended. The Omarska mines further to the north, employing about 850 workers, fully depends on the sales of ore to the Zenica plant.
Last month, the worker unions announced a general strike requesting a new bargaining deal but they are pondering to postpone it after the company has halted production.
ArcelorMittal said it had increased wages 32% since 2020 because of the inflation.