Russian steelmakers continue to close their European plants. Following Evraz Group and Mechel, which have already stopped production at their European operations, Novolipetsk Steel (NLMK), is considering idling its La Louviere plant in Belgian which has a capacity of 2.6Mt of steel per year and is currently only half loaded.
According to sources close to NLMK, the company cannot continue to run at this unprofitable level at a time when demand in the EU remains low.
Currently, La Louviere remains the most problematic European plant for NLMK and, according to the company’s expectations, by the end of 2012 its total losses will amount to €100M. La Louviere has the highest production costs of all NLMK plants in the EU, mainly because of high labour costs.
This plant was acquired by NLMK from Duferco in 2006, as part of the deal worth $600M. NLMK currently operates six plants in Europe, in France, Belgium, Denmark and Italy, La Louviere mainly specialises in the production of flat-rolled products, in contrast to other EU plants of the company, which focus on production of heavy plate.
NLMK follows in the footsteps of other Russian steelmakers, whose EU assets have become unprofitable in recent years. In October Evraz suspended operations at its steel shop at Vitkovice Steel in the Czech Republic due to the decline in demand for steel. Also Mechel has announced its intention to idle operations at its plants in Romanian and Ukrainian.