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Kallanish Kallanish

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August, 17th 2019

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JUN 06
09:27

ArcelorMittal to temporarily lay off workers in Taranto

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ArcelorMittal Italia is to lay off 1,400 workers for a limited period of time of 13 weeks at its works in Taranto, Italy, the company has announced.

"It is a difficult decision but the market conditions are really critical throughout Europe. However, these are temporary measures, the steel market is a cyclical one, " ceo of ArcelorMittal Italy Matthieu Jehl says in a note on the layoffs seen by Kallanish.

The European steel sector is suffering a strong market slowdown due to an increasingly worse economic situation. The automotive sector is currently slowing by 10%. The Purchasing Managers Index (PMI) fell to 47.4 in March 2019 going below 50 for the sixth consecutive month and reaching the lowest level since May 2013, ArcelorMittal says.

Starting in the first quarter of this year, the steel industry has witnessed a gradual reduction in demand which has been particularly strong for the coil sector. The company is seeing a gradual fall in orders due to a significant reduction in European steel consumption. Together with the demand slowdown in Italy an unprecedented increase in imports from third countries has been noticed.

“In the first four months of 2019 imports of coil and sheet products increased by 51% compared to the same period in 2018... This is happening at a time when stocks have risen well above the standard stock levels,” ArcelorMittal says. It is urging the European Commission to adopt more efficient safeguard measures as the current market protection weakness “… makes us vulnerable at a time when steel prices are low, energy costs are high and raw materials costs are constantly increasing.”

45 European steel executives and the head of the steelmakers’ association Eurofer have this week sent an open letter to Europe’s heads of state and governments and to EU institutions. The purpose of this is to demand the strengthening of the existing safeguard measures from beginning of July.

Despite this backdrop, ArcelorMittal Italia is confirming its commitment to implement both the industrial and environmental plan in Taranto.

The layoffs in Taranto follows the announcement in May that the group will reduce steel production in Europe due to critical market conditions. The cut in output will also involve the Taranto plant, where it will fall in 2019 from the planned 6 million tonnes to 5mt, Kallanish notes.