Dunaferr restarts blast furnace amid positive market trends

Hungarian flat steel producer Dunaferr has restarted blast furnace №2, which has been idle since the plant was shut down in September 2022. Kallanish reports about it.

Raw materials for the coke division of the Hungarian steel plant, the shortage of which was the main factor in the stoppage of production, are supplied by the Romanian steel plant Liberty Galati, owned by the British Liberty Steel Group.

The iron ore to run the blast furnace was sourced from stockpiles. The amount of raw material available is enough to increase production, but additional supplies must be provided for long-term operation.

The UK’s Liberty Steel is leading the restart of Dunaffer, signing a short-term contract to run the mill. However, Liberty has yet to confirm this information.

“Dunaferr will generate significant losses in this configuration. But the Hungarian government provided 6 months of wages, as well as free electricity and natural gas, which makes things easier for Liberty Steel, which can later receive assets for the money it spent on supplying the Hungarian plant with coking coal,” the message says.

In March 2023, Dunaferr is also expected to restart the hot rolling state and purchase slabs from Liberty Galati. Blast Furnace №1 will remain idle, probably forever, due to the irreparable damage the unit experienced as a result of the long shutdown.

Now is an opportune time for Dunaferr to return to the hot rolled coil market as European producers gradually raise product prices from December 2022. The coated coil is also reported to be in high demand.

Regional sentiment improved after a peak in destocking coupled with reduced supply in the fourth quarter of 2022. Contrary to fears, Europe also managed to avoid a recession in the 4th quarter, while inflation eased and energy prices fell.

The Hungarian government over the next six months will pay wages at the ISD Dunaferr steel plant in the amount of $44.8 million. According to the country’s prime minister Viktor Orban, the working group, which includes a deputy from the ruling party from the Dunaujvaros region, where the enterprise is located, will make efforts in the next six months to find an investor who would turn Dunaferr into a viable business.

At the end of December 2022, the Municipal Court of Budapest made a decision to liquidate the ISD Dunaferr plant. The plant received a temporary administration.

Accroding to ArgusMedia, in January, the UK’s Liberty Steel is likely to signed a contract with the Dunaferr liquidator to get the opportunity to manage the enterprise for 3 months. At the same time, Liberty Steel and the liquidator refused to comment.

At the beginning of 2023, Metinvest Group expressed interest in the acquisition of the Dunaferr steel mill, applying to the Hungarian government. The steel plant can provide a number of synergies for the Ukrainian company and corresponds to its strategy, allowing full use of its own raw materials – iron ore concentrate, pellets and coking coal. In addition, the European asset will provide Metinvest with its own supply of slabs for processing assets.