Mechel OAO MTL, one
of the leading Russian mining and metals companies, reports temporary halting
of production at Donetsk Electrometallurgical Plant (DEMZ), which is part of
Mechel's steel division, and the schedule for temporary suspension of
production at the group's Romanian steelmaking facilities that are part of
Mechel's Eastern European Steel Division, in both cases due to unfavorable
conditions on markets of raw materials and finished steel products.
Due to unfavorable prices in European steel markets linked to rising ferrous
scrap prices and weak demand for finished products, production at Mechel's
Romanian steelmaking facilities is being temporarily halted. The decision was
made in order to cut costs and synchronize production with market demands. The
decision was partly helped by the fact that Romanian plants have already
completed their production plans for the year.
Starting on November 21 and 22, electric smelting facilities at Mechel
Targoviste and Ductil Steel Otelu Rosu respectively were temporarily halted.
Rolling production at Mechel Targoviste will also be temporarily suspended
starting November 27 once production plans are met, and starting December 15,
rolling and hardware production is planned to be temporarily halted at Ductil
Steel Buzau, Laminorul Braila and Mechel Campia Turzii.
Production at Donetsk Electrometallurgical Plant has been temporarily
suspended due to rising production costs and reduced profitability linked to a
steady increase in prices for the plant's primary raw material — ferrous scrap
— as Ukraine's steelmakers are making seasonal stock pile-ups.
While production at these steelmaking facilities is temporarily suspended, all
necessary measures will be undertaken to retain the affected facilities'
operational capability and to conduct maintenance works in winter. All
employees involved in those works will be paid their full salary. In order to
preserve jobs, the remaining personnel that are not involved in the scheduled
works will be either paid for idle time or placed on leave, according to labor
law.
Temporary suspension of production facilities will not affect sales volumes.
All contractual supplies will be made from warehouses as normal.
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