“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 Russian company said in a statement.
It said the measure aims to cut costs and synchronize production with market demand.
“The decision was partly helped by the fact that Romanian plants have already completed their production plans for the year,” the statement said.
Mechel operates four steel plants in Romania, namely Mechel Targoviste, Mechel Campia Turzii, Laminorul Braila and Ductil Steel Otelu Rosu, and employs around 7,000 staff.
In September, the Russian company announced plans to sell its operations in Romania, as part of a larger restructuring strategy to improve financial performance and increase market value.
Production at Mechel’s electric smelting facilities Mechel Targoviste and Ductil Steel Otelu Rosu has been halted as of November 21 and November 22, respectively.
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.
Mechel’s unit in Ukraine, Donetsk Electrometallurgical Plant, has also stopped production, due to rising production costs and reduced profitability linked to a steady increase in prices for the plant’s primary raw material.
Skeleton crews will be maintained at all facilities for the duration of the suspension, Mechel said. 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 and all contractual supplies will be made from warehouses as normal,” Mechel said.
Production will resume once market conditions return to normal, it added.