Steel market in Europe remains complicated

USSK management refused to attend a meeting of the parliamentary committee.

(Source: Courtesy of USSK)

The steelmaker U.S. Steel Košice, the biggest employer in eastern Slovakia, has continued to reduce its labour force during its struggle on the European steel market impacted by cheap steel imports from China. While the USA has imposed hefty tariffs on Chinese steel products, the European steel market is just waiting for a response of the European Commission to Chinese dumping prices as local import duties remain low.

U.S. Steel Košice (USSK) is laying off an additional 29 people after it scrapped the same number of jobs already in April and May, the Nový Čas daily reported. This way the steelmaker, employing about 12,000 people, avoids mass layoffs starting at 30 people. Otherwise it would violate a memorandum on cooperation it signed with the Slovak government back in 2013.

The continual reduction of the labour force at USSK has raised concerns of members of parliament. Based on a proposal by the head of the parliamentary committee for economic matters Jana Kiššová (SaS), the parliamentary committee approved invitating the USSK management to explain the continual layoffs.

Kiššová understands that the company is a live organism and if it wants to survive the tough international competition, it has to adapt to changes.

“This means to increase effectiveness and reduce costs including remuneration ones,” said Kiššová as cited by the SITA newswire, adding that nevertheless, the state was forward towards the US investor during its operation in Slovakia.  Based on a memorandum from 2013 the government provided the company some stimuli in exchange for keeping some obligations related to maintaining employment. “This is why the situation in the steelmaker interests us exceptionally.”

Thus Kiššová and other PMs would be very pleased to be informed about the USSK plans directly from its management and not via media.

USSK spokesperson Ján Bača has already informed Kiššová that the meeting would be not possible during the proposed term of May 25.

“Nevertheless, we would like to welcome members of the Slovak parliament in our company if we find a mutually suitable term,” said Bača as cited by Nový Čas.

After the USSK management refused to attend the meeting, Kiššová, canceled it, the Denník N daily reported.

Recently, the local trade unions at USSK received another list with 29 names of employees that should be ousted. It is estimated that as many as 600 people may leave the company this way by the end of 2017, Nový Čas wrote.

Read also:SME: U.S. Steel is for sale Read more 

USSK scrapped 29 white-collar positions as of April 1, and it cut another 29 jobs as of May 1 as part of its organisational changes. Those to be ousted were offered to take blue-collar positions at USSK and some of them used this possibility. Earlier in 2016 more than 80 employees left the company within a voluntary programme for early retirement.

The local trade unions protest against reduction of the labour force at USSK pointing to good economic results during the last month. They also see the labour reduction in violation of the memorandum as well as the collective agreement and they have already turned to the Labour Inspectorate, Nový Čas daily wrote.

USA imposes hefty tariffs

Last week the U.S. Commerce Department imposed duties of 522 percent on Chinese cold-rolled flat steel, widely used for car body panels, appliances and in construction. In Europe this tariff is only 16 percent.

“The main reason why the US department took this step is that Chinese companies sell their excessive production of steel on the American market for lower prices thanks to subsidies,” said Ondřej Drdek, analyst of Saxo Bank, as cited by the Sme daily.

Tomáš Matuška, analyst of BH Securities, perceives the decision of Washington as a significant signal for OECD countries, of which Slovakia is also a member, to quickly negotiate.

“If Europe would continue with the current policy, then the American decision might harm European steelmakers,” Boris Tomčiak, analyst of Finlord, told Sme, adding that China may turn its attention to exporting cheap steel to Europe.   

Tomčiak believes that higher import duties on Chinese steel products in Europe would help USSK as Europe is its main region in which it supplies its products. A possible agreement on supply of steel to the carmaker PSA Peugeot Citroën might also help USSK, while currently the Trnava-based plant is in the phase of negotiations, analyses and primary testing.

USSK has been already suffering from imports of cheap Chinese steel while reduction of the labour force is one of measures the company has taken.

“These steps are one of the activities focusing on adapting costs to complicated market conditions including weakening prices of steel and import of steel under unfair conditions,” said Bača in mid-March.

While Bača points to the differing stance of the US and Europe, he said that the resolution of the European Parliament adopted some days ago can be considered to be a positive step. By it the EP stood up to granting China the status of market economy.

“Now, it’s the turn of the European Commission that should elaborate a report about the current situation and propose steps, if possible as soon as possible,” said Bača as cited by Sme.

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