Capacity Curtailment Curbs Continental Contribution

ArcelorMittal France has significantly scaled down its operations, functioning at merely 60–70% of its full 10 million metric tons annual capacity. Output has declined to between 6.5–6.8 million metric tons, according to company chief Alain Le Grix de la Salle’s testimony before the French Senate’s economic affairs commission. The televised hearing highlighted how a relentless decline in European steel demand, particularly in France, has forced the company into retrenchment. France's steel consumption has halved over the past decade, leaving facilities like Dunkirk dependent on exports & EU-wide consumption to remain viable.

Emissions Economics Erode Energy-Efficient Evolution

The company’s ambitions to transition toward greener production methods, primarily via Direct Reduction Plants and Electric Arc Furnaces, have hit an economic wall. De la Salle pointed out that the cost of producing steel through a gas-fuelled DRP route currently mirrors that of conventional blast furnace methods, once CO₂ emission allowances are accounted for. This parity undermines the economic incentive for green steelmaking, especially in the absence of guaranteed subsidies or pricing differentials from the market for low-emission steel products.

Hydrogen hurdles hamper hopeful hydrogenisation

At the core of the DRP technology is hydrogen, but its affordability remains a stumbling block. Hydrogen derived through electrolysis is heavily tied to electricity prices, which remain volatile & elevated in Europe. For hydrogen to become cost-effective at €2/kg ($2.2), electricity would need to be available at €25 per megawatt-hour. However, current hydrogen market prices linger near €7/kg, making the operation financially impracticable. “This gives you an idea of the road ahead,” said de la Salle, underscoring the gap between green ambition & commercial reality.

Regulatory Reticence Restricts Renewable Roadmaps

De la Salle voiced concern over the EU’s slow pace in offering regulatory clarity & fiscal support for decarbonisation. While ArcelorMittal has committed to green transformation, it has yet to receive the visibility or financial assurances necessary to activate full-scale deployment. Teams at sites like Fos-sur-Mer remain in strategic limbo, awaiting guidance from Brussels & corporate headquarters alike. “Once Europe has clarified the rules, we will clarify our investment strategy,” he said, emphasizing the group’s readiness, if and when regulatory roadblocks are removed.

Fiscal Frugality Fuels Functional Flight to Foreign Frontiers

Amid European cost pressures, ArcelorMittal is also restructuring its back-office & support functions. The company plans to offshore certain tasks to India, mirroring strategies employed by other steel majors, focusing on functions that do not require direct client engagement. Unions are collaborating in this transition, which seeks to streamline operations and consolidate transactional activities into fewer, more efficient hubs. This is viewed as a cost-containment measure critical to navigating Europe’s expensive operating environment.

Industrial Identity in Ideological Imbalance

Despite its longstanding presence in France, where it employs 15,400 people across 40 sites, ArcelorMittal is re-evaluating its long-term strategy in the country. De la Salle questioned whether a steelmaking facility still holds value in a nation where demand is disappearing. The Dunkirk site, Europe’s largest, cannot be sustained solely by domestic needs. Italy’s steel market, he noted, is now four times larger than France’s. This mismatch has reignited calls for nationalisation by unions, especially after the company announced 600 job cuts in May.

Continental Contraction Collides with Construction Crises

Steel consumption across Europe has declined from 160 million metric tons in 2008 to just 120 million metric tons, a 25% drop. This is largely attributed to systemic changes in the automotive & construction sectors. Electric vehicle production, for example, is reshaping supply chains & reducing traditional steel usage. The European automotive sector, which consumes 13 million metric tons of flat steel annually, 35% in France alone, is facing structural uncertainties. The resulting demand volatility leaves producers like ArcelorMittal grappling for stability.

Carbon Constraints Create Competitive Conundrums

Unlike their global peers, EU steelmakers must bear the financial burden of CO₂ quotas. These quotas, while environmentally necessary, sharply inflate production costs. De la Salle estimates that by 2030, CO₂ expenses could represent 25% of the cost of a single steel coil. Meanwhile, non-EU producers, unburdened by such costs, flood European markets with cheaper finished goods. The global steel overcapacity, now four times larger than Europe’s production capabilities, further erodes the bloc’s competitiveness. Imports from Southeast Asia & India are surging, intensifying pressure on local players.

Key Takeaways

• ArcelorMittal France is producing at just 60–70% capacity due to collapsing steel demand in France & the EU.

• Soaring hydrogen & electricity costs have stalled green DRP project plans, making transition economically unfeasible.

• EU carbon taxes & unclear policies threaten competitiveness, as imported steel outprices EU-made low-emission coils.