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30. November 2010

GER - ThyssenKrupp to build a cost saving melt shop plant in US

Reuters reported that ThyssenKrupp will bring forward construction of a cost saving melt shop plant in the United States to help it compete against rivals.

Sources said that construction of the melt shop will be brought forward to enable production in 2013 instead of 2014. It is also considering a major revamp of its weak stainless business.

Construction in the United States of the melt shop, which would allow ThyssenKrupp to melt scrap metals and avoid having to import stainless products, has been estimated by some analysts to cost around EUR 600 million.

But it would enable the German steel maker to supply material to its USD 1.4 billion steel plant in Alabama, rather than importing it from Germany, Italy and Mexico. The Alabama plant started production last month with one cold rolling mill, which will initially produce 100,000 tonnes annually.

One of the sources said that "Moving forward the construction will allow the company to save on transportation costs and be closer to its market, thus better competing against (Acerinox owned) NAS."

Analysts said that they expected ThyssenKrupp could save around 90% of shipping and handling costs to North America or around EUR 100 million per year.

Mr Hermann Reith analyst of BHF Bank said that "Possible US import taxes are another factor. An important aspect also is avoiding the US anti dumping taxes."

Some analysts said that the US government has initiated a review of anti dumping duty orders on some stainless steel sheet and strip in coils from other countries including Germany, Italy and Mexico.

The sources said that a supervisory board meeting on November 26th 2010 of Europe’s biggest stainless steel producer is expected to approve a capital expenditure plan which allows a new timetable.

Sources also said that the board will discuss other efficiency measures that include shutting down Benrath, one of four stainless plants in Germany, and the cutting of up to 400 jobs from Benrath’s 550 strong workforce.

The board is also expected to approve plans on capital expenditure including EUR 250 million of investment for the Benrath restructuring.

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