Evraz Group might stop Vitkovice Steel

Evraz Group might stop the steel production process at its Czech plant Vitkovice Steel on July 1, 2010. Evraz cannot seem to reach an agreement with ArcelorMittal Ostrava on crude iron prices, and crude iron is the primary raw material for steel production, Evraz representative explained to Kommersant. In case the parties fail to come to a compromise before July, the Vitkovice-based plant will stop buying iron and manufacturing steel. At the same time, Vitkovice Steel will keep up with its rolled goods production.

Evraz Group bought Evraz Vitkovice Steel in 2005. The plant currently produces 950,000 tons of steel a year. ArcelorMittal Ostrava has been run by ArcelorMittal since 2003 and produces 3 million tons of steel annually, says Kommersant.

Vitkovice and Ostrava did manage to agree on the formula to be used for price determination. The formula is based on the iron ore and baking coal prices and is to be reconsidered every three months. However, the two parties still couldn’t agree on the basic price. According to Interfax, Ostrava’s price offer is 13% greater than the figures Evraz is hoping for. Vitkovice suggests that the basic price should stem from the average prime cost of crude iron calculated by an independent expert body, with a fixed 10% premium, Kommersant reports.

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