The reasons behind Acindar's decision to suspend operations at 4 Argentine steel mills

Argentine steelmaker Acindar, part of the Luxembourg-based ArcelorMittal group, is set to halt operations at four plants starting March 18.

Production will be suspended at the Villa Constitución plant in Santa Fe province, San Nicolás in Buenos Aires, La Tablada in Rosario and Villa Mercedes in San Luis until April 15.

The decision was made due to the impact of the domestic recession, high inflation and lack of government funding for public works, resulting in low sales.

“ArcelorMittal Acindar states that, as a result of the sustained drop in demand in the domestic market, which has caused a sharp reduction of between 35% and 40% in sales in recent months, the company is forced to readjust production levels according to the new levels of activity,” it said in a release cited by local media.

"In December, they told us that [2024 production] would be 870,000t. By the end of January, it had fallen to 750,000t, and last week it continued to decline," Pablo González, secretary general of the metallurgical workers' union at the Villa Constitución plant, said in an interview with Radio Gráfica. 

The stoppage is considered essential to conduct a “short-term diagnosis,” said Facundo Velasco, Acindar's institutional relations manager, as reported by local media.

During the stoppage period, Acindar will give workers vacations, reduce overtime, and provide safety training, the executive said.

Mariano Obarrio, president of NGO Movimiento por los Valores de Argentina, which focuses on promoting employment and human capital, said on social media: “Not only are 6,000 jobs at risk, but also the SMEs that are suppliers to Acindar and everyone in the value chain.”

During his election campaign, President Javier Milei promised not to allocate funds to public works as part of his economic shock therapy, which has resulted in a sharp drop in purchases of Acindar’s products.

In February, the Argentine construction chamber declared a state of emergency in the country and warned that the cut in funding would threaten 1,400 companies and 200,000 jobs, calling for national and provincial authorities to hammer out a rapid solution.

Acindar is one of the two major steel companies in Argentina alongside Ternium, and is a leader in production of long steel products for the construction and manufacturing industries.

In 2023, it produced 1.1Mt of crude steel, similar to output in 2022, but its installed capacity is approximately 2Mt/y.

In December output dipped 32.6% year-on-year due to difficulties in importing critical raw materials. This was in addition to lower demand from the construction sector, the automotive industry, agricultural machinery manufacturing and production of household appliances, according to the Argentine steel chamber.

In Latin America, ArcelorMittal has iron ore mines in Brazil and Mexico.