Thyssenkrupp steel JV talks slow over customer contract discussions, sources say
16/02/2024 14:30
By Christoph Steitz, Emma-Victoria Farr and Tom Käckenhoff
FRANKFURT/DUESSELDORF, Feb 16 (Reuters) - Thyssenkrupp
and EPH are facing delays in talks about a steel joint venture
as ongoing contract negotiations with automotive clients hamper
the German group's efforts to work up a necessary business plan,
three people familiar with the matter said.
The issue underscores ongoing challenges for Thyssenkrupp
TKAG.DE to find a strategic solution for its iconic steel
division, which has come under pressure from high raw material
and energy prices as well as cheap Asian steel imports.
Thyssenkrupp said in e-mailed comments that open-ended and
constructive talks with EPH continued unabated and that the
company wanted to reach an agreement as soon as possible but
would not let itself be rushed into any deals.
"Of course, the challenging environment with a weak economy,
rising raw material costs, high energy costs and strong
competition from non-European market players is having an impact
on the outlook for European steel manufacturers and therefore
also on the ongoing talks with EPH," the company said.
EPH declined to comment.
Sources told Reuters in December that the German firm may
have to make financial sacrifices to get a planned 50:50 joint
venture with EPH, which first emerged as a potential partner in
June 2023, over the finish line.
Both parties still remain interested in continuing
discussions but there are differences over the outlook for
Thyssenkrupp Steel Europe, Germany's biggest steelmaker, the
people said.
While both sides are holding talks on less critical aspects
of a deal, any serious efforts by Thyssenkrupp to win EPH and
billionaire owner Daniel Kretinsky as a co-shareholder of its
steel unit depend on updated business assumptions that reflect
the sector's changing environment, the people said.
That is still out several weeks as Thyssenkrupp is working
through contract renegotiations with automotive clients, its
single largest customer group, they added.
Thyssenkrupp is hoping that updated contracts will show
stabilising prospects for the steel division over the next 12-18
months and provide tailwind for its green transition that aims
to decarbonise production, one of the people said.
Thyssenkrupp Chief Executive Miguel Lopez earlier this week
said that there was no deadline for discussions with EPH and
that Thyssenkrupp was working on a new business plan for steel
which would then serve as a basis for continuing talks.
Thyssenkrupp said doing that was "absolutely essential in
the current volatile world and especially in the steel industry,
which is heavily dependent on economic cycles".
(Reporting by Christoph Steitz, Emma-Victoria Farr and Tom
Kaeckenhoff; editing by David Evans)
((christoph.steitz@thomsonreuters.com; +49 30 220 133 647;))