The recent decision by Medway Council to approve the redevelopment of Chatham Docks into a mixed-use scheme has been met with strong opposition from ArcelorMittal, a multinational steel manufacturer. The company, which produces concrete rebar steel at the docks, has warned that the planning decision will have a "catastrophic" impact on the UK's steel supply, potentially cutting access to this crucial product by nearly a third.
ArcelorMittal's Chatham Docks site is the company's only facility in the UK that produces reinforced concrete steel, which has been used in major infrastructure projects such as High Speed 2 (HS2), Thames Tideway, and Crossrail. The company had also hoped to supply steel for the upcoming Lower Thames Crossing project. The closure of the site, as a result of the approved redevelopment plans, could force ArcelorMittal to pull out of the UK reinforced concrete steel market altogether.
The steel giant has called on the incoming secretary for levelling up, housing and communities to re-examine the project following the general election on 4 July. The company has garnered support from prominent figures, including Labour leader Keir Starmer, who in September 2020 expressed his "proud support" for the campaign to save industry at the docks.
Developer Peel Waters, which has received preliminary approval from the council to build 31,000 square meters of workspace at the docks, argues that its Basin3 plan will serve as "a catalyst for innovation and collaboration." However, ArcelorMittal's chief executive of Kent Wire, Phil Taylor, strongly disagrees, stating that the move would be "catastrophic" for the firm and a "significant loss to the UK construction industry."
Taylor warned that the closure of the docks for redevelopment would result in the loss of about 800 jobs. He also revealed that ArcelorMittal had presented a masterplan to the council to expand the industrial site, which would have created 100,000 square meters of industrial space, over 2,500 additional jobs, and protected the existing jobs at the site. However, the council chose to consider Peel Waters' plans instead.
The potential departure of ArcelorMittal from the UK market could have far-reaching consequences for the construction industry. Taylor cautioned that prices for reinforced steel would soar, and lead times would increase as the remaining UK-based producers would struggle to meet the demand, leading to stock rationing. The high costs associated with relocating the site, which amounted to more than £7 million in 2014/15 for a mere 500m move, make it highly unlikely that ArcelorMittal would consider re-establishing its operations elsewhere in the UK.
Peel Waters has claimed that its approved program would generate "hundreds of new jobs." However, Taylor countered this argument, stating, "You don't destroy existing jobs in order to promise some jobs at some point in the future." He expressed concern that Medway Council officers and some councillors were being misled by promises of future benefits that may not materialize, while destroying highly skilled, well-paid existing jobs in the process.
NYSE: MT
Current Price: $28.45
Change: -1.5%
ArcelorMittal's stock has been in a sideways trend over the past few months, with no clear direction. The stock has found support around the $27 level, while facing resistance near the $30 mark. The 50-day moving average has been acting as a dynamic support level, while the 200-day moving average has been acting as resistance. The MACD indicator has been fluctuating around the zero line, suggesting a lack of strong momentum. The stock has been trading within the Fibonacci retracement levels of the previous uptrend, with the 38.2% and 61.8% levels acting as key support and resistance zones. The stock has been trading within the Bollinger Bands, with occasional breakouts on either side, indicating periods of increased volatility. In summary, the news of the potential closure of ArcelorMittal's Chatham Docks site and its impact on the UK's steel supply may have a negative impact on the company's stock price in the short term. However, the broader market conditions and the company's global operations will also play a significant role in determining its overall financial performance. The technical analysis suggests that ArcelorMittal's stock is currently in a sideways trend, with no clear direction, and investors should monitor key support and resistance levels for potential breakouts.
