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Thyssenkrupp Steel Unit cancels contract with HKM and remains open for sale

Thyssenkrupp Steel Europe, the continent's 2nd largest steelmaker, announced on Friday that it had decided to terminate a contract with HKM. This is a step further to sever ties to the business, which it owns in part and wants to sell.

Thyssenkrupp has been under pressure to streamline its steel business due to high energy prices and low-cost Asian competitors. It warned that it might have to close or sell HKM, which is a 50-30-20 joint enterprise between Thyssenkrupp and Salzgitter.

Dennis Grimm said that due to the market conditions we would have to reduce production capacity from 11.5 million metric tones of steel at the moment to a target shipping of between 8.7 and 9 million metric tones in the future.

Grimm added that the cancellation of HKM would result in a savings of up to triple-million euros.

The cancellation of the agreement means that TKSE will no longer be obligated to purchase around 2.5 million metric tonnes of steel from HKM per year. This obligation expires on December 31, 2032.

Grimm stated that TKSE - in which Czech billionaire Daniel Kretinsky holds a 20% stake - remained open to discussions with potential buyers after recent talks with a buyer fell through. (Reporting and Editing by Louise Heavens, Christoph Steitz)

(source: Reuters)