USA UPDATE
Weak demand from the major steelconsuming industries has also caused a drop in capacity utilisation among US steelmakers, forcing the latter to temporarily close down operations and scale down production. The rate of capacity utilisation, an indicator of the US steel industry’s health, slumped to 53.2% for the week ending 23 May from 80.8% a year ago, according to the AISI. Experts fear that the ongoing pandemic could have a long-term impact on the US steel market, though nobody has exactly pinpointed how – or to what extent. Before this fear began making the rounds in steel circles, many had been optimistic that the coronavirus had not yet affected US steel production. But things changed dramatically when reports surfaced that America’s leading three car manufacturers Ford, General Motors and Fiat Chrysler – the ‘Big Three’ as they are called – were halting their North American production. Besides the ‘big three’, others too had cut down their output by some 33,000 vehicles per day and, in effect, eliminated an estimated 1.5Mt of steel consumption from 18 March to 18 May. This further impacted downstream demand, with steel producers from Arcelor Mittal to US Steel announcing temporary closure of blast furnaces totaling over 10Mt of lost annual domestic capacity. In the circumstances, prices are likely to remain depressed until demand and confidence return. But many steel experts fear that if US assets remain depressed in these economically challenging times, they are not sure who could come forth to provide the badlyneeded capital infusion,
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and which of these companies can survive the crisis. The coming weeks and months will provide indications on the extent of the impact of the slowdown. US Steel idled its Lorain Tubular Operations and laid off 250 workers as of 24 May. US Steel’s spokesperson, Meghan Cox, was quoted saying that the layoffs were ‘in line with what was previously announced’ in March when the company said that the decision to close the plant was driven by weak market conditions for tubular steel, large-scale imports and the price and demand for oil, though it did not specifically mention COVID-19 among the reasons. On another note, US Steel signed a longterm contract to supply iron ore to Algoma Steel of Ontario, Canada. The Pittsburghbased steel producer operates two mines in northern Minnesota that supply iron ore to its Gary works and other steel units. The company will also supply iron-ore pellets to Algoma Steel for four years – from 2021 to 2024. In March, US Steel had idled its Keetac mine located in Minnesota’s Iron Range, from where iron-ore pellets are shipped on lake freighters across Lake Michigan to the Gary Works and the Midwest Plant steel mills. About 375 steelworkers were laid off as a result of this closure. A month later, in April, US Steel announced the sale of an option to buy a 25% interest in its Minntac iron-ore
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operations. US Steel president/CEO, David Burritt, said that the asset revitalisation investments made in the company’s critical steelmaking assets in the past few years had enhanced safety, quality, delivery and cost performances as the company built on the cost and capability benefits of being an integrated producer. With its electric arc furnaces in Alabama getting completed, the company is continuing its investments in the Mon Valley Works and upgrades in its hot-strip mill at Gary Works. Meanwhile, the US Department of Commerce Bureau of Industry and Security (BIS) is seeking, effective 26 May 2020, public input on Section 232 of the aforementioned Trade Expansion Act of 1962, which was used by President Donald Trump, on the recommendation of the Secretary of Commerce, to take actions to adjust imports of goods found to be imported into the US in such quantities or under such circumstances as to threaten to jeopardise national security. US steel companies are urged to provide the BIS a full picture of how the current process has, or has not, worked for them, as officials consider if and how to amend the review process. BIS has asked for comments before 10 July. The annual Steel Success Strategies 2020 conference, which was scheduled to take place in New York from 8-10 June has been postponed 26 - 28 October 2020 because of the worsening situation caused by Covid-19 and following the advice of international governmental bodies to abstain from non-essential travel. The event will now be fully online as a result of the global pandemic. For further details, log on to https://www.metalbulletin.com �
July/August 2020
14/07/2020 15:22:14