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USS slates outages in recovering US market

Keywords: Tags  John Surma, U.S. Steel, sheet, steel, blast furnace, outages, tin plate, Anne Riley

NEW YORK — U.S. Steel Corp. will conduct planned maintenance outages at a "fairly elevated level" during the second and, perhaps, third quarter after performing no blast furnace outage projects in the first three months of the year, chairman and chief executive officer John P. Surma said.

"(Maintenance work) will be (at) a fairly elevated level in the second quarter compared to the first. It’s the reason we pointed it out to you. It’ll probably be around that same level in the third quarter, depending (on) if we go ahead with what we expect to do, but we could change our minds," Surma told analysts Tuesday during a conference call following the release of the steelmaker’s first-quarter earnings results.

The Pittsburgh-based company is undertaking maintenance work on one of the furnaces at its Granite City, Ill., steel works "as we speak," and expects to begin work on one of the smaller furnaces at its Gary, Ind., plant later this quarter, according to Surma.

"That’s our current plan. We have the right to change our minds, of course," he said, citing some "flexibility" in the timelines. "It all depends on how the market looks and what our capabilities are. But given as it currently stands, we’ll probably do some work in the third quarter (as well), and we normally would."

U.S. Steel is preparing for the planned outages in advance in order to maintain its supply of finished product to customers, Surma added.

"We plan for these things for a long time, and that includes having some slab staged in there right in front of the strip mill so we can maintain our customer supply," he said. "We had some higher inventories that you saw earlier in the year, late last year, and now we’re working those down as we go through the process."

The planned outages come at a time of apparent stability in the market, according to Surma.

"We’ve looked at our second quarter and said things look pretty good, for us at least. I think the way I’m seeing the world right now is there’s the potential for some degree of stability, which hasn’t visited us much since 2008," he said.

"There seems to be a pretty good supply-demand balance, or at least a pretty good demand, from our standpoint, and our supply-cost structure is relatively stable," Surma said. "Prices seem to be in the zone, just based on the public reports, that we can earn a pretty good living at. So things look like stability might be happening without us really expecting it."

That stability is more apparent in the North American market than in Europe he said.

"If you’re just looking at today’s world, you’d certainly have to conclude that North America, and the U.S. in particular, for our company is more favorable than some of the European activities," Surma said.

"Despite the fact that the economic recovery has been very choppy and it’s been up and down and back and forth, (North America) is still a pretty good market. We’re still not, as an industry or as a country or as a sector, back to the levels of steel use (before the recession) ... and I think the biggest missing link there is in construction. Most other markets have come back fairly well," he said.

One particular bright spot in the North American market is the strengthened automotive sector. The company’s tinplate business is also on the rise, Surma said.

"I think the tin market last year was a little slower, particularly later in the year. ... We’re (now) to the point where we’re running most of our facilities in that sector pretty close to full," he said. "(It’s an) excellent market for us. We’re a large player in it and tend to be, and we’ll stay close to our customers. And if any of them are having trouble meeting supply, they know where to reach us."

Surma did not mention any company by name, but earlier this month, RG Steel LLC—another tinplate producer—confirmed it was idling tin mill operations at its Sparrows Point, Md., steelmaking facility (AMM, April 14), which market sources have said is a boon for both U.S. Steel and ArcelorMittal USA Inc.

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