NEW YORK ArcelorMittal SAs wire rod mill in Georgetown, S.C., continues to run on two shifts instead of its usual three as the company attempts to control costs after a slow winter.
The mill has been running below capacity since the company laid off 30 employees in the fourth quarter of 2012, in part due to competition from imports (amm.com, Nov. 5). Wire rod demand began to weaken at around the same time, sources said.
The Luxembourg-based steelmaker plans to maintain a two-crew operation in the short term, a company spokeswoman told AMM. However, it could increase production if the market picks up.
"While there have been indications of market improvement, we are carefully monitoring the situation on a quarter-by-quarter basis," the spokeswoman said.
"The market is soft, and they dont want to produce material for nothing," a market source said.
Some sources said that they expected the mill to move back to three shifts when the market picked up in the spring, but the company hasnt announced plans to return to normal production. Whats more, Charlotte, N.C.-based Nucor Corp.s facility in Darlington, S.C., is slated to begin producing wire rod in the third quarter this year, which could create further competition in the southeastern market.
"Mills should be running three shifts going into the spring," a steel trader said, adding that "having Nucor moving into (ArcelorMittals) backyard is going to make life more difficult."
Despite the layoffs, the two crews are working a full 96 hours a week instead of the 40 hours per shift that one crew usually works, a domestic non-mill source said.
"Theyre running the crews 96 hours a week, and theyre actually producing some pretty good results," the source said. "Theyre doing all the right things."
The Georgetown facility is unlikely to return to three shifts unless there were "a guarantee that Chinese imports are not going to come in," a second market source familiar with the situation said, adding that the reduction to two shifts "makes a big difference in fixed costs."
ArcelorMittals Georgetown facility makes high-carbon, low-carbon and alloy wire rod and has the capacity to produce 750,000 tons per year, according to the 2012 Association for Iron and Steel Technology Directory.