NEW YORK NLMK USA is
planning to temporarily idle one of its galvanizing lines in
Sharon, Pa., "in order to balance current production with
marketplace demand," according to an April 24 letter to
The Portage, Ind.-based
steelmaker, a division of Russias Novolipetsk Steel, told
customers that it will temporarily idle its No. 2 galvanizing
line at the facility starting in late May.
"Open orders for light-gauge
(less than 0.018-inch) line No. 2 product will be coated (the)
week of May 19. After this run, the line will shut down until
conditions in the light-gauge galvanized market improve," James
M. Banker Jr., NLMK USAs executive vice president for
commercial, wrote in the letter.
The Sharon facilitys
heavier-gauge No. 3 line will continue to run its normal
schedule of 0.018- to 0.135-inch galvanized and galvannealed
products, NLMK added, noting that the current lead time for the
No. 3 coating line is May 19.
A company source confirmed the
move but declined to comment further.
A buyer source told AMM
that the steelmakers No. 2 line has not been running full
out for quite some time, so the move makes sense at it looks to
consolidate efforts with its more-active No. 3 line. The buyer
said he has been told the idled line will come back immediately
after conditions change.
Other sources said that while
the flat-rolled steel industry overall faces an overcapacity
issue, the move does not reflect a lack of demand in the coated
industry in general.
"The overall (U.S.) capacity has
been reduced technically, but only because there wasnt
enough demand to fill it anyway," a Midwest buyer said. "My
read on it is that they (NLMK) were balancing out their own
supply vs. demand. ... Its like they were trucking steel
in two trucks that were half full. Now, theyre just
sending one truck, which makes sense."
Others speculated that market
conditions impacting the line may have been aggravated due to
imports, particularly as galvanized sheet and strip shipments
from India have continued to remain at elevated levels. Some
30,741 tonnes of Indian galvanized material hit U.S. shores in
March, according to preliminary figures from the U.S. Census
Bureau, up from February final figures of just 1,808 tonnes.
Imports totaled 170,471 tonnes last month, up nearly 36 percent
from 125,436 tonnes in the same month last year.
But while Indian import volumes
in particular remain strong, sources said they are consistent
with previous levels.
"Looking at the numbers, there
are regular cycles of ships coming in (from India)," said one
trader, noting that import levels have not dramatically
increased when viewed cyclically. "Light-gauge (galvanized
product) is usually a good imported product. But again,
its always easy to blame imports."