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 customers.
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."