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AK idles blast furnace on ‘mechanical failure’

Keywords: Tags  steel, AK Steel, Middletown plant, furnace outage, blast furnace, Catherine Ngai

NEW YORK — AK Steel Corp.’s blast furnace in Middletown, Ohio, has been temporarily idled due to an unexpected mechanical failure, the company said June 24.

No injuries were reported, the West Chester, Ohio-based steel producer said, but the mill’s only blast furnace was taken offline June 22 in order to prevent further damage following the incident, AK Steel said.

"At this time, the company does not have a specific estimate of the cost or an exact date for completion of the repairs, though it currently expects to complete the repairs as early as sometime in July, though the repairs may be completed later in the third quarter," the steelmaker said.

"Prior to the completion of the repairs, the company will utilize its Butler (Pa.) Works electric-arc furnace and its Ashland (Ky.) Works blast furnace and, to the extent necessary, purchase merchant carbon slabs to service its customers," AK Steel added.

The company said that it has both property damage and business interruption insurance, and predicts that its uninsured losses will be between $10 million and $27.5 million. The outage will impact both the second- and third-quarter shipments and financial results, it added.

While an AK Steel spokesman told AMM in an e-mail that the company is still assessing the schedule and can’t comment on the exact timing of the outage at this point, customer sources noted that the furnace was expected to be offline for a minimum of three to four weeks. However, two sources called that timeline "aggressive" since they estimated purchasing new equipment would take closer to six weeks.

"What our intel said is that they should be down for a minimum of four weeks," according to one Midwest service center source who buys from AK Steel. "They were already behind on orders because of their automotive activity. With this happening, lead times are going to explode."

AK Steel said in recent earnings guidance that its second-quarter results would include charges related to a planned seven-day maintenance outage at its blast furnace in Middletown, the first major maintenance outage for that furnace since a reline in 2009 (, June 17). The company didn’t have any other planned blast furnace maintenance outages for the remainder of 2013, it said.

The AK Steel spokesman added that the planned outage had already been completed.

Some market sources predicted that the outage will help solidify the latest round of sheet price hikes, with some noting that a third round of sheet increases might already be in the works. With supply being taken offline, sources said it could help change the supply-demand fundamentals in a recently oversupplied market.

"This is a sign of another price increase to come," a second Midwest service center source said. "It’ll come soon."

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