Worthington Industries Inc. has seen its steel business profits
squeezed over the past 12 months, due in part to lower selling
prices and a temporary loss of some coating volume.
But the company
anticipates an upturn as automotive build rates increase over
the next few years, and the company is preparing by expanding
its cold-rolled strip rolling mill and strip annealing capacity
amm.com, May 30), executives say.
joint-venture Spartan Steel Coating LLC saw a reduction in
steel tonnage during its fiscal year ended May 31 because
Dearborn, Mich.-based partner Severstal North America Inc.
"moved business to their in-house galvanizing facility in
Dearborn," Worthington vice president and chief financial
officer Andy Rose said during a conference call.
"The main driver of
the shortfall was tolling volume, which was negatively affected
by (Severstals) balancing of production between Spartan
and Dearborn," Rose said. "But by the end of the quarter,
Spartans volume began to recover as Severstals new
line is now full. So we expect Spartans volume to
continue to improve."
Ohio-based company expects to boost cold-rolling and annealing
capacity by 15 to 20 percent when it concludes its capital
projects in Cleveland and Columbus. Its 2010 acquisition of the
strip steel assets of Buffalo, N.Y.-based Gibraltar Industries
amm.com, Feb. 1, 2010) "basically doubled our
capacity but now were full again, so we need to increase
it," Worthington president and chief operating officer Mark
The market for strip
production "has been in consolidation mode for a long time, and
its now where it needs to be," chairman and chief
executive officer John McConnell said. "If the (vehicle) build
rates get any higher, we need to make sure we can keep up with
tentative support for recent mill-announced coil price
amm.com, June 27), citing rising scrap tags, but
added that "there isnt a whole lot of demand-side drive
for that at this point."
If prices "get out of
hand, (domestic producers) know that will invite more imports,"
Russell said. "And you see some of the signs of imports
starting to increase. So if they get greedy, the imports will
come and discipline them. Weve seen that before and that
will happen again."