NEW YORK AK
Steel Corp. plans to restart its Middletown, Ohio, blast
furnace July 18, just three and a half weeks after an
unexpected mechanical failure caused the producer to idle the
facility, according to sources familiar with the matter.
The repairs have
reportedly been moving ahead of schedule and the mill will be
taking scrap ahead of time, three market sources said. The bell
has been replaced and the furnace will likely achieve full
operation within a week of restarting, they added, which falls
in line with the West Chester, Ohio-based steel producers
earlier predictions that the repairs would be completed in July
amm.com, June 24).
An AK Steel spokesman
declined to comment, but said the company will provide an
update on the plant during its second-quarter earnings call
The steel sheet market
has seen strong upward momentum in recent weeks thanks to three
rounds of successful price hikes, particularly due to supply
being taken offline because of the unplanned outage at
The steelmaker had
indicated before the completion of the repairs that it would
utilize its Butler, Pa., works electric-arc furnace and
its Ashland, Ky., works blast furnace, along with
purchasing merchant slabs, to service its customers.
however, that by losing out on the 2.3-million-ton-per-year
Middletown facility, which represents about 40 percent of
AKs total U.S. capacity, the mills lead times would
extend very quickly, causing tightness in the market.
With the furnace
returning earlier than some had thought, sources questioned
whether the sheet price increases would continue.
"Will the (recent)
price increases be hurt by this? They definitely will. Capacity
that was lost is now being brought back, and thats why
the mills went from $31.50 (per hundredweight) to $32.50 (per
cwt) in the latest round," one Midwest service center source
said. "Its come back a lot faster than anyone thought.
And with (the labor contract at Essar Steel Algoma Inc.) being
settled and supply coming back online, I think the price
increases could be relatively short-lived."
pointed out that overall steel production levels in the U.S.
market have changed little even though AK Steel took capacity
offline for several weeks.
During the first week
of Middletowns idling, U.S. raw steel output slipped to
1,822,000 net tons from 1,881,000 tons a week earlier, but has
since returned to late-June levels as it closed the week ended
July 6 at 1,876,000 tons. As such, some believe that other
mills have capitalized on the outage by bringing more tons into
"We already think AK
coming back online will pressure prices," one trader said.
"Looking at the numbers, other mills have seemingly picked up
the slack because theres been no shortfall in production.
The question, though, is at what point do steel mills start
making deals again because they want orders so badly. Lead
times will then start falling back and there will be more
But buyers noted that
a slight uptick in business activity and demand will keep
prices steady despite the furnaces return.
"I think there will be
some people who slow down a little bit on their thought
process, but I still maintain this thing has legs through
October. From a market standpoint, theyre largely still
out of the spot market until October," a second Midwest service
center source said. "The market is still strong, and the
automotive and construction sector is still strong. Ultimately,
lead times are out, and thats the kicker."