special bar quality (SBQ) market could see some temporary
fallout in the supply chain as a result of a furnace outage at
Republic Steel, cold drawers, forgers, manufacturers and others
said, although they conceded that it is too early to gauge how
it will impact sourcing of certain grades and chemistries.
Republic experienced a
failure Aug. 2 at the transformer supplying power to the No. 7
furnace at its Canton, Ohio, melt shop, resulting in an outage
of its No. 7 backup furnace that will last between two and
eightweeks (amm.com, Aug. 5).
"We are doing everything in our power to implement the needed
repairs to minimize any impact on our customers," president and
chief executive officer Jaime Vigil said.
is ramping up production from its No. 9 electric-arc furnace to
try to keep up with the order book.
division is aware of the issue. ... We dont expect any
disruption to our operation at this time. We have other sources
that supply SBQ steel," a spokesman for Detroit-based American
Axle & Manufacturing Inc. told AMM.
"About 20 to 25
percent of our steel comes from Republic. ... It is material
that we cannot get elsewhere," a Mid-Atlantic cold drawer
source told AMM.
"We dont know
the impact yet. We know there will be (some)," he said, noting
that his company had orders in the rolling schedule.
A Midwestern forge
executive who receives a truckload of steel from Republic each
day claimed the steelmakers "delivery times were way off
before the transformer failure." This outage is problematic
because customers "want to run with no inventory and same-day
delivery, which leaves very little room for variation."
shortages in the past have led to production line shutdowns
among the forgers customers.
"We cannot move to
another source. There is one approved source for each
(automotive build) program," the forger said.
"Republic was having
problems keeping up with automotive demand and shipping on
time. This will only exacerbate that situation," a Great Lakes
cold finisher source said.
A Tier 1 supplier to
the commercial vehicle industry believes the furnace outage
"will impact the people who had immediate orders and who now
have to scramble to find replacement material." Overall,
however, "the impact wont be that great. There is a lot
of inventory and lots of capacity in the U.S. market."
An East Coast bar
processor agreed, adding that he doubts it would constrict
supply for long, given the seasonal lull in demand the market
Mid-Atlantic drawer source fears Republic will choose to supply
its major contract customers first, leaving some smaller buyers
in the lurch.
managing director of West Chester, Pa.-based Metal Strategies
Consulting LLC, believes the No. 7 furnace is Republics
largest, with an annual rated capacity of 950,000 tonnes, at
least until the new one at Lorain is up and running in a few
amm.com, Aug. 2).