CHICAGO The 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.
Canton-based Republic is ramping up production from its No. 9 electric-arc furnace to try to keep up with the order book.
"Our metalforming 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."
Similar supply 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 is experiencing.
Still, the Mid-Atlantic drawer source fears Republic will choose to supply its major contract customers first, leaving some smaller buyers in the lurch.
Christopher Plummer, 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 weeks (amm.com, Aug. 2).