NEW YORK U.S.
Steel Corp. is looking to improve its bottom line by shuttering
major parts of one steelmaking operation, changing its raw
materials strategy and dissolving an existing joint venture,
its top executive said Oct. 29.
The changes are needed
to make the company more profitable, and are "just the
beginning," Mario Longhi, Pittsburgh-based U.S. Steels
president and chief executive officer, told analysts during a
conference call to discuss the steelmakers third-quarter
Those changes include
permanently shuttering the iron and steelmaking operations at
the companys Hamilton, Ontario, facility effective Dec.
31. The Hamilton Works produces some 2 million tons of
semifinished steel annually, according to U.S. Steels
"The Hamilton Works
cokemaking and finishing operations will continue to operate,"
a U.S. Steel spokeswoman told AMM via e-mail. "This
difficult decision will affect 47 non-represented employees.
Those employees will be provided working notice and the company
will endeavor to reassign them."
The Hamilton Works
employs 875 workers.
The company will take
a non-cash charge of some $225 million in the fourth quarter in
connection with the closure, Longhi said.
U.S. Steel also plans
to shut down two of its coke batteries in Gary, Ind., and
confirmed its earlier announcement that it would dissolve its
Double Eagle Steel Coating Co. joint venture due to economic
amm.com, July 15).
"After a thorough
review of the business ... the economic viability of
electrogalvanized production at Double Eagle could no longer be
maintained at an acceptable margin," Longhi said, adding that
the company would move volumes from the joint venture to its
own facilities, as well as provide alternative products to its
U.S. Steel also
announced plans for the procurement of raw materials, including
moving forward with plans to pursue direct-reduced iron (DRI),
as well as letting two long-term iron ore contracts expire,
which have end dates of 2013 and 2014.
Asked about the DRI
future, Longhi said plans to build an electric-arc furnace (EF)
operation were still on the table, although moving forward with
DRI and an EF operation could be "mutually exclusive."
U.S. Steel has been
going through the testing phase at its Minntac mining
operations in Minnesota, and has determined that "with the
appropriate investments" it could produce quality DRI. As a
result, it is moving into its engineering phase, Longhi said,
without providing additional detail on a timeline.
part of U.S. Steels Project Carnegie cost-reducing
initiative, are part of efforts to help it boost its bottom
happy. Were not happy. Thats not acceptable. We
have to fix the business," David B. Burritt, executive vice
president and chief financial officer, told analysts after the
company reported its sixth net loss in the past eight quarters.
"In order to be a good company, we have to develop economic
In its flat-rolled
division, Longhi said that the flat-rolled supply chain is in
the "healthiest position its been for this time of year
since the economic recovery began," noting that in past years
market sentiment has typically turned negative in the fourth
quarter. "Were experiencing a market (now) that has a
different feel to it."
However, Longhi warned
that cautious order entry patterns from spot market buyers
coupled with end-users increasing consumption rates is causing
lean inventory levels, and U.S. Steel is trying to
position itself for more flexibility as shorter cycles are
becoming more common in the steel sector.
But while prices saw
an uptick in the third quarter on the sheet side, the company
wasnt fully able to take advantage of higher pricing due
to the lockout at Lake Erie Works in Nanticoke, Ontario, which
saw its furnaces restarted in October.
New York, contributed to this story.