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Warren Steel seeks lower rate to restart

Keywords: Tags  Warren Steel, Public Utilities Commision of Ohio, PUCO, electricity, power rates, U.S. Steel Optima, steel, Michael Cowden

CHICAGO — Warren Steel Holdings LLC wants to restart and ramp up production to 1 million tons per year, its maximum capacity, if it can wrest a lower power rate from Ohio regulators.

The Warren, Ohio-based electric-arc furnace (EF) steelmaker wants the Public Utilities Commission of Ohio (PUCO) to approve an initial rate of $50 per megawatt hour (MWh), one-third less than the $75 per MWh the company said it was paying before it shut down.

"Without a competitive power rate, Warren Steel does not have a near-term plan to restart operations," the company said in documents filed with PUCO earlier this month, noting that a lower rate was necessary for the "long-term viability" of the plant.

Warren Steel, owned by Miami-based Optima Acquisitions LLC, cited electricity as its third-biggest expense behind scrap metal and labor, according to regulatory filings.

The company ceased production in March because of weak customer demand (, March 25). But it has also said it might resume steel melting after its executive team reportedly worked out a supply deal with U.S. Steel Corp., which was said to be interested in purchasing billets from Warren Steel (, March 28).

Pittsburgh-based U.S. Steel declined to comment June 10.

A spokesman for Warren Steel said the company doesn’t comment on market rumors or speculation.

If a lower rate were approved, Warren Steel would be able to compete with another EF producer in a southern state to supply a third "major steel producer" with product, the company said. A second "strategic opportunity" would also become available if Warren Steel were to restart, it added.

Warren Steel didn’t specify the southern EF producer it was hoping to compete with, the steelmaker it was hoping to supply or the company with which the second opportunity might be.

If granted a lower power rate, Warren Steel also said that it would look to boost production to 1 million tons per year from 240,000 tons annually. That would require capital expenditures of approximately $10 million in the first year of operations and $33 million in each of the next three to four years, it said.

Among the upgrades would be a $2.1-million investment to make Warren Steel’s substation state of the art, as well as $600,000 to modernize its EF, the company said. If production were boosted, the steelmaker would also lift employment to 325 people, Warren Steel said, noting that it currently employs 180 wage and salaried workers, as well as 66 full-time contractors who will lose their jobs unless production restarts.

Warren Steel has a melt shop and casting facility that can produce carbon and alloy steel continuous-cast rounds, squares and rectangles for the specialty steel sector, including for energy, construction and automotive applications, the company said.

Ohio-based energy company Ohio Edison currently supplies power to the plant, Warren Steel said. The company has proposed a rate of $50 per MWh in its first year of operations—so that it could match the rate of the unnamed southern competitor—an amount that could increase to $52.50 per MWh by its third year.

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