NEW YORK Allegheny Technologies Inc. (ATI) is in discussions with carbon steel producers regarding tolling agreements at its $1.2-billion hot-rolling and processing facility in Brackenridge, Pa., according to its top executive.
The company has already begun "running (carbon steel) product" at the facility and has included "a variety of carbon steel products from more than one carbon steel producer" in the commissioning schedule, ATI chairman, president and chief executive officer Richard J. Harshman said during the companys second-quarter earnings call July 22, although the "No. 1 prioritization" at the facility is the companys own product offerings.
The facility could be an ideal place to roll next-generation advanced high-strength steels for carbon steelmakers, analysts said.
The facility, which Harshman characterized as "a game-changing investment," progressed to the hot commissioning and operational integration start-up phases in the second quarter, with hot commissioning expected to be completed in the fourth quarter.
Meanwhile, Harshman said that ATI is "on the verge of a major aerospace cycle" that could last "into the next decade" and prove a boon for one of its key end markets.
The Pittsburgh-based specialty steel and alloy producer posted a net loss of $4 million for the three months ended June 30 vs. net income of $4.4 million in the same period last year despite a 5.9-percent increase in sales to $1.12 billion.
Stronger revenue was attributed to improved demand for its nickel-based alloys and superalloys, which also highlighted positive trends from the jet engine and oil and gas end markets. The company expects the commercial aerospace market to drive sales going forward, Harshman said, with an "unprecedented production rate ramp-up" of next-generation airframes and jet engines anticipated in the coming years.
The companys oil and gas end market sales increased more than 30 percent from the first quarter, Harshman said, due in part to demand from "small and medium-sized products for both upstream and downstream applications." Along with "major" upcoming projects in the oil and gas market that are expected to increase sales for ATI in 2015, the company is tracking several large chemical processing industry projects in the United States, Harshman said.
"We continue to see signs of sustainable improvement and demand growth from most of our end markets," he said, noting that lead times "are extending for many of our products" and base price increases "are being realized in much of our transactional business."
The company expects business conditions to continue to improve in the third quarter, with pretax operating results forecast "to improve by $15 million to $20 million" compared with the second quarter, Harshman said.