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USS plans ‘extended’ blast furnace outage

Jun 10, 2019 | 01:11 PM | Chicago | Michael Cowden

Tags  U.S. Steel, Great Lakes Works, b2 blast furnace, outage, extended outage, David Burritt, Kevin Bradley, Section 232 Tyler Kenyon

U.S. Steel plans to take an “extended outage” at the B2 blast furnace at its Great Lakes Works near Detroit, a company spokeswoman confirmed to Fastmarkets AMM.

The steelmaker is taking the outage to replace and upgrade a gas cleaning system, thus reducing emissions, the spokesperson said in an email to Fastmarkets AMM. U.S. Steel is spending $25 million on the project.

She declined to say when the outage would start, when it would end or how long it might last.

U.S. Steel president and chief executive office David Burritt discussed several major planned outages, including at Great Lakes Works, during the company’s first-quarter earnings conference call in early May.

And chief financial officer Kevin Bradley stressed that nothing was being taken offline for a longer time than necessary for the scheduled upgrades. “No plans right now for us to turn off any blast furnaces today,” he said during the call.

Great Lakes Works has three blast furnaces and two top-blown basic oxygen process (BOP) vessels capable of making 3.8 million tons per year of crude steel. The facility produces hot-rolled, cold-rolled and coated flat-rolled sheet primarily for automotive industry customers, according to U.S. Steel’s website.

The outage at the B2 furnace comes during a period of low prices for the domestic steel industry - US hot-rolled coil prices are at their lowest in 2½ years - and amid concerns that prices might not be close to a bottom.

Fastmarkets AMM’s daily US Midwest HRC index stood at $28.38 per hundredweight ($567.60 per ton) on Monday June 10, down 21.6% from $36.21 per cwt at the beginning of the year and 38.1% from a 2018 peak of $45.84 per cwt in July.

Demand has weakened across the automotive, energy and industrial sectors. And production or capacity cuts might be the "sole catalysts" able to change the downward drift in steel prices, Cowen analyst Tyler Kenyon wrote in a June 10 research note.

ArcelorMittal has announced production cuts and laid off workers at its operations in Europe.

But cuts in the United States are unlikely. “It would not please the Trump administration following the degree of protectionism/political support bestowed upon the industry,” Kenyon wrote.

US President Donald Trump gave the domestic steel industry extraordinary support last year when he implemented tariffs and quotas against imported steel under Section 232. The tariffs - 25% in the case of imported steel - have been removed against Canada and Mexico but remain in place against some of the US’ traditional allies, including Japan and the European Union.

U.S. Steel restarted two blast furnaces at its Granite City Works near St. Louis after the Section 232 tariffs were put in place.


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