Breaker: USS to idle BFs, cut capital spend
Mar 27, 2020 | 08:56 AM
New York |
U.S. Steel will take a series of “aggressive and meaningful actions,” including idling a blast furnace at its Granite City Works and extending downtime for a blast furnace at its Gary Works, in response to impacts from Covid-19.
“The short-term actions announced today are difficult but necessary,” David Burritt, president and chief executive officer at USS, said in a statement on Friday March 27. “Our focus on cash and liquidity will ultimately position us to achieve our long-term goal as a stronger organization.”
According to the release, the following actions will be taken by the Pittsburgh-based steelmaker amid the worsened economic environment caused by the coronavirus.
- Idling of the No4 blast furnace at Gary Works will begin “immediately” and a previously planned 48-day outage, which was scheduled in April, will be extended until “market conditions improve.”
- Blast furnace A at Granite City Works will be idled temporarily, effective immediately.
- The indefinite idling at Great Lakes Works will continue as planned.
- Indefinite idlings of most of the company’s Lone Star tubular operations and Lorain tubular operations will start in late May as a result of weak tubular market conditions.
- Capital spending in 2020 will be reduced by $125 million, meaning that projects including the endless casting and rolling and co-generation investments at Mon Valley, upgrades at the Gary Works hot strip mill and a new non-grain-oriented electrical steel line at U.S. Steel Europe will be delayed “until market conditions become more certain.”
These actions will not impact the company's first-quarter adjusted earnings before interest, taxes and amortization. "To ensure a more secure future for all our stakeholders, the time has come for us to take aggressive actions to reposition the company," Burritt said.
- U.S. Steel will increase borrowings under its revolving credit facility by $800 million in an effort to "increase its cash position and preserve financial flexibility."
Fastmarkets' daily steel hot-rolled coil index, fob mill US was calculated at $28.02 per hundredweight ($560.40 per ton) on Thursday March 26, down 1.1% ($0.31 per cwt) from $28.33 per cwt on Wednesday and down 1.3% ($0.38 per cwt) from $28.40 per cwt a week earlier.
Prices for hot band in the US are falling as a result of widespread order cancellations, particularly from the energy tubular market. Major downstream industries for steel, including automotive and energy, have been hammered by the worsened market environment resulting from the Covid-19 virus.
Market participants previously told Fastmarkets that more production cuts by domestic flat-rolled mills could keep prices from falling more, and rumors of idlings at Gary Works and Granite City Works had been circling for weeks.