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AM takes Ind BF outage, mulls idling: sources

Apr 17, 2020 | 03:06 PM | Chicago | Michael Cowden

Tags  ArcelorMittal, Burns Harbor, blast furnace, maintenance outage, steel, flat-rolled steel, Covid-19, automotive Michael Cowden

ArcelorMittal USA is taking an approximately two-week maintenance outage on the "C" blast furnace at its integrated steelmaking complex in Burns Harbor, Indiana, sources familiar with the matter said.

The United States subsidiary of the world's largest steelmaker will use that time to assess business conditions and determine whether to resume normal output thereafter, the sources said.

"It's a very fluid situation... based on order entry and customer demand," one source said.

Another agreed. "It will be very fluid depending on how the situation evolves," he said. "[Covid-19] has a heavy impact. There is no way around it. You have to keep your fixed costs under control, and you cannot make steel you are not going to sell."

Both said much hinges on whether, when and to what extent North American automotive assembly plants resume production. Both also said the kind of discussions taking place about how to flex production at the "C" furnace at Burns Harbor were likely taking place at other furnaces across North America.

While some sources said ArcelorMittal might ultimately idle the furnace, other sources said that option was not explicitly on the table.

Burns Harbor has two blast furnaces - "C" and "D" - and an extended outage or idling of the "C" furnace would be notable because it is bigger than most ArcelorMittal furnaces in the US.

An ArcelorMittal spokesperson declined to comment for this article because the company is in its quiet period before the release of first-quarter earnings.

But one thing is clear: The company is poised to announce layoffs at Burns Harbor.

United Steelworkers union Local 6787 president Pete Trinidad Sr said in a blog post dated Friday April 17 that a “layoff minimization plan” had been implemented at the facility. “The company has stated business conditions have brought them to this decision,” he wrote.

ArcelorMittal management will inform employees of layoffs beginning April 19, Trinidad wrote.

USW Local 6787 represents union members at Burns Harbor, which has annual steelmaking capacity of about 5 million tons and employs nearly 4,000 people, according to an ArcelorMittal fact sheet about the mill.

The company had filed a notice on April 13 with the state of Indiana about 63 employees at Burns Harbor being placed on furlough.

“Many of the company’s customers have unexpectedly and temporarily closed their plants due to the Covid-19 pandemic,” ArcelorMittal said in the letter. “The temporary closure of these customers has a direct impact on our business and requires us to place employees on temporary, unpaid furlough.”

The number of employees furloughed or temporarily laid off could change from week to week depending on demand, Fastmarkets AMM understands.

Burns Harbor makes hot-rolled, cold-rolled and coated sheet in addition to carbon and heat-treated plate for a variety of end-use markets - including the automotive, energy and construction sectors.

Automotive demand has been hammered by automakers' suspension of assembly plants across North America. And energy demand has been clobbered by a plunge in oil and gas prices.

Burns Harbor is ArcelorMittal’s second-largest facility in the US, behind the Indiana Harbor steelmaking operations in East Chicago, Indiana.

An idling of the "C" furnace would leave ArcelorMittal with only three blast furnaces operating in the US: The "D" furnace at Burns Harbor, the No7 blast furnace at Indiana Harbor and the No5 furnace at its steelworks in Cleveland.

ArcelorMittal just six months ago operated three blast furnaces at Indiana Harbor alone: The No3, No4 and No7. The company said in November that it was idling the No3 furnace, and in March that it was blowing down the No4 furnace.

ArcelorMittal confirmed that it was blowing down the No6 blast furnace in Cleveland, which has two furnaces - No5 and No6 - earlier this month.

Other US steelmakers, including electric-arc furnace (EAF) producers, have also swiftly and significantly cut output in response to the demand destruction from the Covid-19 pandemic.

On the integrated side, U.S. Steel Corp and Cleveland-Cliffs’ AK Steel Corp subsidiary have also idled capacity.

AK Steel has indefinitely idled its Ashland Works in Kentucky, and temporarily idled its Dearborn Works in Michigan - leaving it with just two operating blast furnaces at its Middletown Works in Ohio, a company spokesperson confirmed in an email to Fastmarkets AMM on April 17.

On the mini-mill side, JSW Steel USA has temporarily idled the EAF and hot-strip mill at its steel mill in Mingo Junction, Ohio, as well as its pipe mill in Baytown, Texas.

And Nucor Corp has suspended operations at its direct-reduced iron (DRI) plants in Louisiana and in Trinidad.

Fastmarkets also understands that EAF producers have significantly reduced production by running only single casters or running mostly during off-peak hours to reduce energy costs. Such cutbacks can happen quietly because they are typically not accompanied by the mass layoffs seen at integrated mills.

The idlings come during a period of low steel prices.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $24.94 per hundredweight ($498.80 per short ton) on Thursday, down by 19.3% from this year's high of $30.91 per cwt, reached in mid-January.


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