Market sources say the outlook is cloudy as to what effect the temporarily idling of US Steel’s domestic capacity will have on sheet pricing, Kallanish reports.
US Steel told the state of Michigan it plans to lay off about 200 workers at its Ecorse, Michigan, Great Lakes works through at least 30 September in connection with the idling of the facility’s B2 blast furnace.
The blast furnace was initially taken down in June for a maintenance outage, which stretched into an indefinite idling due to prevailing market conditions. US Steel notes that the outage and layoffs could last for more than six months.
Coupled with the idling of the south blast furnace at the company’s Gary, Indiana, works, the company’s raw steel production will be down by about 200,000-225,000 short tons/month.
A Midwest flat-rolled buyer says the raw steel reduction will likely not affect hot-rolled output for some time.
“The output from the hot strip mill is about the same,” he says. “No market supply change until that happens.”
He adds that flat-rolled pricing appears to be hitting a plateau, and is “... likely to retreat to some degree.”
A West Coast buyer agrees that flat-rolled pricing momentum appears to have stalled, and it is not clear to what extent reducing capacity will change that.
“I am not certain that sheet prices are moving up. They are up from the lows of $460/short ton back in June,” he says. “Officially, [... mills] are asking $640/st but that number does not work. I think they are happy at $600/st.”
Kallanish currently puts hot-rolled at $600-630/st with cold-rolled at $780-800/st. All prices are ex-works, domestic mill.