Posted on 24 Feb 2022
US steelmaker curtailments could cut into persistent oversupply that has led to falling prices.
Integrated steelmakers Cleveland-Cliffs and US Steel and electric arc furnace (EAF) steelmakers Nucor and Steel Dynamics (SDI) have all announced closures or slower production ramps for new or existing steelmaking. These closures or slow production ramp ups could take more than 30,000 short tons (st)/day of raw steel production out of the market, or more than 900,000st/month.
Steel prices have plunged by 48pc since peaking in September 2021, with the Argus US hot rolled coil (HRC) Midwest ex-works assessment dropping by more than $950/st to $1,029.25/st on 22 February.
Since mid-October, US steel mill utilization rates have fallen by 5.2 percentage points to 80.1pc, while weekly raw steel production has fallen by 118,000st/week, a 6.3pc decline.
Cleveland-Cliffs will indefinitely idle its 2.1mn st/yr No. 4 blast furnace at Indiana Harbor in the second quarter, citing improved efficiencies in its use of prime scrap and hot briquetted iron (HBI) in its steelmaking processes. The steelmaker also said it would raise flat-rolled prices by $50/st.
At the company's 3mn st/yr Cleveland mill one of the blast furnaces will be taken down for more than 100 days for maintenance, while integrated steelmaker US Steel will take a 25 day outage at its remaining 1.4mn st/yr blast furnace at its Granite City, Illinois mill.
In January, Nucor chief executive Leon Topalian said the company would slow roll the restart of its 1.6mn st/yr flat-rolled mill in Gallatin, Kentucky, and set the start of a new 1.4mn st/yr flat-rolled expansion at the same mill for March. Combined, the 3mn st/yr mill has a daily production of 8,200st/day.
SDI's new 3mn st/yr Sinton, Texas flat-rolled mill is not expected to reach its full ramp rate of 8,200st/day until the fourth quarter.
The decline in steel utilization rates in the US has coincided with offers for seaborne US iron ore pellets to Europe emerging in the last week. Based on industry estimates for iron ore usage in crude steel production, the removal of 900,000st/month of raw steel production is equivalent to a reduction of as much as 1.3mn t/month of 62pc Fe iron ore fines. US pellets were last heard to be offered in Europe during the summer of 2021 but steel capacity utilization in the US was much higher then at 84.1pc in July and 84.9pc in August, based on data from the American Iron and Steel Institute (AISI).
Source:Argus Media
