According to Steel Market Update sources, the news out of RG Steel Sparrows Point is looking a little brighter as we move into the post New Year production schedule. There have been rumors floating around the mill that the mill may not run parts of or any of their finishing mills next week. Our sources are advising SMU this is not the case and everything but the “L” blast furnace, BOF’s and Casters (steel making end of the mill) will be in operation next week.

According to our sources the hot strip mill will begin operations on Wednesday and the cold mill on Tuesday. The #4 galvanize/Galvalume line will begin operations on Tuesday as will the Tin Mill.

Separately, in an article published by the Baltimore Sun this evening (December 29th) Maryland Governor Martin O’Malley has asked General Electric Chairman and CEO Jeffrey Immelt for assistance in “stabilizing the financial arrangements that helped build R.G. Steel, America’s fourth largest steel company.”

According to Governor O’Malley’s letter, GE Capital and the 10 other financial institutions have shifted funds need to support business operations to “reserves” in order to further secure the loan.

The Governor wrote, “R.G. Steel feels that this decision has frustrated its efforts to improve its liquidity situation and runs counter to the purpose of the financing arrangement, forcing it to begin to laying off workers.” According to the Baltimore Sun article the Governor added “…the company projects a positive cash flow by the first quarter 2012.”

In other developments the Baltimore Sun is reporting the lack of information from R.G. Steel regarding the Sparrows Point situation is making it “very difficult” for the government to help the workers. Baltimore County Executive Kevin Kamenetz wrote to R.G. Steel CEO John Goodwin and stated, “The absence of information has made it very difficult for Baltimore County, the State, and federal government to mobilize the services that the men and women of Sparrows Point need.”

Customers of R.G. Steel have been frustrated by the lack of information they have been receiving from the mill. As an example, earlier today R.G. Steel published their latest lead time sheet for all three of their plants. Each facility – Sparrows Point, Warren and Wheeling showed promise dates as “Inquire” on each and every line on their lead time chart.

Steel Market Update will continue to watch the developments at R.G. Steel and elsewhere as the other domestic mills react to the situation at Sparrows Point and contemplate their next pricing moves.

We have heard from service centers in the region who are advising their spot customers of a new higher level of pricing as we move into the New Year.

Steel Market Update will put out our next newsletter on Tuesday, January 3rd and we will also begin our next SMU Steel Market Survey next Tuesday as well. If you have never had a trial of our newsletter (which is published three times per week) you can register on our website: www.steelmarketupdate.com (or by clicking on the link below).

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