Severstal NA recently announced they would be idling the "L" blast furnace at their Sparrows Point operation. The plan is to idle the hot end of the mill but the finishing end will continue to produce hot rolled, cold rolled, galvanized, Galvalume and Tin Mill products.

David Howard, Vice President & General Manager of the Severstal Sparrows Point mill has provided further insights into the decision behind the idling of the steelmaking end of the mill. Below is a copy of a letter which many Sparrows Point customers received earlier this week:

It has been brought to my attention that there is some apparent confusion over the announcement made last Thursday, June 3 regarding the primary operations at Sparrows Point. I would like to try and clarify our plans for you, if possible.

Severstal, like most other domestic producers, has experienced a weakening order book as marketplace inventories have been replenished and we approach the time period where seasonal summer shutdowns occur in many industries, but most notably automotive. While we believe the economy continues to slowly recover from the depths of the recent recession, forward visibility about market conditions remains murky as our customer base continues to tightly manage inventories and their supply chains.

As a result, Severstal has made the decision to temporarily idle the primary operations at Sparrows Point for approximately 30-45 days beginning on or about July 1, 2010. This will impact the blast furnace and steelmaking operations (BOF and Caster) only. We expect the hot strip mill and finishing operations to continue to run and consume existing slab inventories at Sparrows Point.

Like our customers, we too are trying to closely manage inventories of high priced raw materials as well as manage our total steel inventories not only at Sparrows Point, but across Severstal. This action will allow Severstal to rebalance inventories with existing demand levels and set the stage for the restart of primary operations at Sparrows Point in early August, 2010.

We expect to be able to satisfy the forecasted demands of our customers through this period from existing slab inventories, or from other facilities within Severstal.

We are finalizing our plans this week and will provide further information regarding this action early next week, if not sooner.

Please make sure that our customers understand that we sincerely appreciate their business and that we appreciate their continued support. Should you have any additional questions and/or concerns, please feel free to contact me directly at (410) 388-4337 or at dhoward@severstalna.com.

David A. Howard, Vice President & General Manager, Severstal Sparrows Point, LLC

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