Steel Products

Key Pricing Driver for the Month – Constraints in Supply

August 13, 2013

The main issue driving steel prices during the month of July was supply and the constraints in supply related to production issues at the North American steel producers.

U.S. Steel Lake Erie Works continued to be on lockout throughout July. The 2.5 million ton a year slab and hot rolled mill was

first locked out on April 28, 2013. U.S. Steel submitted a new offer to the union late during the month and asked the Canadian government for a forced vote which was supervised by the Ministry of Labour on July 31. The vote failed and the lockout will continue at Lake Erie Works.

AK Steel’s Middletown blast furnace was down due to a bell falling into the furnace back in June, leaving the mill operating with limited melt in widths wider than 68” and no spot availability. The accident occurred on June 22nd and the furnace was restarted on July 12th coming back to full operation the week of July 22nd.

The Ternium Shreveport, LA facility suffered a spill of molten zinc/aluminum from their Galvalume pot on July 5th. The liquid metal came in contact with electrical wiring and shut down their hot-dipped coating line. The facility was back in operation after approximately one week.

ThyssenKrupp Steel USA (Calvert, Alabama) slab source mill out of Brazil suffered a failure on one of its two blast furnaces in early May. This accident affected TK’s lead times and availability of slabs for its August order book. The blast furnace did return to operation during the month of July and TK should begin building back their slab inventories during the month of August.

Ternium Mexico suffered an explosion at their Guerrero facility in Northern Mexico. The explosion, which was located at the DRI entry point into their electric arc furnace killed 10 people and injured 4 others. The mill steelmaking facilities were out of operation for approximately one week.

Severstal Columbus suffered a spill of molten steel on July 30th which damaged one of its casters. SMU understanding is the spill was minor and the shut-down in production would only be for one week or less.

As we enter the month of August a number of the constraints to supply during July will have been resolved or on their way to resolution and could impact future pricing as the month of August progresses.