Allegheny Technologies announced it will take rightsizing actions to align its Flat Rolled Products operations to challenging market conditions.
The standard stainless melt shop and sheet finishing operations at the Midland, Pa., facility will be idled in January 2016.
The grain-oriented electrical steel (GOES) operations in Bagdad, Pa., will be idled by April 2016.
Restart of the operations will depend on future market conditions.
ATI will conduct on impairment review on long-lived assets in the flat rolled products business, including goodwill, and will report the findings in a news release before announce fourth quarter 2015 results.
“The actions announced today are the result of an extensive strategic review and analysis of the current and expected medium-term market conditions affecting our U.S. Flat Rolled Products operations,” said Rich Harshman, Chairman, President and CEO. “These actions are designed to return the FRP segment to profitability as quickly as possible and execute our strategy for sustainable long-term profitable growth.”
Harshman continued, “Market conditions for our commodity stainless steel products have been challenging for an extended period and have continued to deteriorate throughout 2015, with further deterioration during the fourth quarter. These conditions are the result of global excess capacity, which has led to unfairly traded imports in the U.S. market, including the first half 2015 record surge of low-priced imports, primarily from China. Base-selling prices have fallen throughout 2015 and are now at historic lows. In addition, falling raw material prices, primarily for nickel, has resulted in aggressive inventory reduction actions by customers.
“As a result of these market conditions, total transaction prices for standard stainless sheet products, which include base prices plus raw material surcharges, have declined to levels not seen since 2003. And demand for our standard sheet products is showing no signs of sustainable improvement as we head into 2016.”
Harshman said that ATI expects the rightsizing actions will allow the flat rolled products segment to be modestly profitable by the second half of 2016.
USW workers have been locked out of ATI mills since August 2015 after refusing to approve the company’s last contract proposal.
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