Steel Mills

US Steel Down to 3 Steelmaking Facilities

Written by John Packard

US Steel told analysts this week that the company was down to 3 steelmaking facilities and 5 finishing mills as they try to right size to the market conditions.

U.S. Steel conducted their earnings conference call with financial analysts on Wednesday of this week. During the call, CEO Mario Longhi and other executives with the company discussed the status of their operations.

USS reported that their flat rolled mills have been operating at capacity utilization rates of only 60 percent for calendar year 2015. According to David Burritt this rate was, “…our lowest full-year utilization rate since 2009 as high levels of imports had a significant impact on both prices and volumes.”

Longhi reported that they now have three mills making steel in the United States: Gary Works, Great Lakes and Mon Valley Works. The hot end at Granite City (steel making) and their two blast furnaces are temporarily idled while the blast furnace and steel making operations at Fairfield in Alabama have been permanently shuttered.

The hot end at Fairfield Works had the capability of producing 2.4 million tons of steel while the two furnaces and BOF’s at Granite City were rated at 2.8 million tons. Combined USS has taken out 5.2 million tons of production out of their system.

Finishing operations continue to run at Fairfield, Granite City and Fairless Hills locations.

US Steel Canada is currently in restructuring in Canada and is no longer included in the USS financial or production numbers.

Longhi reported that by closing or idling the various steelmaking operations and switching them to the remaining three mills allows for much better operating efficiencies which overcome some of the variable costs associated with maintaining the Granite City hot end.

Even so, he reported that their expectation is that US Steel will make zero money during calendar year 2016 (“adjusted EBITDA to be near break even”).

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