Steel Mills

AK Steel Closures Possible Due to Electrical Steel Circumvention

March 7, 2020

AK Steel could be in danger of mill closures, said soon-to-be CEO Lourenco Goncalves, if stronger protection is not provided against electrical steel imports.

In a warning to members of the Congressional Steel Caucus, Goncalves said the AK Steel mills in Butler, Pa., and Zanesville, Ohio, are unprofitable because of a loophole in the Section 232 tariffs that allows imports of electrical steel products to circumvent the tariffs by passing through Mexico and Canada. He called the level of circumvention “absurd” and said the two facilities may have to close unless electrical steel laminations and cores are included in the Section 232 tariffs.

“I’m talking about 1,500 jobs in Butler and 100 jobs in Zanesville that will be gone. And I promise, they will be gone if I don’t get help,” said Goncalves in his testimony.

Goncalves is the chief executive at Cleveland-Cliffs, whose acquisition of AK Steel is expected to close on March 13. AK Steel, an integrated steelmaker, incurred a net loss of $53.9 million in the fourth quarter of 2019 that was attributed to lower selling prices, decreased shipments to the automotive market, and higher input costs.