ATI Converting Slabs for CSN, JSW and NLMK: Sources

The issue is relevant because the United Steelworkers (USW) union has voted to authorize a strike at nine ATI locations. And a strike might apply additional pressure to a U.S. market already characterize by extremely limited availability from domestic mills, some sources said.

An ATI spokeswoman declined to comment on customer contracts such as slab conversion agreements. But she also said the company hoped to maintain customer commitments should a strike occur.

“While we are working toward a reaching agreement with the USW, we have also taken steps to ensure continuity for our customers. We are committed to protecting our current and future business with them, operating safely without interruption,” she said.

NLMK USA declined to comment for this article. JSW Steel USA and CSN did not respond to requests for comment.

CSN sold its U.S. operations in Terre Haute, Ind., to Steel Dynamics in 2018. But the Brazilian steelmaker maintains a presence in the U.S. via imports. That includes through slabs imported to the U.S. from Brazil and converted into coil at ATI, market participants said.

JSW Steel USA has restarted the electric-arc furnace (EAF) and caster at its mill in Mingo Junction, Ohio. But it has not, as far as SMU is aware, restarted its hot-strip mill, and in the meantime is offering customers hot-rolled coil rolled at ATI from slabs made in Ohio, sources said.

The Ohio mill is also sending slabs to JSW Steel USA’s plate and pipe mill in Baytown, Texas.

NLMK USA had a slab conversion agreement in place with ATI’s hot-rolling and processing facility in Brackenridge, Pa., since the first quarter of 2019. And the pact was extended until December 2020. But it was not clear to SMU on Tuesday whether a new agreement had been negotiated.

NLMK USA described the Brackenridge rolling mill, originally designed for specialty and stainless products, as “world class” in a release announcing the conversion agreement.

Market participants generally agreed that the $1.2-billion Brackenridge facility has certain capabilities–wider widths and higher strengths, for example–not readily available at other rolling mills.

The potential loss of any tons is not welcome in the current market, some sources said.

“People are so frustrated trying to find what they are looking for,” one Midwest service center source said. “Mills are holding them to the minimum of their contracts. … People that are desperate, they’ll pay whatever they have to pay just to keep their plants running.”

But others said ATI’s importance to the broader carbon flat-rolled steel market should not be overstated.

“I don’t think it (a potential strike at ATI) will impact the market that much,” an Ohio Valley service center source said. “We’re already deep into the ditch. How much further into the ditch can we go?”

Limited availability from domestic mills has contributed to U.S. hot-rolled coil prices skyrocketing to new all-time highs in the first quarter of this year.

By Michael Cowden, Michael@SteelMarketUpdate.com