Steel Mills

This Could Be a Tumultuous Week

March 30, 2014

US Steel has essentially lost a steel mill – Great Lakes in Ecorse, Michigan – for how long is the unknown question. Part of the roof collapsed in the building which houses their basic oxygen furnace (they called it a basic oxygen process or BOP). It is the most critical piece of equipment in the steel making process and no steel gets made at Great Lakes without it (we have a full report in an article below).

It is Steel Market Update’s opinion that the loss of Great Lakes will have a ripple effect across the other steel mills as they move to protect their customers and order books. We would expect there may be a number of order books which will be “closed” come Monday morning as the commercial and operations departments at each mill take stock of what has happened and what impact it may have on their order books. Further price announcements could happen (although we think the mills will wait to see how long Great Lakes will be down). Be prepared.

This “incident” at USS comes on top of problems at AK Steel which have been dogging that mill for a number of mills culminating with the Ashland furnace going down for a number of weeks. The Ashland furnace is back up but AK is not in a position to take on any more business at this moment.

U.S. Steel is also a supplier to a number of the conversion mills supplying full hard cold rolled feed stock to their galvanizing and Galvalume lines. It is always important to understand where the substrate is coming when doing business with a conversion mill.

Tuesday is the 1st day of April and this week is the beginning of negotiations for April mill scrap prices. Early forecasts are for prices to rise anywhere from $5 to $20 per gross ton. A large increase coupled with the USS situation could make this an interesting week. With Great Lakes down the scrap situation in Detroit could be very different than other areas of the Midwest.

Steel buyers may want to take an inventory as to exactly where their suppliers are as the week begins.

This could be a tumultuous week…