NLMK Signs Slab-Rolling Deal with ATI

“NLMK USA is pleased to enter into this agreement with ATI. It expands our ability to supply the high-quality materials that U.S. manufacturers demand.  Due to its immense power and unique capabilities, ATI’s HRPF enables us to increase the breadth of our product portfolio to better complement the products produced at our Sharon, Pa., and Portage, Ind., facilities,” stated Bob Miller, Chief Executive Officer, NLMK USA. “We were attracted to the HRPF’s capabilities and its close proximity to many of our strategic customers.  ATI and NLMK were able to structure a win-win agreement that will ultimately benefit NLMK’s end customers by providing high-quality and distinctive carbon flat-rolled products at competitive prices.”

The agreement provides ATI with guaranteed fee-per-ton volumes and significantly increases the asset utilization at its HRPF, said Bob Wetherbee, ATI’s CEO-Designate and current Executive Vice President, Flat Rolled Products Group (end of press release).

NLMK USA, a subsidiary of Russia’s NLMK Group, imports Russian-made slabs and rolls them into coils in the U.S. The company has requested an exclusion from the 25 percent tariff on steel imports on the grounds that it cannot source slabs domestically on a stable, consistent basis. Domestic mills, including Nucor and U.S. Steel, have filed objections to NLMK’s exclusion request, which is still pending. The company has production sites at NLMK Indiana, NLMK Pennsylvania and Sharon Coating (NLMK Pennsylvania’s galvanizing operations), and employs about 1,100 workers.

NLMK Discusses ATI Agreement with Steel Market Update

SMU President & CEO John Packard spoke with NLMK USA Executive Vice President James Banker, Jr. late this afternoon about the ATI/NLMK slab conversion deal. One of the keys to the arrangement is the ability to expand the products NLMK will be able to offer to their U.S. customers. NLMK is able to procure 80-inch slabs, which will allow them to expand their current product offerings beyond 51 inches, their current width restrictions.

Secondly, the product quality and characteristics out of the ATI facility are exceptional and their customers have enthusiastically accepted the new product.

NLMK USA is entering the agreement already having contract and spot arrangements starting now and into 2019.

The mill also has oil country tubular goods “on their radar,” although that is not a core concentration right now.

The slabs will arrive into the port and will ship to ATI by train. The lead time to convert the slabs at ATI is very short, since the mill has limited storage capacity.

NLMK told us this will allow the mill to become a “foreign fighter,” and they believe they will be able to compete for the wide HRC markets.

We were told the synergies between the two mills have worked well during the trial process. “They have an outstanding facility,” Banker said. “ATI is a good organization and we have a compatible relationship between the two companies.”

Orders are already on the books and NLMK is excited to expand their capabilities. The tolling arrangement will not impact what the mill is currently rolling at their Farrell, Pa., mill.

We will discuss the second portion of our conversation with Mr. Banker in the Final Thoughts segment of tonight’s issue.