Steel Mills
Stelco at Full Capacity in Q1 Despite Pandemic
Written by Sandy Williams
May 7, 2020
Canadian steelmaker Stelco sold out its mill and shipped to capacity despite the coronavirus pandemic in the first quarter of 2020. CEO Alan Kestenbaum attributes a higher value mix, excellent service to customers and a tremendously loyal customer base for its ability to fill order books when competitors are struggling. The company shipped 621,000 net tons of steel during the quarter.
“We reached 150,000 tons or an annualized run rate of close to 600,000 net tons of value-added cold-rolled and coated shipments. With our order book approximately 85 percent filled for the second quarter, we are hopeful to be able to ship to capacity yet again for this current quarter despite the uncertainty resulting from the pandemic,” said Kestenbaum.
Stelco began preparing for the crisis after first hearing about the virus infection rate in China. “We saw the crisis coming and saw it hit China. When China gets sick it is not good for the metals business,” said Kestenbaum. “We had no idea it would hit North America the way it did.” Decisions to aggressively solicit business, price hedging and controlling purchasing costs helped the company to weather deteriorating conditions in the first quarter.
Stelco’s revenue in the first quarter fell 14 percent to CAD $445 million from Q1 2019, but increased 2.0 percent from the prior quarter. Average selling price per ton was up 7 percent from Q4 but declined 14 percent from a year ago due to lower market prices for flat steel products. Shipping volumes increased due to higher coated and cold rolled steel product shipments, which were partly offset by lower hot rolled coil shipments. The company reported a net loss of CAD $24 million for the quarter.
Stelco is moving forward with an upgrade and reline of its blast furnace and, barring recruitment and safety issues resulting from the pandemic, expects to finish the full project in less than 18 months The company is building its slab inventory to meet customer needs during the outage. Once completed, the upgraded furnace will add 300,000 tons of annual production and reduce costs, the company said.
The upgraded furnace, combined with the recent pellet agreement with U.S. Steel and the option to purchase a 25 percent share of the Minntac mine, will make Stelco one of lowest cost steel producers in North America.
Upgrades to the coke battery have been deferred due to the COVID-19 crisis and will resume when conditions permit, the company said.
Sandy Williams
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