US integrated steelmaker Cleveland-Cliffs will take down one of its Cleveland, Ohio, blast furnaces for more than 100 days for a reline.
The previously reported outage would reduce raw steel production by at least 411,000 short tons.
In the future, when reviewing capital investments in its blast furnaces, Cleveland-Cliffs may decide against spending money on blast furnace and related supply chain maintenance and use that money instead to build a scrap-intensive electric arc furnace (EAF) steel mill, chief executive Lourenco Goncalves said on the company's earnings call today.
It built on comments Goncalves made in August about moving toward EAF steelmaking in the next decade.
The steelmaker is using all of its hot briquetted iron (HBI) produced at its 2mn metric tonne/yr (2.2mn st/yr) Toledo, Ohio, plant internally. That has led to it to close its Mountain State Carbon coke plant in West Virginia, which operates four coke batteries. The move comes after Cleveland-Cliffs shut the coke battery at its Middletown, Ohio, steel mill. The company will avoid $400mn of maintenance that would have been necessary in the coming years at Mountain State Carbon.
In Minnesota, Cleveland-Cliffs will idle its Northshore iron ore mine in the spring as it reduces its third-party sales of iron ore pellets to cut Scope 1 emissions. The closure will last through the fall and possibly longer. Northshore produced 3.8mn long tons of iron ore pellets in 2020.
Goncalves railed against the use of indexes to set contract pricing, saying he wants to move toward fixed-pricing deals.
Around 45pc of Cleveland-Cliffs' sales are done through annual fixed-price contracts, reducing volatility, Goncalves said. He aims to increase the amount of fixed-price contracts and is moving his sales away from smaller customers, whom he blamed for creating price volatility.
"At this point all important clients of Cleveland-Cliffs are being offered index-free deals to continue to do business with us," Goncalves said. "Marrying stable costs with stable prices up and down the supply chain can create a much healthier business environment for steel in the [US]."
He added that sales volumes are expected to be roughly the same in 2022 compared with the 15.88mn st shipped in 2021.
Steel mill maintenance brought forward into the fourth quarter by Cleveland-Cliffs cut its quarterly crude steel production by 675,000st, financial officer Celso Goncalves said.
The company expects to realize a 2022 average hot rolled coil (HRC) selling price of $1,225/st. That would be an increase of 3.2pc compared with the $1,187/st Cleveland-Cliffs earned in 2021.
Cleveland-Cliffs reported an $899mn profit in the fourth quarter, up from $74mn in the same period prior year. For full-year 2021, the company reported a $3.03bn profit compared with a loss of $81mn in 2020.
