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Granite City restart to boost US HRC capacity

07 Mar 2018 19:35 GMT
Granite City restart to boost US HRC capacity

Houston, 7 March (Argus) — US Steel's planned restart of one of two blast furnaces and the steelmaking facilities at its Granite City Works is expected to add more than 1mn short tons (st) of hot-rolled steel (HRC) steel capacity.

The Pittsburgh-based steelmaker plans to restart the "B" blast furnace, the larger of two furnaces at the Granite City, Illinois, facility to support an anticipated rise in demand for steel in the US following President Donald Trump's plan to impose a 25pc tariff on steel imports.

Market participants estimate the furnace is capable of producing 1.2mn-1.5mn st/yr (1.1mn-1.4mn metric tonnes) of crude steel. This new crude capacity is expected to allow US Steel to boost its estimated North American flat-rolled capacity of 10mn st/yr by 1.2-1.3mn st.

Analysts from investment bank Jefferies expect "little discernable impact on the pricing-margin dynamics of US flat-rolled products," with US HRC supply tight amid strong demand, reduced imports and limited US capacity.

US flat-rolled mill utilization rates have ticked up as high as 90pc or more, market participants estimate.

"Market supply-demand needs support the incremental supply irrespective of 232," investment bank KeyBanc said in a research note.

Still, US Steel is the first to announce an expansion following Trump's decision to impose a 25pc tariff on US steel imports.

In a listening session with steel and aluminum industry executives last week, Trump singled out promises made by US Steel and TimkenSteel and signaled there could be others.

"You're all -- pretty much all of you -- will immediately be expanding if we give you that level playing field, if we give you that help," Trump said.

KeyBanc estimates US Steel will invest $10-15mn in the Granite City restart. The effort could take up to four months but the company said it expects to begin calling back some 500 employees as early as this month.

Granite City Works currently operates its pickle line, cold and finishing lines as well as its hot strip mill. The hot strip mill was restarted in February 2017 after being idled a year earlier.

The mill's two blast furnaces have stayed offline since being idled in December 2015 in response to challenging market conditions.

A restart of the second blast furnace will be incumbent on Trump's final decision on the import tariff, KeyBanc said.