US Steel to idle blast furnaces in US, Europe

US Steel will idle two US blast furnaces and one in Europe in response to declining steel prices.

The Pittsburgh-based integrated steelmaker will keep the B2 blast furnace at its Great Lakes Works in Michigan idled once it completes planned maintenance that began last week and idle a blast furnace at its Gary Works in Indiana.

US Steel expects the moves to reduce blast furnace production by 200,000-225,000 st/month beginning in July. Flat-rolled steel shipments to third party customers would drop to about 11mn st if the furnaces remain idled for the rest of 2019, US Steel said today.

Gary Works is US Steel's largest flat-rolled operation, featuring four blast furnaces and an annual raw steelmaking capacity of 7.5mn st/yr. Great Lakes Works can has three blast furnaces and an overall raw steel capacity of 3.8mn st/yr.

Production will resume at one or both of the furnaces if market conditions improve, the steelmaker said.

At its European operations in Slovakia, US Steel will idle its 125,000 st/month #2 blast furnace, potentially resulting in a 3.6mn st drop in flat-rolled shipments if it remains off-line for the rest of the year.

The blast furnaces are being idled in response to soft market conditions and "to better align out global production with our order book", US Steel said. In Europe, the producer cited increased imports, higher raw material costs and lower demand.

US Steel also said its second quarter shipments in the US have been lower than expected because of flooding that has hindered logistics and limited barge availability along the river system.

Flat-rolled steel prices have been in steady decline this year. In the US, midwest hot-rolled coil (HRC) prices were assessed by Argus at $535.50/st ex-works, down by $204.50/st since the beginning of 2019. Prices have dropped precipitously since spiking last summer near $1,000/st in response the the US implementing the 25pc sections 232 tariff on steel imports in March 2018.

The rebound in prices drove US Steel to restart the idled blast furnaces at its Granite City Works in Illinois last year, as well as invest $750mn in upgrades at Gary Works and $1.2bn in upgrades at its Mon Valley Works near Pittsburgh.