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May 30, 2012
RG Steel, which formed 14 months ago with the purchase of three struggling domestic steelmaking facilities, has announced plans to idle all of them. The flat-rolled producer will curtail production at facilities in Sparrows Point, Md.; Warren, Ohio; and Wheeling, W.Va., as a result of a liquidity crisis.
The idling report followed shortly on the heels of RG’s announcement that it was considering the sale of one or all of its facilities. Company officials claim that potential buyers have expressed interest in RG’s assets.
Layoffs were expected to begin in June. The company issued a warning of layoffs due to “continued uncertainty regarding the outcome of discussions with our lenders to sustain business operations.”
The Renco Group bought the three steel mills in March 2011 from Severstal, creating the nation’s fourth-largest steelmaker. But funding troubles have plagued the company almost from the outset, resulting in off-and-on operations.
Industry officials and analysts have been skeptical of RG’s plans, expressing doubt about whether the domestic industry could support the increased capacity of RG bringing the facilities—two of which were idled at the time of the purchase—back on line.
How much the recent announcement will affect the steel market is uncertain. Michelle Applebaum of Steel Market Intelligence says that “while capacity reductions in the domestic market are great news, overall the malaise in steel is really coming from China, so production cuts in the U.S. won’t likely be sufficient to stem the tide of declining prices.”
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2012 Directory of Master Distributors
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The Metal Center News Directory of Master Distributors—distributors who sell to other distributors—is an invaluable tool for service centers seeking new sources for special or hard-to-find products. Master distributors play an important role in the marketplace, giving service centers an alternative to buying in mill quantities and helping to remove redundant and excess inventories from the distribution channel.
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