April 1, 2015
OCTG Drop Forces U.S. Steel to Idle Granite City
As a result of plunging oil and gas prices that have stalled new drilling, United States Steel Corp. says it must temporarily idle its Granite City Works operations in Illinois as part of a consolidation of its North American Flat-Rolled operations. Granite City Works is the primary flat-roll supplier of the company’s Lone Star Tubular Operations.
The Pittsburgh-based steel giant says the consolidation is a result of challenging market conditions that reflect the cyclical nature of the industry. Global influences in the market such as reduced steel prices, imports and fluctuating oil prices continue to have an impact on the business, lowering demand for oil country tubular goods.
Granite City, located near St. Louis, is a supplier of hot-rolled, cold-rolled and coated sheet products. The facility, which operates two blast furnaces, an 80-inch hot-strip mill, a 56-inch four-stand cold-reduction mill, a 46-inch hot-dipped galvanized line and a 49-inch hot-dipped galvanizing/Galvalume line, has a capacity of 2.8 million tons.
U.S. Steel says it will work closely with its customers through this consolidation. It will continue to run its steelmaking operations in Alabama, Indiana, Michigan and Pennsylvania.
Earlier in the month, U.S. Steel announced two capital investments totaling $277.5 million. The company will construct an electric arc furnace steelmaking facility at its Fairfield Works in Birmingham, Ala. It will also build a tubular products coupling facility at Fairfield Works to manufacture couplings with premium, semi-premium and American Petroleum Institute connections for customers in the oil and gas industries.
“These investments will directly support U.S. Steel's ongoing transformation journey,” said President and CEO Mario Longhi. “Together, these projects will enhance our operational flexibility and allow us to serve our customers better, two critical steps in creating shareholder value.”
Construction of the EAF will begin in the second quarter, with completion in third-quarter 2016. Construction on the coupling facility also is anticipated to begin soon and be complete in first-quarter 2016. Throughout the process, U.S. Steel will continue to operate Fairfield Works' steelmaking and finishing operations to serve both flat-rolled and tubular customers, in accordance with market requirements, the company says.
However, in January, U.S. Steel curtailed operations at its Lone Star and Fairfield, Ala., tubular mills as a result of the depressed demand from the energy sector. Production of Fairfield Works flat-rolled operation was also cut. The company also idled operations at its Minnesota Ore Operations facility in Keewatin, Minn., in March.