ArcelorMittal has idled Columbus Coating, its galvanizing plant, and its Obetz processing facility in Ohio, for an unspecified period.
The action will impact about 120 employees with layoffs beginning August 2, according to a Workforce Adjustment and Retraining Notification filed by the steelmaker on June 11.
Significant uncertainty continues to affect the producer’s outlook in the near-term due to COVID-19. The galvanized sheet metal business has faced unanticipated market decline due to the pandemic. Thus, the steelmaker cited its need to act while remaining flexible to retain production levels that correlate with changing costs and demand in this business segment.
According to a company spokesperson, this decision, like other recent changes made by ArcelorMittal, was difficult but necessary as demand levels have fallen considerably and are not supportive of retaining operations at all coating lines.
Moreover, the company leadership did not confirm that this move will be the last step taken to align with the current state of the industry, also mentioning that lowered demand will impact the steelmaker for a while.
ArcelorMittal Columbus comprises a hot-dip galvanizing facility and a nearby processing facility with coating production capability of 450,000mt per year.
Macro factors impact steelmaking
Prolonged weak demand caused raw steel capacity utilization rates to drop under 55pc in April-May compared to levels of around 80pc or above during the same period in 2019. Spot pricing for hot rolled coil was around $600/nt in 2019 compared to the current approximated realized levels of $510/nt.
Weakening demand also brought about several temporary idlings and indefinite closures for the integrated steelmaker that began March 20 when blast furnace No. 4 in East Chicago and blast furnace No. 3 at Dofasco were idled, followed in April by the idling of blast furnace No. 6 in Cleveland. By late April the company also idled blast furnace “C” in Burns Harbor.
Automakers are beginning restarts that commenced in March, however their slowdowns lasted longer than projected and current forecasts point to a slow return in consumer demand. Since the auto restarts, steelmakers like ArcelorMittal have seen a boost in orders and recent steel price increase announcements have also slowed the decline. However, compared to 2019, auto production in the US is forecast to drop at least 20pc in 2020.
Moreover, apparent steel consumption estimates are 22-25pc lowered for 2020 compared to 2019 with 2021 assessments, though mildly improved, also under 2019 levels by around 15-18pc. Other assessments propose that global economies may not fully recover until 2023.