Sparrows Point’s owner, Russian billionaire Alexei Mordashov, has decided to delay the idling of the mill’s furnaces to stockpile steel for an anticipated longer shutdown.
Steelmaking is now scheduled to be suspended around July 28 for at least 65 days, rather than the company’s initial announcement of a 30-day shutdown beginning July 1.
The plant’s finishing mills will continue operating during this period, in part by using low-cost steel imported from Severstal’s Russian facilities.
The shutdown is aimed at restoring profitability at Sparrows Point, whose losses –attributed chiefly to its furnace operations – have infuriated Mordashov.
Severstal’s suspension of raw material deliveries to the mill will make it impossible to produce steel from scratch at the mill’s gigantic “L” blast furnace until at least October, according to John Cirri, president of United Steelworkers Local 9477.
The idling of the furnaces will affect about 700 workers. The company has not said how many employees may be laid off.
Mordashov at Washington Trade Talks
Two weeks ago, Mordashov accompanied Russian President Dmitry Medvedev on his visit to Washington, where the Russian president discussed Russia’s push to join the World Trade Organization with President Barack Obama.
Mordashov heads Russia’s working group on WTO accession. He has vigorously pushed for free trade worldwide and is the leading Russian investor in the U.S. through his ownership of Severstal.
His spokesmen have blamed the temporary shutdown of Sparrows Point on a steep decline of customer orders in the last two months.
As late as March, Sparrows Point was so awash with orders that, combined with weather-related delays, it was unable to deliver two-thirds of its orders on time, according to Plant Manager David A. Howard.
The backlog of orders led to the decision to import steel slabs from Severstal’s Cherepovets mill in northern Russian. The Brew documented the arrival of the first shipload.
Some Russian Steel Going to Michigan
The Steelworkers Union filed a grievance against the imported slabs, saying they violated Severstal’s agreement not to import steel when it purchased Sparrows Point in 2008.
According to a weekend e-mail from Cirri, the “last ship of Russian slabs has arrived and approximately 20,000 tons are being diverted to Dearborn.” Dearborn refers to Severstal’s Michigan plant, which is under the jurisdiction of the United Auto Workers and is apparently not covered by the no-imported-steel agreement.
This still leaves at least 50,000 tons of Russian steel stockpiled at Sparrows Point, according to Brew sources. Company officials have refused to discuss – or even confirm the existence of – the imported slabs.
The stockpile has caused unease in customer circles because “Buy America” rules require that only U.S.-made steel can be used in federally financed programs, such as highway construction and all projects funded by the American Recovery and Reinvestment (Stimulus) Act.
Processing Russian slabs could subject contractors and suppliers to possible sanctions from the government.
One large customer said it has “issues” with any Sparrows Point steel that uses Russian slabs.
Mark Reutter can be reached at reuttermark@yahoo.com.
