Steel giant ArcelorMittal (MT) is all set to restart its west side steelmaking operations in Cleveland in the second quarter of 2012 driven by an increase in customer demand and anticipated market conditions.
The steel plant has been shutdown since October 2008 when the last financial crisis led to a global economic slump and took a huge bite out of steel demand. Current employees are performing maintenance projects and preparing equipment for the restart.
The Cleveland plant will add 480,000 tons per year of steel production to the market. About 150 hourly and salaried employees, mostly skilled craftsmen and entry-level workers, will be hired as a result of the restart. ArcelorMittal currently employs about 1,700 hourly and salaried employees at its Cleveland operations.
Despite the restart of Cleveland's west side, ArcelorMittal continues to operate below pre-crisis levels. The potential for additional capacity utilization remains available within the company's USA operations, as required by market demand.
ArcelorMittal Cleveland's west side operations consist of a basic oxygen furnace, Ladle Metallurgy Furnace and caster. ArcelorMittal Cleveland is able to produce 2.29 million tons of crude steel a year and can produce coated coil, galvanizing line, and cold rolled coil products.
Steel prices are volatile, reflecting the highly cyclical nature of the global steel industry. A resumed downturn in steel prices would materially and adversely affect the company’s revenues and profitability, resulting from potential further write-downs of steel products and raw material inventories.
The steel industry is highly competitive. Established producers expanding in new markets, smaller producers increasing production or exporters selling excess capacity from markets such as China could cause ArcelorMittal to lose market share, increase expenditures or reduce pricing. Any of these developments could have a material adverse impact on its business, financial condition, results of operations or prospects.
Major competitors of ArcelorMittal are United States Steel Corp. (X) and Tata Steel Limited.
We currently hold a Zacks #5 Rank (Strong Sell) on ArcelorMittal.
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