U.S. Steel X said that it will temporarily idle a part of its Minnesota Ore Operations at the Minntac iron ore plant in Mt. Iron, MN, to adjust production. The move will be effective Jun 1, 2015. Iron-bearing rock (known as taconite) is mined and processed into iron ore pellets at the Minntac plant for use in the company’s steelmaking plants.
U.S. Steel’s existing inventory levels and adjustments of its steel production throughout North America led to this decision. The company will continue to operate the Minntac facility at reduced capacity to meet customer demand. The plant has annual production capability of around 16 million net tons of pellets.
All employees working at the Minntac plant have been advised of the forthcoming temporary idling and are being issued notices under the Worker Adjustment and Retraining Notification (WARN) Act. The number of affected employees will be based upon operational and/or maintenance requirements.
U.S. Steel’s shares fell around 4% to close at $24.40 yesterday.
U.S. Steel, which had around 23,000 employees in North America last year, regularly adjusts production at its operating facilities to adapt to the changing market conditions owing to the cyclical nature of the industry. Factors such as high levels of imports, unfairly traded products and lower steel prices continue to have an adverse impact on steel production.
U.S. Steel, on Mar 25, 2015, said that it will consolidate its North American flat-rolled operations and temporarily halt its operations at Granite City, IL, due to challenging market conditions. The company will be issuing notices to 2,080 workers at Granite City Works under the WARN Act as part of the consolidation.
Moreover, on Mar 12, U.S. Steel announced that it will temporarily halt production in its Minnesota Ore Operations at its Keetac plant in Keewatin, MN, effective May 13, 2015, resulting in a lay off of 412 employees.
Falling oil prices are hurting U.S. Steel’s business in the energy market. The company, in Jan 2015, said that it is temporarily shutting down two tubular steel facilities, laying off more than 750 workers. It is idling its Lorain Tubular Operations in Ohio and another steel tube facility in Texas. Several energy companies are dialing back drilling plans in the face of the oil price slump.
U.S. Steel, once the country’s first billion-dollar corporation, remains hamstrung by weak steel market fundamentals. The U.S. steel industry remains hobbled by surging steel imports. This, in addition to the oversupply in the industry, is pressurizing prices and prospects of steel producers.
Amid a difficult operating environment, U.S. Steel is aggressively pursuing actions to improve its cost structure and boost revenues on a sustainable basis through its “Carnegie Way” program.
U.S. Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the steel industry include Kobe Steel Ltd. KBSTY, ThyssenKrupp AG TYEKF and LB Foster Co. FSTR. While both Kobe Steel and ThyssenKrupp sport a Zacks Rank #1 (Strong Buy), LB Foster carry a Zacks Rank #2 (Buy).
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