JSW Ohio signs HRC tolling agreement with ATI

Pittsburgh — JSW Steel Ohio has signed a long-term tolling agreement with Allegheny Technologies Inc. to convert slab produced at JSW's facility in Mingo Junction, Ohio, into hot-rolled coil at ATI's hot-rolling and processing facility in Brackenridge, Pennsylvania, JSW USA said in a statement May 4.

"As per the terms of the agreement, ATI is expected to hot roll a significant percentage of carbon steel slabs produced by JSW Steel USA," the company said in a statement. Actual tonnage figures were not provided by the company. The ATI facility has had similar arrangements with other US coil producers, such as NLMK USA.

"This partnership with ATI allows us to supply the high-quality products required by our customers and is in line with our strategy of increasing the share of 'melted and manufactured in the US' products in our product mix," JSW USA CEO Mark Bush said in a statement. "The collaboration with ATI allows us to operate our electric arc furnace at the most optimal volumes and efficiency, lowering our conversion costs."

JSW restarted the electric arc furnace at its Ohio mill in March after being largely absent from the US market in the prior year as a result of intermittent production in 2020 due to coronavirus-related demand disruptions, low HRC prices and planned mill upgrades.

US HRC prices have been extremely volatile since the mill went quiet in the summer of last year. The daily Platts US HRC index fell to a multiyear low in August 2020 but since has rebounded to all-time highs. US HRC prices hit a new record high May 3 with the daily Platts TSI US HRC index increasing by $27 to $1,472/st on an ex-works Indiana basis.

US mill lead times for flat-rolled products also remain extended, continuing to support high pricing. Mil lead times for HRC averaged 8.8 weeks as of April 28, according to the latest S&P Global Platts lead time assessment.

JSW's Indian-parent company purchased the Mingo Junction mill in early 2018 with a price tag of $80.85 million. The transaction included an 80-inch hot-strip mill with a capacity of 3 million st/year and an electric-arc furnace that was installed in 2004 but was not operational between 2009 and 2018. It was able to restart the furnace by the end of 2018.

The tolling agreement comes as local unions representing about 1,300 United Steelworkers members at ATI's facilities elected to strike March 30 as negotiations between the two parties did not resolve the outstanding issues.

ATI has deployed a business continuity plan to operate the affected facilities during the strike, ATI CEO Robert Wetherbee said during the company's first quarter conference call April 29.

"While this plan will take time to fully implement, the operations are gaining momentum, and we expect to reach our run rate goals in June," Wetherbee said. "We're absolutely delivering on orders at the required quality levels. We're quoting and winning new business. We've partnered with our customers to understand their needs against our projected capacity, prioritizing our production for what's most critical to them."