Pittsburgh — ArcelorMittal Long Carbon North America plans to close its Georgetown, South Carolina, wire rod mill in the third quarter "due to challenging market conditions," the company said Thursday.
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"ArcelorMittal Georgetown, our primary producer of wire rod in the United States, has been severely impacted by waves of unfairly traded steel imports from China and other countries," the company said in a letter to customers. "Even in the most recent quarter, wire rod imports rose to account for 36% of the US market."
The mill was idled in 2009 and brought back online in February 2011. The company expects the mill's closure will be complete in Q3, pending customer requirements. ArcelorMittal Long Carbon North America CEO P.S. Venkat said in a statement that the mill has "incurred significant losses since the restart due to high input costs and imports."
A Southern wire rod buyer said Thursday he expected the Georgetown mill might close because of its "unsustainable cost structure," adding that one of the contributing factors is the higher cost of scrap in the Southeast compared with the Midwest.
The rod buyer also noted that the mill was not able to fully capitalize on its location because the US Army Corps of Engineers had not dredged the port at Georgetown for several years. As a result, it was unable to unload vessels carrying direct reduced iron, so the raw materials had to be brought in by truck.
ArcelorMittal confirmed that transportation costs at the mill played a role in the decision, but the main challenges were imports and the high costs of scrap, electricity and natural gas.
Army Corps of Engineers spokesman Sean McBride said the Port of Georgetown was not dredged because it was a lower priority relative to other ports.
"Because the [Army Corps] budget-development process gives priority to those coastal harbors and inland waterways with the most commercial traffic, funding constraints have prevented dredging within the harbor since fiscal 2009. The low annual traffic and tonnage volume at the Port of Georgetown means it does not compete well in the budget process," McBride said.
Market sources said Thursday the closure could help to support wire rod prices. ArcelorMittal was one of four wire rod mills that announced a $20/st price increase for June shipments in the last week.
Another southern rod buyer said Georgetown had been strong producing high-carbon, low-residual products. He said Nucor Darlington and Charter Steel are likely to benefit most for this closure.
The announcement disappointed one southeastern rebar buyer because the Georgetown mill also produces coiled rebar. His suppliers are "all getting father away and farther up North."
Venkat said Georgetown is "a very productive" mill that produces 300,000 st annually with fewer than 200 full-time employees.
The Georgetown facility's electric arc furnace has a 600,000 st melt capacity and a 750,000 st wire rod capacity, ArcelorMittal said on its website.