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10/8/2015  U.S. Steel may temporarily close Granite City steel mill

By Jim Gallagher  St. Louis Post-Dispatch


U.S. Steel said Tuesday it may temporarily idle its Granite City Works steel mill, which would put 2,000 people out of work.

The company blamed tough market conditions, “including fluctuating oil prices, reduced rig counts, depressed steel prices, and unfairly traded imports.”

The steelmaker said it is considering idling the plant as part of a consolidation of its North American flat-rolled operations.  The Granite City plant is a prime supplier of steel to U.S. Steel’s Lone Star Tubular plant in Texas, which makes pipe for the oil industry.

Thought it descried the idling as “possible”, U.S. Steel issued 60-day layoff warning notices to the plant’s 2,000 workers, complying with federal requirements for mass layoffs.

The idling-if it occurs- would include both steelmaking and finishing operations at Granite City. 

Jobs for 2,000 Granite City workers may depend on the price of oil.

“Demand for tubular remains very weak,” noted Andrew Lane, steel analyst at Morningstar in Chicago.  “Ultimately, demand is a function of the price of oil.”

Oil rig counts have plunged by half over the past year, cutting demand for pipe, as the price of oil fell from $107 per barrel in June of last year to $48.85 Tuesday.

Most of Granite City’s steel production goes for pipe, although the plant also makes steel used in appliances and other industries.

The company said it plans to continue making steel at its plants in Indiana, Michigan, and Pennsylvania.  In August, U.S. Steel announced that it was closing its Fairfield Works mill near Birmingham, AL., affecting 1,100 workers at the century-old plant.

The announcement marks the second layoff threat faced by Granite City workers this year.  In May, U.S. Steel canceled plans to temporarily close the mill in the face of weak steel demand.

“We can hope that it’s like last time,” said Granite City Mayor Ed Hagnauer.

He said that a U.S. Steel representative informed him of the possible idling Tuesday.

“They said say that, at this time, it wasn’t a permanent closure, Hagnauer said.  “They’re cutting back until their orders build up.”

U.S. Steel this summer completed installation of a massive caster at one of the two blast furnaces at the Granite City works.

Hagnauer noted that idling the plant has an impact beyond its 2,000 employees.

“Those people eat here, buy food, clothing, gas,” he said, keeping local businesses going.

Other local business also make their money directly from U.S. Steel, he noted.  “It’s a big impact.  There are coal haulers, coil haulers,” he said.

The United Steelworkers until last week reported “slow but steady progress” in ongoing talks for a new contract with U.S. Steel.  Steelworkers officials could not immediately be reached for comment Tuesday evening.

U.S. Steel has blamed part of its woes on a surge in imports.  The U.S. International Trade Commission last month found evidence that U.S. pipe producers are being injured by imports from South Korea, Mexico, and Turkey.  The finding is a step closer to import duties.