United States Steel Corp. (U.S. Steel), Pittsburgh, says it will take “a series of aggressive and meaningful actions to provide greater certainty on the company’s response to impacts from the coronavirus (COVID-19) and the sudden, significant changes in global oil and gas markets.” According to the company, these actions “strengthen its ability to serve customers, partner with suppliers, create long-term value for investors and ensure a more secure future for employees and the communities” where U.S. Steel operates. 

The company says it is prioritizing cash and liquidity to maintain its strategic flexibility, positioning itself for when the global economy recovers from the current situation.

“In this unprecedented and rapidly changing situation, our first priority remains the safety and well-being of our employees,” says President and Chief Executive Officer David B. Burritt. “As an essential part of our critical infrastructure, our employees have embraced the special responsibility to continue making the steel society needs, including the packaging for our food supply during the COVID-19 pandemic response.”

He continues, “To ensure a more secure future for all our stakeholders, the time has come for us to take aggressive actions to reposition the company. U. S. Steel has been a cornerstone of manufacturing for over a century, and our products are vital to national and economic security. I am confident in the resilience of our employees, the strength of our customer relationships and the reliability of our regional supply chain. The actions we are announcing today make us stronger and enable us to weather the current situation to emerge as a leader in sustainable steel solutions for generations to come.”

U.S. Steel says it will idle the No. 4 blast furnace at its Gary Works operations in Indiana immediately to begin a planned outage that was originally planned to begin in April and last for 48 days. The scope of the current outage has been reduced and the remainder of the Gary No. 4 blast furnace outage is being delayed. The company says it expects the Gary No. 4 blast furnace to remain idled until market conditions improve. 

In addition, the company says it will temporarily idle blast furnace “A” at its Granite City Works in Illinois, effective immediately.

US steel had already announced that it would complete the indefinite idling of the iron and steelmaking facilities at Great Lakes Works in Detroit. The company says it will continue to monitor the impacts of the coronavirus on its orderbook and will regularly assess the footprint required to support its customers’ needs.   

As Recycling Today previously reported, beginning in late-May, U.S. Steel plans to idle all or most of its Lone Star Tubular Operations and Lorain Tubular Operations for an indefinite time in response to weak tubular market conditions, including continued high levels of imports and decreased demand driven by a sudden, significant drop in oil prices. The company has issued Worker Adjustment and Retraining Notification (WARN) Act notices to employees at both facilities.

U.S. Steel says it also is aligning its strategic projects with today’s market realities by reducing capital spending in 2020 by $125 million. The company says it now expects 2020 capital spending to be approximately $750 million. Strategic projects will be affected by this move:

• The company plans to delay construction of the endless casting and rolling line and cogeneration facility at its Mon Valley Works near Pittsburgh. March 23, the Allegheny County Health Department (ACHD) announced, after consultation with the company, that a temporary pause in the permitting process is appropriate given the challenges posed to the public comment process while COVID-19 public health orders are in effect in Allegheny County. U.S. Steel says it agrees with the pause during this time of social distancing precautions implemented by the county. In addition to the regulatory delay, to preserve cash and liquidity, the company says it currently expects groundbreaking for this project to be delayed for an indeterminate time until market conditions become more certain and 2020 capital spending for the project to be approximately $85 million. U.S. Steel says it will continue to assess the project timeline and remaining budget.   
• U.S. Steel says it expects to complete the electric arc furnace (EAF) at Tubular as planned, with first arc anticipated in the second half of 2020. The expected 2020 capital spending budget for the EAF project is unchanged at $150 million.  The investment in the EAF has been prefunded with environmental revenue bonds issued in the fourth quarter of 2019.
• The company says it has paused planned upgrades at its Gary hot strip mill (HSM) and will continue to evaluate the pace and timeline for completing the remaining investments in the HSM.
• The investment in a new nongrain oriented electrical steel line at U.S. Steel Europe in Slovakia remains delayed, U.S. Steel adds.

As a precautionary measure, U.S. Steel says it has increased its borrowings under its revolving credit facility by $800 million to increase its cash position and preserve financial flexibility. According to the company, “This action safeguards the business, as well as the company’s customers, suppliers, workforce and investors and ensures that the company will maintain the cash and balance sheet strength required to navigate the current environment.”.

U.S. Steel says it doesn’t expect the actions to meaningfully affect its first-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted net loss or adjusted diluted net loss per share included in its guidance that was provided previously in March. “However, given the rapid pace of change in market dynamics in the current environment, the company is regularly monitoring and updating impacts to first-quarter shipments,” it adds.

The steelmaker says it expects a “meaningful reduction in demand for the full fiscal year, though an updated full-year estimate of third-party shipments for each of its operating segments cannot be determined at this time.”

Burritt adds, “Our world-competitive, ‘best of both’ integrated and minimill strategy is our future. The short-term actions announced today are difficult but necessary. Our focus on cash and liquidity will ultimately position us to achieve our longer-term goals as a stronger organization.”

Publicly traded producers and recyclers of metal have been issuing warnings to investors that the global COVID-19 coronavirus pandemic has undone previously mildly optimistic expectations for the first half of 2020. The picture in the paper and board sector is less clear, however, as a reduction in industrial activity is partially offset by increased demand for tissue products and home deliveries made in paper and board boxes and envelopes.

Australia-based Sims Group, with its sizable Sims Metal Management business unit based in Rye, New York, was among the first companies to withdraw an earlier earnings outlook, as in mid-March it began witnessing the impact of COVID-19 on scrap metal volumes at its United States, United Kingdom and Australian facilities.

The week of March 16-20, steelmakers based in the U.S. began factoring COVID-19 into their earnings forecasts. Charlotte, North Carolina-based Nucor Corp. remarked in its March 19 guidance statement, “Thus far the impacts of COVID-19 on our supply chains and operations has been minimal. However, more severe impacts are probable as economic activity is disrupted by construction sites being shut down in some major cities and other business interruptions.”

The following week, David B. Burritt, the president and CEO of Pittsburgh-based U.S. Steel Corp., stated, “The time has come for us to take aggressive actions to reposition the company” as a response to rapidly changing economic conditions caused by virus-related shelter in place orders.

Those actions included blast furnaces being scheduled for idle status in May in Gary, Indiana, and Granite City, Illinois. The company also has scheduled idling downtime starting in May at steel tube mills in Ohio and Texas.

In the nonferrous sector, Cleveland-based aluminum scrap consumer Aleris noted in its March 18 outlook, “Given the rapidly changing implications of the spread of COVID-19, it is difficult to assess its impact on our 2020 outlook at this time.”

The following day, Europe-based aluminum producer Hydro cited a “fast-deteriorating market situation [that] is affecting both customers’ and Hydro’s operations” in a news release for its investors. The company melts scrap to make extruded aluminum shapes in both Europe and North America.

Added the company, “The impact is currently most visible in the automotive segment and in building and construction, and more broadly in southern Europe. Consequently, Extruded Solutions is reducing and temporarily closing some activities in France, Spain and Italy.“

A late March survey by Fastmarkets AMM of secondary aluminum producers in the U.S. found that several—including Audubon Metals, Real Alloy, Spectro Alloys and Superior Aluminum—had scaled back or even temporarily halted output, citing the idling of the auto sector to which they sell.

While a severe drop in automotive industry activity and the halt of some construction projects has curtailed the demand for metal, the paper and board market has seen demand shift but not necessarily recede overall. One investment analyst even issued an upgrade on the stock of a containerboard producer based on homeowner stockpiling.

The containerboard sector in the U.S. entered March in seemingly strong condition, with the Washington-based American Forest & Paper Association (AF&PA) reporting that total containerboard production in February 2020 increased 10 percent compared with February 2019.

In the first two months of the year, output was up 7 percent compared with the same two months of 2019, with exports up an impressive 46 percent year on year.

The AF&PA has been touting paper, tissue and board’s “essential” role in COVID-19-impacted America. “AF&PA members make essential products, including tissue products, packaging for food and other consumer products, building products and shipping containers,” states AF&PA President and CEO Heidi Brock in a March 18 news release.

Brock adds, “Our members also supply packaging to agricultural producers, food processors, hygiene product manufacturers, grocers and other retailers. Disruptions in the availability of these goods would cause significant hardships to consumers across the country who depend on steady and stable supplies.”

Memphis, Tennessee-based International Paper (IP) echoes that sentiment on its website, stating, “International Paper products are critical components of the supply chains required to produce and deliver food, pharmaceuticals, hygiene products and emergency supplies for consumers around the world. Our mills and converting plants are operated by highly trained employees who are considered ‘essential workers.’ Disruptions in the availability of our products would create significant hardships for consumers across the country and around the world.”

International Paper (IP), headquartered in Memphis, Tennessee, says it has entered into an agreement to sell its Brazilian corrugated packaging business to Sao Paolo-headquartered Klabin S.A. for 330 million real ($64 million), with 280 million real ($55 million) to be paid at closing and 50 million real ($9.8 million) to be paid one year thereafter, subject to certain adjustments. This business includes three containerboard mills and four box plants.

The agreement follows IP's previously announced strategic review of its Brazilian packaging business in the fourth quarter of 2018.

In IP’s “2018 Annual Performance Summary,” the company notes: “During 2018, a determination was made that the current carrying value of the long-lived assets of the Brazil Packaging business exceeded their estimated fair value due to a change in the outlook for the business. Management engaged a third party to assist with determining the fair value of the business and the fixed assets. The fair value of the business was calculated using a probability-weighted approach based on discounted future cash flows, market multiples and transaction multiples, and the fair value of the fixed assets was determined using a market approach.”

IP says the transaction is expected to close in the second half of 2020, subject to certain closing conditions and regulatory approvals. The company adds that it will continue to run its Papers and Forestry businesses in Brazil. 

Klabin is Brazil’s largest paper manufacturer and exporter and the country’s leading producer of papers and paperboard for packaging, industrial bags and corrugated board packaging. The company also supplies hardwood pulp, softwood pulp and fluff pulp to the market. 

Newton, Kansas-based Bunting says its High Intensity Separation Conveyor (HISC) has been designed to help create high-purity copper scrap by achieving “maximum separation of stainless steel and ferrous dirt” in shredded, insulated copper wire (ICW) cleaning applications.

The value of shredded ICW, produced in the auto and appliance shredding process and at specialty wire processing facilities, can be boosted when what Bunting calls “difficult to remove” small stainless steel and ferrous scrap particles can be separated from the copper.

“Bunting’s HISC achieves removal of these types of contaminant particles by incorporating extremely high gauss fields, neodymium rare earth magnets and an extensively field-tested design,” says the company.

The HISC is suitable for wire prechopping purification as well as wire postchopping purification in ICW wire separation applications, according to Bunting. “When used in prechopping applications, the HISC removes stainless steel and ferrous dirt contamination in order to prevent chopper knives from coming into contact with contaminant particles,” states the firm.

By removing contamination, chopper knives experience significantly reduced wear and tear, resulting in a higher throughput, less knife maintenance and downtime and overall higher profitability, adds Bunting.

In postchopping applications, the high-intensity magnetic field separation of the HISC removes stainless steel and fine ferrous contamination and greatly increases the purity and profitability of a recycled copper product, according to the magnetic equipment company.

Bunting says the HISC also is suitable in other applications requiring high-intensity magnetic separation, including medical stainless steel separation, electronics green circuit board recycling and the purification of granulated plastic.