By Paul Ploumis 17 Sep 2015 Last updated at 08:30:02 GMT
US Steel Corp announced investment of $230 million to build electric arc furnace (EAF) at its Fairfield steel making facility.
MONTGOMERY (Scrap Monster): US Steel Corp. is to make an investment of $230 million into building an electric arc furnace (EAF) at its Fairfield facility near Birmingham, Alabama. This will be first time that the company will be making steel by melting scrap. The EAF is expected to become operational by later half of 2016.
The move is seen a part of the company’s efforts to boost profitability of mills in the country. Switching to EAF will significantly reduce the cost of operation, as it offers flexibility of operating at lower capacities at times of falling steel demand. As per industry sources, falling demand from oil and gas sector coupled with increased imports of cheap steel products from other countries will keep the domestic steel demand muted in the US, at least in the immediate near term. It must be noted that blast furnace operations generally require running at high capacities in order to generate operational profit. Many other competitors of US Steel had switched to EAF earlier itself.
According to company management, the Fairfield blast furnace facility was due for a regular maintenance shut down, that would have cost the company approximately $150 million. The investment of $230 million to convert the facility into EAF was reasonable when matched with the cost required for maintenance works at the blast furnace.
The opening of the EAF allows the company to cut back some of its blast furnace steel making operations elsewhere in the country. By doing so, the management expects to lower the company’s operating cost. However, the EAF will have a reduced annual capacity of 1.6 million tons, when compared with 2.4 million tons of annual capacity that was offered by the blast furnace.
US Steel has also announced that it will idle the Fairfield blast furnace operations by November and lay off nearly 1,100 workers.