Indiana’s Steel Industry Struggles Under Weight of Cheap Oil, Low Prices
13 February 2015
Indiana’s steel industry, which many hoped would be on the upswing after the end of the Great Recession, is struggling under the weight of cheap oil, a strong dollar and low prices, leading to hundreds of layoffs in just one week and uncertainty about the future.
Nearly 700 steel industry jobs vanished from Northwest Indiana in January, part of a larger nationwide bloodletting.
“The strong dollar is deadly for the steel industry,’’ Charles Bradford, a steel industry analyst with New York City-based Bradford Research Inc., told The Times in Munster. “The last time the dollar was this strong, half the unionized plants went bankrupt.’’
ArcelorMittal and U.S. Steel haven’t gone bankrupt. But they haven’t seen the upswing that’s expected in a cyclical boom-and-bust industry, either, despite soaring U.S. auto sales and jumps in construction and sales of tubular steel product sales.
U.S. Steel has announced the layoffs of more than 1,300 steelworkers nationwide, including 369 who will be sent home in March when East Chicago Tin is temporarily idled. The company recently closed two of its oldest and most outdated coke batteries at Gary Works, putting 120 people out of work.
ArcelorMittal mothballed the No. 2 galvanizing line, once the world’s most productive line, at ArcelorMittal Indiana Harbor West last year. The company said 304 jobs could be eliminated when it shuts down its electric arc furnace at Indiana Harbor Long Carbon on March 1 and warns that it plans to idle the top aluminizing line at the former LTV steel mill in East Chicago near the end of 2015.
That production will be moved to a newer plant in Alabama, affecting about 100 workers.
“With companies like ArcelorMittal, the advantage of globalization is the company has more facilities and can pick and choose which are most efficient to operate,’’ Bradford said.
Improvement isn’t expected anytime soon.
Oil has fallen to less than $50 a barrel. Prices for hot-rolled coil have fallen to below $600 a ton for the first time since 2010. And worldwide, steelmaking overcapacity — the amount of mills that aren’t needed to satisfy the demand for steel — is estimated to be as high as 628 million tons.