ISG to restart steel-plate mill in Indiana

Rise in demand for armor in Iraq is partly credited

December 21, 2004|By BLOOMBERG NEWS

RICHFIELD, Ohio -- International Steel Group Inc., being bought by Mittal Steel Co. to form the world's biggest steelmaker, said yesterday that it will restart the steel-plate mill in Burns Harbor, Ind., to meet rising demand from its industrial and military customers.

The steel-plate mill will begin production in the second quarter, adding 80 jobs, ISG said in a statement. Burns Harbor is International Steel's biggest plant, with 3,700 workers.

Burns Harbor, which can also make 4.8 million tons a year of raw steel, ended operations at the plate mill in 2000 when it was owned by Bethlehem Steel Corp., hurt by pricing pressure from imported steel. There will be no cost to restart it, International Steel spokesman Charles Glazer said.

ISG got Burns Harbor as part of its $1.5 billion acquisition of Bethlehem assets in 2003. The mill produces plates that are 9 feet, 2 inches wide for customers that make railroad cars, ships, machinery, buildings and energy-exploration rigs.

"Our decision to return this mill to operation is driven by increasing customer demand," Chief Executive Officer Rodney Mott said in the statement. "This restart will provide ISG additional flexibility to better meet our customers' growth and project opportunities."

Shares of International Steel rose 32 cents to close at $40.80 yesterday on the New York Stock Exchange. They have risen 5 percent this year.

ISG, created by financier Wilbur Ross, is the largest U.S. maker of steel plate. The steel industry categorizes plate as sheets wider than eight inches and thicker than one-quarter of an inch.

The price of hot-rolled steel plate cut to ordered lengths reached an all-time high of $789 a ton last month, more than double what it cost a year earlier, according to PurchasingData.com, which tracks metal prices.

Union Pacific Corp., the biggest U.S. railroad company, is ordering locomotives this year to help end delays after surging demand in late 2003 left it short of crews and equipment. Shipyards in South Korea, the world's largest shipbuilding nation, have been winning record orders for vessels to carry cargo, containers and fuel as China and other Asian economies expand trade with the United States and Europe.

Raw steel production in North America last month was 11.3 million tons, a rise of 10 percent from a year ago, according to American Iron and Steel Institute figures released yesterday. Total North American production this year is 123 million tons, 7.7 percent more than in 2003.

ISG is one of a few U.S. companies certified to make military-grade steel used in ships and armored vehicles. Most of its plate for military use is made at its Coatesville and Conshohocken, Pa., plants, which also were acquired from Bethlehem Steel, which had sought bankruptcy protection.

A growing insurgency in Iraq is driving demand for more protective gear for U.S. troops. Armor Holdings Inc., the only company that fully armors the Humvee transports used by the U.S. Army in Iraq, already had tripled production this year.

Armor Holdings said yesterday that it received a contract worth up to $50 million to provide spare parts for the vehicles. The initial Pentagon award covers 2005 through 2007, with an option to extend the work for two years.

"We are making four times as much armor plate this year, compared with last year," Glazer, of ISG, said. "The increased demand is also coming along with shorter delivery times."

Each Abrams battle tank, made by General Dynamics Corp., uses about 22 tons of steel plate, while each of United Defense Industries Inc.'s Bradley Fighting Vehicles uses about 6 tons, according to the American Iron and Steel institute.

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