EAST CHICAGO | An investment analyst and a major trade publication have reported ArcelorMittal is looking at closing its Indiana Harbor West steel mill, a sprawling century-old plant where generations of region residents have worked.

ArcelorMittal responded Tuesday by saying it doesn't plan to shut down any blast furnaces in the United States, which means it wouldn't shutter an entire steel mill.

The Luxembourg-based steelmaker, however, reiterated its stance that it needs to look at closing, idling or selling off under-used facilities after losing an average of about $294 million a year in the United States over the last half decade at a time when nearly 30 percent of the nation's steelmaking capacity is sitting idle. U.S. steelmakers have blamed a flood of low-cost imports.

"While it's true that global economics, coupled with internal cost and productivity challenges, have placed significant pressure on our U.S.A. business and forced us to re-evaluate our footprint, no final decisions have been made with regard to an asset optimization plan," said Andy Harshaw, president and CEO of ArcelorMittal USA Flat Carbon in 2014.

"What I want to ensure you is that we have no intention of reducing our blast furnace capacity in the United States."

ArcelorMittal's coke supplier, Lisle, Ill.-based SunCoke Energy, issued a news release Monday that said a closure at Indiana Harbor would not affect its business.

"SunCoke Energy Inc. provides coke to ArcelorMittal USA under long-term take-or-pay contracts to its Indiana Harbor blast furnace No. 7 and Cleveland steel-making facilities," the release said. "SunCoke spoke with its customer this morning and confirmed that there will be zero impact to SunCoke Energy Inc. from any of ArcelorMittal's plans to rationalize a portion of its Indiana Harbor operations."

Industry analysts at KeyBanc had reported Sunday the steelmaker will idle or shutter finishing lines at ArcelorMittal Indiana Harbor, possibly shutting down the entire Indiana Harbor West steel mill.

Originally built by industrialist Clayton Mark, who also designed East Chicago's historic Marktown neighborhood, the mill has changed ownership many times over the years and been known as Youngstown, J & L, LTV Steel and ISG.

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"Late on Friday, several of our contacts indicated ArcelorMittal USA is taking steps to reduce its sheet hot end and finishing capabilities via the closure of Indiana Harbor West in East Chicago," KeyBanc Analyst Philip Gibbs wrote in a note.

"The move would be in line with Mittal's recent public rhetoric it would look to enhance utilizations/lower unit costs without sacrificing total U.S. sheet production and/or market share. Upon execution, we view this as a net positive for the sheet steel S/D balance domestically and a net negative for raws, i.e., iron ore."

ArcelorMittal could be trying to strengthen its bargaining position since contract talks with the union have started, but it faces real problems such as sluggish growth, a strong dollar that favors imports and low capacity utilization nationwide, said Charles Bradford, a New York City-based steel industry analyst. About 72 percent of the steelmaking capacity in the United States is currently being used, but steelmakers likely won't be profitable again unless it gets up around 85 percent.

The only way to fix that problem would be to take capacity off-line, Bradford said.

"No decision has been made, but they clearly have too much rolling capacity," he said. "It's very expensive to operate."

Rumors have swirled among steel buyers that either ArcelorMittal Indiana Harbor West or East is likely to close, since the aged steel mills that were built shortly after the turn of the 20th century aren't as efficient as the company's newer plants, like Burns Harbor, Bradford said.

ArcelorMittal likely wants to bring up the prospect of closing finishing lines during contract negotiations, because it would be bad to announce a big closure after a new contract were agreed on, he said.

"You're better off discussing it with the workforce," Bradford said.

"ArcelorMittal has plants all over the world so they know better than anybody how many people should be operating a hot strip mill," Bradford said. "There are definitely some that are better than others, and they can take the operating practices of the best mills and transfer them to the worst. It might actually save jobs. The mills that are not efficient are not going to last."


Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.