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Russia's Severstal to idle operations at US plant
June 8, 2010 / 9:45 AM / in 7 years

Russia's Severstal to idle operations at US plant

* Sparrows Point plant in Maryland affected for 30 days

* Layoff number not set; operations employ about 600

* Fixed costs will be spread, weigh on other US plants -Citi

MOSCOW, June 8 (Reuters) - Severstal (CHMF.MM), Russia’s largest steel maker, said it planned to idle the primary steelmaking facilities at its Sparrows Point, Maryland plant for 30 days later this month because of weak demand.

The operations employ about 600 people, but the exact number of layoffs has not been determined.

“The facilities will be idled for about 30 days beginning in late June but no later than July 1,” the company said in an emailed statement. “The affected facilities include ironmaking, steelmaking and continuous casting.”

Severstal’s U.S. operations have struggled since the economic downturn crimped North American steel demand.

The Russian company acquired the former Bethlehem Steel plant in Baltimore from ArcelorMittal ISPA.AS in 2008 for $810 million.

Citigroup analysts noted that Sparrows Point is the highest cost plant at Severstal with first-quarter hot rolled coil (HRC) cash costs of more than $700 per tonne.

“We believe that the decision to stop Sparrows is prudent, however it will likely weigh negatively on the company’s financial performance in the U.S. as the fixed operating costs will be spread across other facilities in the U.S.,” the bank’s analysts wrote.

Sparrows Point has one blast furnace, one hot strip mill and two cold mills. In 2007, it produced 3.7 million tonnes of slab, according to the company’s website.

Reporting by Alfred Kueppers, editing by Jane Baird

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