RG Steel Files Bankruptcy Protection Amid Improving Steel Capacity Utilization

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Researched by Industrial Info Resources (Sugar Land, Texas)--According to the American Iron and Steel Institute steel mill capacity utilization in the U.S. is up about 7.9% in 2012 compared to last year with mills operating at a rate around 78.6%. As a whole the steel manufacturing sector has improved because of demand for steel in the automotive manufacturing sector and oil & gas development. In the U.S. capital expenditures are on the rise, but high raw material costs and increased competition from foreign and domestic sources have left some steel makers struggling. It's never good news to lose an employer, but yesterday's bankruptcy filing by RG Steel LLC (Sparrows Point, Maryland), an affiliate of Renco Group Incorporated (New York), and the previous announcement that it will lay off more than 3,500 workers at its steel mills is a significant blow to communities in Maryland, Ohio and West Virginia where the company's mills are located. While first announced as temporary the idling process may be permanent according to company sources.

The Sparrow's point mill and sister facilities have been through more than their fair share of ups and downs recently. Just last year RG Steel LLC brought optimism back to Sparrow's Point by acquiring and reopening closed mills from SeverStal. The acquisition included 7.5 million tons per year of steel-making capacity consisting of nine operations and associated facilities in Maryland, Ohio and West Virginia. The company previously idled mills in Allenport, Pennsylvania; Martins Ferry, Ohio; and Steubenville, Ohio, leaving Sparrow's Point, Warren, Ohio and Yorkville, Ohio as the last remaining operations.

Prior to that, Russian owner Severstal laid off most of the workforce and idled the plant in 2010 before selling to RG Steel. Severstal predecessor Arcelor Mittal operated the facility and International Steel Group also tried its hand at running the plant and also ended up selling.

In January 2012 RG Steel sent a letter to customers stating that steelmaking operations at Sparrow's Point would remain idle until the company resolves production issues.

RG Steel was looking at significant investments to keep the mill operating include a $300 million blast furnace rebuild.

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