EAST CHICAGO — Ispat Inland is taking advantage of the lackluster steel demand to temporarily shut down some production and accelerate a pair of maintenance projects.
The company has shut down its No. 6 blast furnace so employees can add extra refractory material to extend the life of the furnace.
Ispat Inland has also decided to speed up maintenance that was scheduled for later this year at the 80-inch hot-strip mill.
Officials wouldn’t say how long the blast furnace and hot-strip mill will be out of production while the maintenance work is being done.
Ispat Inland spokesman Dave Allen said the company expects impact on employment levels to be “minimal.”
“We don’t expect it right now,” he said, when asked about layoffs.
Last week, at a steel conference in Chicago, steel analysts urged companies to consider lessening capacity instead of reducing prices when steel demand is down.
Steel demand is low because service centers are still stocked with inventory from orders they made last year.
Steel analyst Charles Bradford said it makes perfect sense to do maintenance now.
“If the market isn’t there, why produce material that you have to lower the prices to sell?’’ Bradford said.
Ispat Inland President and CEO Lou Schorsch said last week that his company reduced capacity in the fourth quarter and planned to take advantage of slow times in the industry by reducing capacity rather than slashing prices.
“Doing maintenance now is better than doing maintenance later, when business could be better,’’ Bradford said. “I think it makes perfect sense. You’ve got to do the maintenance anyway. Let’s do it when it’s not disrupting production, because you don’t need the output right now.”
Steel service centers recently said they over-ordered last year, and are working down current order-books and anticipate orders to pick up sometime in the second quarter.
The company says the work will prepare the 80-inch hot-strip mill for, “greater production later in the year, when demand is expected to be stronger.”
“While the economy remains strong, there is currently excess inventory in the system,” said Michael G. Rippey, executive vice president, commercial and chief financial officer, in a statement. “Considering both current demand and likely demand later in the year, we decided it was better to do this work now.”
The No. 6 blast furnace typically produces about 2,500 tons of iron daily.
Ispat Inland is still operating its No. 5 blast furnace, similar to No. 6, and the No. 7 blast furnace, which produces 11,000 tons of iron daily.
