The blast furnace of Middletown Works has been shut down for repairs after a weekend mechanical failure, AK Steel said Monday.
The blast furnace — the part of the mill where fuel, iron ore and limestone are heated and reduced to make hot metal — was taken offline to prevent any further damage to it, the steelmaker said in a news release. The company, which has property damage and business interruption insurance, estimates uninsured losses will be between $10 million and $27.5 million and that this outage will impact second and third quarter shipments and financial results.
As long as the furnace is shut down, the Middletown Works plant isn’t producing new carbon flat-rolled steel.
This could affect AK Steel’s business supplying the automotive sector, which uses carbon and stainless steels. The auto business has been a bright spot for AK Steel and an improving source of business, while the Butler County steelmaker struggles overall to turn profits post-recession.
As U.S. auto production rises, AK Steel has said in past financial reports that it is gaining market share in supplying steels to automakers. AK Steel also makes steel products for the construction, manufacturing and electrical power generation and distribution markets.
There were no injuries, and AK Steel said it is investigating the cause of the incident.
“I know the problem was noticed on Saturday,” but it may have taken longer to actually shut the furnace down temporarily, said Neil Douglas, president of International Association of Machinists & Aerospace Workers Local Lodge 1943. The IAM represents hourly employees of Middletown Works.
“It’s not just something that you can shut off a light or shut off a switch and it shuts down… They slowly brought it down,” he said.
AK Steel spokesman Barry Racey said Monday evening there was no additional information at this point.
“We continue to assess the impact,” Racey said in an email.
Middletown Works, one of several steel plants operated by West Chester Twp.-based AK Steel, is Middletown’s largest employer. The plant and West Chester headquarters make the steel manufacturer the county’s third largest employer with approximately 2,400 full-time jobs.
Portions of the mill are still running, Douglas said.
As far as what it means for work in the mill, it’s still early in the process. “There’s things people can do in the mill in the meantime,” Douglas said.
The company is executing a contingency plan. Until repairs are finished, the company will use the electric arc furnace at its Butler Works, Penn., plant and its blast furnace at its Ashland Works, Ky., plant to help production. To the extent necessary, AK Steel said it could also buy merchant carbon slabs to service its customers.
At this time, the company does not have a specific cost estimate or an exact date to complete repairs. It expects repairs to be done as early as sometime in July. However, it’s possible the repairs may be completed later on in the July to September quarter, AK Steel said.
Previously AK Steel said it had planned a seven-day major maintenance outage during the second quarter at Middletown Works, the first major outage since 2009. It was estimated to cost $21 million.
The mechanical failure was not related to the planned outage, which Racey said has already been completed.
AK Steel’s stock price closed Monday down more than 5 percent at $3.15 per share.