Along with other steel producers across the world including several in the US, at least two Canadian mills also plan to cut their steel production in reaction to weak demand.
Essar Steel Algoma Inc. in Sault Ste. Marie, Ontario, as well as US Steel Canada, will both temporarily idle some of their steel production.
Essar Steel Algoma sent out a letter to its 3,500 employees last Friday stating that it will immediately cease operations on its no. 6 blast furnace and cut back production levels at its no. 7 blast furnace. The company did not indicate whether any employees would be laid off, but it said that it is currently assessing the impact of the reduced operations on its employment levels and is developing a plan to address it.
"The global financial crisis has led to rapid reductions in steel demand," the company explained in the letter to employees. "In less than a month, there has been a virtual stop in steel buying and the short to mid-term market outlook is weak ... In response, over the past two weeks steel mills across North America have drastically cut production. Essar Steel Algoma is not immune to the current economic situation. We do not have sufficient orders to sustain present operating levels."
The Canadian press is also reporting that US Steel Canada, United States Steel Corp.'s Canadian branch, will shut its Hamilton, Ontario blast furnace later this month for up to two months. The plant, which also includes a finishing mill and galvanizing line, employs about 2,100 workers. US Steel has declined to comment officially on its production cuts in Canada or the US.
A major reason behind the reduced flat rolled sheet demand in both the US and Canada is the decrease in demand from the automotive sector, which is seeing its own string of shutdowns and layoffs. On Monday General Motors Corp. told the 1,500 employees at its metal stamping plant in the city of Wyoming, Michigan that the plant will close by December 2009.