SunCoke companies say AK Steel has obligation to take its coke

SunCoke Energy Inc. (NYSE: SXC) and SunCoke Energy Partners LP (NYSE: SXCP) on Oct. 16 responded to AK Steel‘s announcement that day that it intends to temporarily idle the blast furnace and related steelmaking operations in Ashland, Kentucky, due to challenging market conditions.

“SunCoke supplies coke to AK Steel’s Ashland and Dearborn blast furnace operations from its Haverhill coke plant under a long-term, take-or-pay contract until 2022,” the companies said. “Any temporary idling of their facility does not change AK Steel’s obligations. We expect AK Steel will continue to honor our contract and we will work with our customer in supplying coke to their other facilities.”

The Haverhill facility, located in Ohio, bakes metallurgical coal into coke, which is a key raw material in the steelmaking process.

AK Steel (NYSE: AKS) issued a notice under the Worker Adjustment and Retraining Notification (WARN) Act to hourly and salaried employees at the Ashland works that it intends to temporarily idle the blast furnace and related steelmaking operations at the facility as a result of “challenging domestic market conditions.” AK Steel said it does not intend to idle the hot-dip galvanizing line at Ashland that primarily services automotive customers. 

AK Steel said it has appropriate steelmaking capacity at its other plants to meet customer requirements and does not expect any interruptions in shipments to its customers.  

“We are taking this necessary step due to the onslaught of what we believe are unfairly traded imports of carbon steel that have been flooding our shores. These imports have substantially reduced order intake rates, production rates, shipment volumes and selling prices,” said James L. Wainscott, Chairman, President and CEO of AK Steel. “We will continue to closely monitor market conditions and run our overall operations as efficiently as possible to continue to meet our customers’ needs.” 

AK Steel, along with other domestic steel companies, has filed anti-dumping and counter-vailing duty trade cases with the International Trade Commission with respect to coated, cold-rolled and hot-rolled carbon steel products in an attempt to combat these foreign imports. 

The WARN notice begins a 60-day period that must be given prior to idling operations and laying-off employees under the WARN Act.  If market conditions do not improve, it is expected that the idling of the affected portions of the facility will begin in mid-December and could last more than six months.   

Ashland Works produces carbon steel slabs, along with hot dip galvanized and galvannealed coated steels. The plant employs approximately 940 men and women.

Headquartered in West Chester, Ohio (in the Greater Cincinnati area), AK Steel employs about 8,000 people at eight steel plants, two coke plants and two tube manufacturing plants across six states: Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia.

SunCoke Energy Inc. supplies high-quality coke to the integrated steel industry under long-term, take-or-pay contracts that pass through commodity and certain operating costs to customers. It is he sponsor of SunCoke Energy Partners, a publicly traded master limited partnership.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.