SunCoke companies say U.S. Steel has obligation to buy coke for Illinois plant

SunCoke Energy Inc. (NYSE: SXC) and affiliate SunCoke Energy Partners L.P. (NYSE: SXCP) in a joint Oct. 6 statement reacted to United States Steel’s Oct. 6 announcement that it may temporarily idle its Granite City Works flat-rolled operations in Illinois given current steel market conditions.

“SunCoke supplies coke to U.S. Steel’s Granite City Works under a long-term, take-or-pay contract until 2025,” the companies said. “Any potential temporary idling of their facility does not change U.S. Steel’s obligations. We expect U.S. Steel will continue to honor our contract. We value our long-standing relationship with U.S. Steel and would assist in shipping coke to other U.S. Steel facilities.”

The SunCoke companies have a coke plant, that bakes metallurgical coal into coke for the steelmaking process, at the Granite City steel plant.

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. SunCoke Energy Partners is a publicly traded master limited partnership that manufactures high-quality coke used in the blast furnace production of steel and provides export and domestic coal handling services to the coke, coal, steel and power industries. 

United States Steel (NYSE: X) announced Oct. 6 it is examining a consolidation of its North American Flat-Rolled operations and may temporarily idle its Granite City Works steelmaking operations and most finishing operations in Granite City, Ill. The company noted that it routinely adjusts production at its operating facilities to reflect market fluctuations. The potential consolidation is a result of continued challenging global market conditions including fluctuating oil prices, reduced rig counts, depressed steel prices and “unfairly traded” imports. The company said it will be working closely with its customers and will continue to operate its steelmaking facilities in Indiana, Michigan and Pennsylvania. 

As part of the possible consolidation, 2,000 employees at Granite City Works are being issued notices under the Worker Adjustment and Retraining Notification (WARN) Act. These notices are being issued beginning on Oct. 6 and are separate from previously issued notices. 

United States Steel, headquartered in Pittsburgh, Pa., is a leading integrated steel producer and Fortune 200 company with major operations in the United States and Central Europe and an annual raw steelmaking capability of 22 million net tons.

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.