Expert: Future of Warren mill remains bleak

WARREN – Despite increased indications of an improving steel market, the future for a worn and weathered Warren mill may be dim, one expert on the industry said last week.

Still the Illinois-based company attempting to find a buyer for the blast furnace and other equipment on the hot mill of the 1,200-acre former RG Steel plant is remaining optimistic.

“These (soft market) conditions can, at times, provide a good environment for a potential buyer based on their overall strategic needs, capital and stated objectives,” said Gary C. Epstein, chief marketing officer for Hilco Trading. The company last month purchased the mill’s assets and committed to working for three more months to try to find a buyer to operate the mill’s hot side.

The cold side of the mill, which includes the rolling mill and other equipment south of Warren’s Pine Avenue, is expected to be demolished and scrapped after property owner BDM Warren Steel Holdings spent the last nine months unsuccessfully attempting to find someone to operate it.

John Russo, a retired Youngstown State University labor studies professor who now is with Metropolitan Institute at Virginia Tech, on Friday said he expects the same future for the mill’s steel-making equipment, which includes the blast furnace and property on the west side of South Main Street and adjacent to the ArcelorMittal Warren coke plant.

“Ultimately, even though they are going to hold out some hope, the cost of getting the blast furnace back up and running will be (cost prohibitive),” Russo said. Costs to reline the blast furnace have been estimated at $100 million.

“I am not very optimistic about anything happening there,” said Russo, co-author of “Steeltown USA: Work and Memory in Youngstown.”

Nevertheless, Epstein said Hilco is working hard to comprise a marketing plan designed to reach out to a network of interested buyers around the world.

The company, he said, will leverage its 30 years of experience focusing on points that make this mill “truly unique.” He did not specify what those points are.

Hilco, a privately held, diversified financial services firm, is the same company that in September took ownership of RG Steel’s sprawling and now liquidated Sparrows Point mill in Baltimore. Hilco attempted unsuccessfully to locate operators for that mill and in January sold it off for parts.

Despite his predictions that Warren’s mill will suffer the same fate, Russo remains adamant that the need for steel does exist.

“We need steel for bridges and dams and highways and new schools, but we don’t have an industrial policy to do that,” Russo said. “So I think the steel industry is not incredibly healthy right now.”

Russo’s comments came in spite of last week’s dedication of two new area pipe mills. The $1 billion Vallourec mill in Youngstown that manufactures products needed in the oil and gas drilling industry and Sharon Tube just across the state line that manufactures steel tubes used for heavy equipment, agriculture and other industry, each celebrated ribbon cuttings at their new facilities.

About 90 miles east, specialty metals manufacturer Allegheny Technologies Inc. this year expects to complete a $1.2 billion state-of-the-art rolling mill in Brackenridge, Pa. That mill will manufacture flat-rolled nickel-based alloys, titanium and other special metals. While the Warren mill and this new Pittsburgh-area mill both specialize in the manufacture of flat-rolled metals, an ATI spokesman said the new facility cannot be compared to RG Steel, a carbon steel producer.

The shift from steel to specialty metals also has contributed to the reduction in steel demand, Russo said. However, he is not exceptionally optimistic for the longterm specialty metals market either.

“What does it mean with the defense cuts that could be coming on the horizon?” Russo said.