WARREN - A slowly healing economy is reviving demand for steel, giving Severstal North America Inc. the confidence to reopen its Warren mill this week and boost prices.
That's good news not only for the mill's 1,200 hourly and salaried workers, but for Warren's water department, which will get some relief from a massive deficit caused when the mill and other large industrial users idled operations last spring during the depth of the economic recession.
''We certainly are seeing strengthening of markets for steel products, and Warren has an excellent reputation for quality and outstanding customer service. We're happy that Warren is returning to operations to serve its customers,'' Severstal spokeswoman Bette Kovach said.
Kovach said the company plans to have the mill up and running by the end of March to meet demand from customers in automotive, service center, distribution and drain culvert markets.
Severstal Warren has joined many steelmakers in raising prices, although some of the increase that took effect with orders received last Wednesday goes to cover higher costs of iron ore and other raw materials the mill must buy to make steel, Kovach said. The mill's full array of 185 grades of steel will be available, she said.
The Warren restart leaves the basic oxygen furnace and electric arc furnace at Severstal Wheeling still idled, Kovach said.
''We would need to see continued strengthening of steel in the U.S. to bring those back,'' she said.
Meanwhile, labor contract talks are continuing in Pittsburgh between the mill's nearly 1,000 members of United Steelworkers Local 1375 and management, Kovach said, declining to comment further about negotiations.
The existing pact expired Nov. 1, 2008, but has been extended numerous times, the latest until the end of March.
Besides the workers, Severstal's opening is good news for Warren's battered finances, including the water department, which counts the mill as its largest customer, according to Director Bob Davis.
The mill, which averaged more than 1.6 million gallons of water a day when running normally, used about 900,000 gallon daily in 2009, producing $972,000 in revenue for the city, Davis said.
Once the mill is up and running, its water usage is projected to rise about 600,000 gallons a day, bringing in an extra $500,000 starting in April for the remainder of 2010, he said.
Davis said he doesn't know how fast the mill will increase its water usage but noted, ''It's certainly something we're looking forward to. We sorely missed them.''
As the city's largest water user, the mill represents 15 to 16 percent of the department's total budget of $10.5 million, Davis said.
The department ran up a $1.8 million deficit in 2009, with $1.4 million of the shortfall coming from its largest customers - Severstal, General Motors Corp. Lordstown Complex, Thomas Steel Strip Corp., ArcelorMittal coke plant and Airco.
Davis said the water department expects $150,000 more in revenue a year from GM, which in February announced the return to around-the-clock carmaking with the return this summer of a third production shift. The complex likely will increase its average water usage from 300,000 gallons a day last year during the recession to about 500,000 gallons a day, he said.
The water department saw revenue last year from the coke plant fall $154,000, while it received $144,000 less from Thomas Steel and $46,000 from Airco, Davis said.
Even with the gains, Davis warned the 83-worker department isn't out of the woods yet but will continue to seek ways to cut expenses and increase revenues. He said some communities like Southington might be potential buyers of Warren water.