Home >  Business

Thursday, November 22, 2001

By Len Boselovic, Post-Gazette Staff Writer

Steel stocks advanced yesterday on the prospect that the shutdown of bankrupt LTV Steel will boost their business as well as slumping steel prices.

U.S. Steel traded as high as $17.50 before closing at $16.60, up 60 cents. Nonunion producer Nucor finished at $46.68, up $1.08 after surging to $50 early in the day. AK Steel rose 50 cents to $10.50.

The tempered revival came after LTV said it would seek court permission to shut down its mills because it no longer has the cash to operate them. LTV cited unsuccessful efforts to negotiate wage and benefit reductions with the United Steelworkers union.

With the nation's fourth-largest producer out of the picture, LTV's customers will have to buy from other producers, bringing supply more in balance with demand. JP Morgan analyst Michael Gambardella called the impending shutdown of LTV mills in Ohio, Indiana and Illinois "the most positive steel event in the past 20 years."

The Bush administration's plan for aiding the debilitated industry includes addressing the issue of a global surplus of steelmaking capacity. Industry observers believe weeding out inefficient producers will reduce supply, permitting efficient steelmakers to earn the returns they need.

USW officials decried the shutdown as "reckless and irresponsible," vowing to keep the mills operating. U.S. Rep. Dennis Kucinich, D-Ohio, said he would ask a judge to fire the top management of LTV in an effort to keep the company operating.

"I think at this point, tempers are hot and emotions are high. ... That's to be expected," said LTV spokesman Mark Tomasch. "Unfortunately, that doesn't help matters, and it doesn't affect matters."

LTV lost $809.4 million through October after reporting a loss of $719 million last year.

Tomasch declined to provide details of what concessions LTV sought from the union in an effort to obtain federal loan guarantees that would have kept the mills operating. LTV also planned to eliminate more salaried jobs and demand greater employee contributions for insurance benefits.

The shutdown will have a major impact on about 12,000 LTV retirees in Western Pennsylvania.

The steelmaker's revenue pays their medical benefits, so they will lose that coverage once operations are halted, Tomasch said. While LTV's pension plan is fully funded for the time being, the government eventually could have to take it over because the company won't be making additional contributions to the plan, Tomasch said.

The Associated Press contributed to this report.