Steel and pipe maker cites decrease in oil exploration and drilling activity.

Luxembourg-based steelmaker Tenaris, which has melt shops in North, Central and South America, is scaling back operations at several plants in the United States.

Much of the company’s output goes into the oil and gas sectors. In a March 19 news release, the company cites “the abrupt, sharp decline in the price of oil and subsequent decrease in market activity” as reasons for layoffs and idled machinery.

The company is idling its plants in Koppel and Ambridge, Pennsylvania, including the melt shops, and a downstream pipe threading plant in Brookfield, Ohio.

Tenaris also says it is “implementing employee reductions” at downstream pipe threading and welding plants in Baytown, Texas, and Hickman, Arkansas.

Two days earlier, Tenaris had announced layoffs affecting 110 employees at its welded steel pipe manufacturing plant in Calgary, Alberta, Canada.

On its website, Tenaris states that ferrous scrap comprises 68 percent of its melt shop feedstock globally. In addition to the two Pennsylvania mills, the company also has melting capacity in Mexico, South America and Europe.

The association urges the Trump Administration to identify the steel manufacturing sector as “essential” in determining its response to the COVID-19 pandemic.

The American Iron and Steel Institute (AISI ), Washington, says it has urged the Trump administration to identify the steel manufacturing sector and its workers as “essential” when drafting and enforcing shelter-in-place orders and other directives in response to the COVID-19 pandemic.

In a letter to Vice President Pence, Thomas J. Gibson, AISI president and CEO, writes, “As the Secretary of Commerce determined in 2018, steel is important to national security well beyond obvious defense applications to encompass critical infrastructure and transportation, electric power and energy generation systems, as well as water systems. Without access to a reliable source of steel production during this crisis, our national and economic security will be severely impacted.

“We appreciate the efforts of the administration to limit the spread and impact of the COVID-19 pandemic. As businesses across the nation have been ordered by many state and local governments to limit or cease operations in recent days, several states have specifically exempted industrial manufacturing as ‘essential.’ We urge the Trump administration to provide consistent nationwide guidance by formally recognizing critical manufacturing sectors that are essential to our country’s critical infrastructure and the response to COVID-19. I urge the administration to identify the steel manufacturing sector and its workers as essential when drafting and enforcing shelter-in-place orders and other directives,” Gibson writes.

He also notes in this letter that the Cyber and Infrastructure Security Agency at the Department of Homeland Security already lists the iron, steel and ferroalloy sector as a critical manufacturing sector.

Gibson writes that AISI member companies are complying with federal, state, local and community directives during the pandemic and are “taking all necessary precautions to protect the health of employees, customers, contractors and the community.”

The full version of the letter can be found here.

Trade association has already written Vice President Pence to seek “essential” status for recycling operations.

Leonard Zeid, the president of the Paper Stock Industries (PSI) chapter of the Washington-based Institute of Scrap Recycling Industries (ISRI) says the organization is “working aggressively for our industry on the national stage in ways [individual recyclers] could not do alone.”

In a letter addressed to “PSI Members and Paper Industry Associates,” Zeid says the organization submitted a letter March 18 to Vice President Mike Pence “requesting that recycling operations be designated ‘essential’ to public health and welfare, as well as to our nation’s economic infrastructure on the local, state, and national levels.”

Continues Zeid, “Recycling operations must remain open during this crisis, ISRI asserts, because they provide vital resources to the manufacturing and economic sectors.”

He says ISRI is developing talking points for members to use at the state or local level so those governments can be asked to make the same designation.

ISRI joins the Arlington, Virginia-based National Waste & Recycling Association (NWRA), which made a similar appeal to Congress and the Trump administration in March to include the waste collection industry in the national emergency declaration, thus exempting waste haulers from Hours of Service (HOS) regulations.

NWRA also sent draft legislative language to Congress that would amend federal law to include waste collection haulers in the FMCSA HOS exemption if or when the president declares a national emergency.

Also, Zeid says ISRI joined approximately 75 other organizations March 18 in sending a letter to the White House and congressional leaders calling for:

In its letter to Pence, ISRI writes in part that “over three-quarters of U.S. paper mills utilize recovered paper from recycling operations for their daily production needs. This supply chain cannot be halted and restarted without significant supply disruptions that would ripple throughout the entire U.S. manufacturing chain."

On the metals side, ISRI comments, “Several of the manufacturing industries that recyclers regularly supply have been officially designated as part of the U.S. ‘Critical Manufacturing Sector’ by the U.S. Department of Homeland Security (DHS), including iron and steel mills and ferrous alloy manufacturing, alumina and aluminum production and processing, and nonferrous metal production and processing.”

Equipment maker sees growing role for programmed and remote-controlled heavy equipment.

Peoria, Illinois-based Caterpillar Inc. is moving forward on equipment connectivity and autonomy, according to its CEO Jim Umpleby. He and two other executives provided an update on the equipment maker’s efforts in those areas at a press conference at ConExpo 2020 in Las Vegas in March.

Caterpillar has “some 1 million connected assets” in place globally collecting data, said Bob De Lange, the group president of services, distribution, and digital at the company.

Caterpillar debuted several new or recently introduced technologies at ConExpo, including Cat Productivity, which it calls a web-based productivity management tool. Also on display was an expanded remote-control Cat Command offering designed to allow an operator to control multiple pieces of equipment from a single station.

DeLange told ConExpo attendees Caterpillar has 30 years of autonomy experience, and the firm has long had programmed or remote controlled dump trucks on the job at mining sites. He said bringing that degree of autonomy to a construction or demolition site (or, presumably, to a scrap yard) will not be easy, but it is currently testing autonomous equipment in such applications at its proving grounds in Illinois and in other parts of the world.

Ramin Younessi, Caterpillar group president for construction industries, said he is seeing “strong interest” in autonomy from many of his customers in that segment, as they continue to find skilled laborers in short supply.

Other remote-control or autonomy related products or services being offered by Caterpillar include: Command for Compaction, automating the soil compaction process; and the recently released Cat Remote Services that includes Remote Flash and Remote Troubleshoot.

Other ConExpo displays focused on the Cat app for smartphones, VisionLink for fleet management and an augmented reality experience “to learn about getting a second life out of machines with Cat Certified Rebuild.” That program offers “like-new machines with a like-new warranty and a new serial number, all at a fraction of the cost of a comparable new machine,” marketed via Caterpillar’s existing dealer network.

The company also had plenty of heavy equipment on display at three different exhibit areas at the expo. That roster of new product offerings included five hydraulic excavators, two dozers, a center-pivot backhoe loader, a motor grader, a wheel loader and an articulated truck.

In addition to the products on display, Caterpillar’s largest exhibit area had live equipment demonstrations and hosted the Global Operator Challenge championship. Nine regional champions from an initial field of more than 10,000 competed in the final round of that event on Tuesday, March 10.

The company states that it cannot provide forward guidance for its earnings with economic uncertainties caused by the COVID-19 outbreak.

Commercial Metals Co. (CMC), Irving, Texas, has announced financial results for its fiscal second quarter ended Feb. 29. Second quarter earnings from continuing operations were $63.6 million, or 53 cents per diluted share, on net sales of $1.3 billion, compared with prior year period earnings from continuing operations of $14.9 million, or 13 cents per diluted share, on net sales of $1.4 billion. Gross margin increased by 45 percent year over year while total shipment volumes grew 2 percent over the same period, CMC reports in a news release on its second quarter earnings. Additionally, adjusted earnings from continuing operations were $63.6 million. 

“Despite winter seasonality and an unusually wet February, the second quarter was strong and demonstrates our company’s enhanced earnings capability following the transformational actions of the last several years,” says Barbara R. Smith, chairman of the board and president and CEO at CMC. “In the quarter, we achieved the second highest adjusted [earnings before interest, taxes, depreciation and amortization or EBITDA] margin in our history, behind only our first quarter 2020 performance.  The great results were helped by robust demand from the U.S. and Polish construction markets, which continued to support steel shipment volumes during the quarter.

“Strong earnings and disciplined working capital management provided $107 million of operating cash flow during the quarter, allowing us to further delever our balance sheet,” she continues. “Our net debt-to-EBITDA ratio of 1.6 times provides us great flexibility in our capital structure to pursue our growth strategies, as well as endure today’s volatile environment.”

The company reports that its liquidity position as of Feb. 29 remained strong, with cash and cash equivalents of $232.4 million and availability under the company’s credit and accounts receivable facilities of $616.6 million.

“We enter the summer construction season with a good fabrication backlog, solid bidding activity and mill metal margins above past cyclical averages,” Smith adds. “However, given economic uncertainties caused by the COVID-19 outbreak, as well as potential courses of action that local, state and federal government bodies may take, we are unable to provide forward guidance at this time. In this unpredictable environment, we remain focused on factors we can control and are positioning our company for long-term value generation.”

CMC’s Americas Recycling segment recorded an adjusted EBITDA of $5.8 million for the second quarter of fiscal 2020, a decrease of 43 percent compared with adjusted EBITDA of $10.1 million for the prior year quarter. According to CMC, the reduction reflected a combination of lower average ferrous selling prices and shipping volumes compared to a year ago, down 15 percent and 9 percent respectively.

The company’s Americas Mills segment recorded adjusted EBITDA of $125.7 million for the second quarter of fiscal 2020, an increase of 12 percent compared with adjusted EBITDA of $112.4 million for the second quarter of fiscal 2019. Volumes increased 5 percent compared with the prior year period, driven by strength in construction end markets, as well as targeted merchant bar growth opportunities. Metal margins contracted by $24 per ton year-over-year, as a reduction in average selling price of $71 per ton was only partially offset by lower scrap costs. Results in the second quarter benefited from a 6 percent year-over-year reduction in conversion costs per ton.

CMC’s Americas Fabrication segment recorded adjusted EBITDA of $16.1 million for the second quarter of fiscal 2020, marking a significant improvement from an adjusted EBITDA loss of $49.6 million for the second quarter of fiscal 2019, primarily due to expanded selling price margins over rebar cost. As in prior quarters, second quarter adjusted EBITDA did not include the benefit of the purchase accounting adjustment related to amortization of the acquired unfavorable contract backlog reserve of $6.0 million. The trend of sequential increases in selling price continued during the quarter, as the company shipped at an average price of $984 per ton. This represented a significant rise of $139 per ton, or 16 percent, compared with the prior year period. Metal margins within our backlog remained at attractive levels.

CMC’s International Mill segment in Poland recorded adjusted EBITDA of $13.5 million for the second quarter of fiscal 2020, compared with adjusted EBITDA of $20.5 million for the prior year quarter. Metal margins remain under pressure as a result of elevated import levels. The overhang of imported steel products in Europe is lessening but remains a headwind to margins. Despite import challenges, shipment volumes reached their highest second quarter level in 12 years, increasing 25 percent on a year-over-year basis, driven by strong demand from the Polish construction sector.

In addition, CMC’s Corporate and Other segment recorded an adjusted EBITDA loss of $23.2 million for the second quarter of fiscal 2020 compared to an adjusted EBITDA loss of $24.1 million for the prior year quarter.