The Allegheny County Health Department (ACHD), in Pittsburgh, ordered U.S. Steel to end ongoing violations of federal sulfur dioxide standards at the Mon Valley Works facilities, the department said in a notice posted to its website on Thursday February 28.

The violations stem from a fire at U.S. Steel’s Clairton coke plant in Clairton, Pennsylvania, on December 24 that damaged the facility's desulfurization equipment, which controls sulfur dioxide emissions. Company executives had said during a January 31 earnings call that the fire could cost U.S. Steel an estimated $40 million, with restoration potentially stretching into mid-May.

“It is important to note that we have made significant progress on repairing our facility in the aftermath of the December 24 fire,” a spokesperson for U.S. Steel told Fastmarkets AMM via email on Thursday. “This matter has been a top priority for the entire company since it occurred, and we continue to work around the clock with maximum resources to resolve it as quickly as possible.”

The ACHD has listed four actions that U.S. Steel could potentially take in order to reduce its coke oven gas usage and daily sulfur dioxide emissions across all Mon Valley Works facilities, including the Peachtree flare at the Irvin Plant:
  • Reduce the volume of coal in each coke oven;
  • Further extend coking times to 30-36 hours from 22 hours;
  • Put as many coke oven batteries as necessary under “hot idle” to achieve compliance with the hydrogen sulfide emissions standard; and/or
  • Propose its own plan to reduce sulfur dioxide emissions with demonstrated ability to comply with the daily permitted limit for its facilities.
The second tactic would essentially cut coke output at the facilities in half, while the third “hot idle” option would mean no coke production, KeyBanc Capital Markets analyst Philip Gibbs said in a research note on Thursday.

As a result, Gibbs strongly believes that U.S. Steel will seek coke purchases in both domestic and foreign markets. “This is a change versus four to six weeks ago, and will likely create more persistent coal/coke cost headwinds through mid-2019,” he added.

Coke, as well as iron ore, are the key raw materials used by integrated mills, such as U.S. Steel, in the steel production process.

U.S. Steel's Clairton plant, part of the Mon Valley Works, operates 10 coke oven batteries and produces an estimated 4.3 million tons of coke annually, according to the company's website.

U.S. Steel had previously indicated that it did not anticipate buying coke in the near future. “We think we’re okay on our coke needs,” U.S. Steel general manager of investor relations Dan Lesnak said in late January.

Fastmarkets AMM’s daily Midwest hot-rolled coil index, a gauge of steel sheet prices, stood at $35.14 per hundredweight ($702.80 per ton) on February 28, up by 6.1% from $33.13 per cwt at the end of January.

U.S. Steel has five days to notify ACHD of its decision on how it plans to reduce sulfur dioxide emissions and usage of coke oven gases, and will also be required to provide weekly data demonstrating compliance, the department said.