ATI

A definitive agreement to form an innovative 50-50 joint venture (JV) was recently reached between the world’s largest stainless steel producer and a global manufacturer of technically advanced specialty materials and complex components, with a target to manufacture and sell 60 inch-wide stainless sheet in North America.

Allegheny & Tsingshan Stainless is the new entity formed between Allegheny Technologies Incorporated, based in western Pennsylvania, which produces components for the aerospace, defense, oil & gas, electrical energy, medical and automotive sectors, and an affiliate company of Tsingshan Group, a multi-national fully integrated stainless steel producer engaged in nickel ore mining, ferronickel and ferrochrome smelting, stainless steel making, hot rolling, and cold rolling with captive supportive power plants and ports. Formation of the JV is subject to customary regulatory and anti-trust clearances, which are expected by the first quarter 2018; first shipments are expected in early 2018.

“Our strategy is to first return our flat-rolled products (FRP) business to profitability and then position our FRP segment for sustainable profitability regardless of raw materials costs or trade policy,” said Rich Harshman, ATI’s Chairman, President, and Chief Executive Officer. “Tsingshan’s capabilities to produce stainless steel slabs using its unparalleled vertically integrated mining, refining, and casting assets combined with ATI’s innovative, low-cost hot-rolling and processing facility (HRPF), and the JV’s unique direct roll anneal and pickle (DRAP) facility creates a cost competitive supplier of stainless sheet products for the North American market.

“For ATI, the conversion agreement volume will significantly increase the utilization of our HRPF and will utilize the previously idled DRAP finishing facility in Midland, PA, which will be owned and operated by the joint venture.”

Key points of the joint venture:

• Allegheny & Tsingshan Stainless is the joint venture company’s name.
• Tsingshan’s operation in Indonesia is vertically integrated from mining raw materials, including ferronickel and ferrochrome, through refining and casting. Tsingshan will supply the JV with redi-to-roll slabs with reduced raw material cost volatility.
• The Tsingshan-supplied stainless slabs will be hot-rolled into coils on ATI’s HRPF under a conversion agreement between ATI FRP and the JV. The HRPF provides customers with the market’s most consistent quality and edge-to-edge, tip-to-tail gauge control.
• The hot-rolled coils will be finished into stainless sheet using the JV’s DRAP line, which is ATI’s major investment in the joint venture. The Midlandoperations’ assets were impaired in 2015 and the DRAP finishing line was idled in early 2016.
• The JV is expected to add approximately 100 manufacturing jobs in western PA.