Union employees who work under a contract in which pay rates are negotiated will maintain their current salaries, Kovach said.
In the letter to employees, RG Steel President and CEO V. John Goodwin said the company has focused on improving the cost structure, but that the economy did not improve as expected.
"As we entered the new year we were optimistic that business conditions would gradually improve," he wrote. "However, the expected economic improvement did not materialize and business conditions continue to pose significant challenges for us."
Goodwin said the company expected conditions to improve in the long term but that the cuts were needed for now.
The pay cuts will be restored in September if conditions improve, Goodwin said.
"While these decisions are difficult, our company must react to prevailing conditions to be a long-term source of employment," Goodwin wrote.
Other actions the company has taken include temporarily shutting down the tin mill at Sparrows Point in April because of low bookings. Kovach said it would restart when market conditions improve. The tin mill market has been shrinking because of consolidation amid falling demand as manufacturers turn to better-made aluminum, plastic and glass.
As it has cut back, Sparrows Point is trying to beef up stronger parts of its business. It announced in March it would restart the No. 2 galvanizing line, to meet customer demand for a broader range of products, the company said.
The line, which was idled by the plant's previous owner in 2010, produces heavy-gauge coated products.
Sparrows Point has had a number of owners over the past decade, leading to constant uncertainty about its future.
RG Steel's parent, the New York investment firm Renco Group, bought the steel plant from Russian steelmaker Severstal in March 2011. Severstal had idled operations for several months because of low demand. RG Steel restarted the plant last May.
Sparrows Point has struggled to pay off its suppliers and recover from a loss of customers during the shutdown.