U.S. Steel, Kobe Steel to Build New Galvanizing Line at Ohio Plant

Researched by Industrial Info Resources (Sugar Land, Texas)--United States Steel Corporation (U.S. Steel) (NYSE:X) (Pittsburgh, Pennsylvania) and Kobe Steel Limited (Tokyo, Japan) plan to build a new continuous galvanizing steel line at their PRO-TEC Coating Company joint venture plant in Leipsic, Ohio. The 500,000-ton-per-year line will serve the domestic auto industry and represents an investment of about $400 million.

Construction is expected to begin in the fourth quarter of 2017, and the line is expected to start up in July 2019, the companies said. The new line will allow PRO-TEC to produce U.S. Steel's Generation 3 steels with a hot-dipped zinc coating. Automakers can use the steels with their existing stamping and assembly methods, the companies said. For related information, see Industrial Info's project report.

North America is the world's second-largest automotive market, noted Kobe Steel. As fuel-efficiency standards become stricter, car bodies need to become lighter. Consequently, demand for galvanized high-strength steel used in the car body is expected to increase.

PRO-TEC currently supplies steel sheet products mainly to Japanese automakers in the U.S. and the "Detroit Three" automakers--Ford Motor Company (NYSE: F) (Dearborn, Michigan), General Motors (NYSE:GM) (Detroit, Michigan) and Fiat Chrysler Automobiles (Auburn Hills, Michigan).

The 50:50 PRO-TEC joint venture was established in 1990. The original PRO-TEC plant, which began operations in 1993, had a 600,000-ton-per-year capacity. Increased demand for galvanized steel led to a second galvanizing line that began operating in 1998, bringing annual production to more than 1.1 million tons. The facility's continuous annealing line was launched in 2013 with an investment of $400 million.

Separate from the PRO-TEC joint venture, U.S. Steel expects capital spending for its asset revitalization program to be about $1.2 billion from 2017 through 2020, according to its second-quarter 2017 earnings presentation. This includes $200 million for blast furnace operations, $400 million for steel making, $300 million for hot rolling and $300 million for finishing operations. Capital spending for 2017 is expected to be $200 million to $250 million. By 2020, the company plans to increase hot-rolled band production capacity by about 1 million tons from its current 2017 forecast of about 10 million tons. For related information, see July 27, 2017, article - Things Look Up for U.S. Steel Corp., AK Steel in Second-Quarter 2017.

Industrial Info is tracking nearly $664 million in active U.S. Steel projects, and more than $4.3 billion in Kobe Steel projects.

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