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Released July 24, 2019 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The old real estate maxim of "location, location, location" can easily be applied to Steel Dynamics' (NASDAQ:STLD) (Fort Wayne, Indiana) decision to build a 3 million-ton-per-year, flat-rolled, electric-arc-furnace (EAF) steel mill in Sinton, Texas. The placement of the $1.9 billion mill will enable it to serve markets in both Mexico and the U.S., and to compete more effectively with steel imports, company executives said Tuesday. Steel Dynamics was studying five sites in the Southwest before announcing a final decision this week.
Industrial Info is tracking 37 Steel Dynamics projects worth $2.31 billion.
Click on the image at right for a graph showing Steel Dynamics project activity by state.
News of the steel mill took up much of the discussion during the company's second-quarter earnings conference call on Tuesday. Located about 30 miles northwest of the port of Corpus Christi, Texas, the steel mill will be set within Steel Dynamics' targeted Southwest U.S. and Mexico market regions, according to the company.
Significantly, it will have proximity to the four-state area of Texas, Louisiana, Oklahoma and Arkansas, along with the Western U.S. and Mexico, representing about 27 million tons of flat roll steel consumption, according to the company. The facility will benefit from on-site access to two class I railroads, transloading opportunities with a third class I railroad, proximity to a major U.S. highway system and access to the deepwater port of Corpus Christi.
"Sinton lies just 190 miles from the large steel-consuming city of Houston and 300 miles from the growing Monterrey, Mexico, region. It also provides advantageous capability to access the West Coast," Steel Dynamics Chief Executive Officer Mark Millett said during the earnings conference call with industry analysts.
Millett said the site will "provide a significant freight benefit to most of our intended customers," who will "be able to order on a much shorter lead time basis, providing a significant delivery time and working capital advantage. We have the opportunity to provide steel in terms of weeks, not months."
As such, he continued, the new mill will be able to compete with "imports thrown into Houston and the West Coast that inherently have long lead times and suspected of pricing risks."
The steel mill will have a casting capability of up to 84 inches wide and up to a 5.5-inch cast thickness, making it the world's largest thin-slab facility, according to Steel Dynamics. The steel mill also will have the capability to produce advanced high strength steel grades, and the capability to produce up to 52.5-ton coils for some energy customers.
Steel Dynamics Chief Financial Officer Theresa Wagler said during the company earnings conference call that the project's estimated $1.9 billion price tag is based on an "expanded project scope to accommodate the differentiated 84-inch width and associated coil handling requirements. We also increased the galvanizing line from 450,000 tons to 550,000 tons."
Wagler said the project will receive about $150 million in local incentives over roughly 10 years. The new mill is expected to provide 600 jobs.
Construction is expected to kick off in early 2020, followed by the start of operations in midyear 2021. For more information, see Industrial Info's project report.
Steel Dynamics reported net income of $194 million for second-quarter 2019, down from $362 million in second-quarter 2018. Millett cited a "challenging steel pricing environment," adding that a "weakening scrap price environment, coupled with steel inventory destocking led to steel buying hesitancy."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Industrial Info is tracking 37 Steel Dynamics projects worth $2.31 billion.
News of the steel mill took up much of the discussion during the company's second-quarter earnings conference call on Tuesday. Located about 30 miles northwest of the port of Corpus Christi, Texas, the steel mill will be set within Steel Dynamics' targeted Southwest U.S. and Mexico market regions, according to the company.
Significantly, it will have proximity to the four-state area of Texas, Louisiana, Oklahoma and Arkansas, along with the Western U.S. and Mexico, representing about 27 million tons of flat roll steel consumption, according to the company. The facility will benefit from on-site access to two class I railroads, transloading opportunities with a third class I railroad, proximity to a major U.S. highway system and access to the deepwater port of Corpus Christi.
"Sinton lies just 190 miles from the large steel-consuming city of Houston and 300 miles from the growing Monterrey, Mexico, region. It also provides advantageous capability to access the West Coast," Steel Dynamics Chief Executive Officer Mark Millett said during the earnings conference call with industry analysts.
Millett said the site will "provide a significant freight benefit to most of our intended customers," who will "be able to order on a much shorter lead time basis, providing a significant delivery time and working capital advantage. We have the opportunity to provide steel in terms of weeks, not months."
As such, he continued, the new mill will be able to compete with "imports thrown into Houston and the West Coast that inherently have long lead times and suspected of pricing risks."
The steel mill will have a casting capability of up to 84 inches wide and up to a 5.5-inch cast thickness, making it the world's largest thin-slab facility, according to Steel Dynamics. The steel mill also will have the capability to produce advanced high strength steel grades, and the capability to produce up to 52.5-ton coils for some energy customers.
Steel Dynamics Chief Financial Officer Theresa Wagler said during the company earnings conference call that the project's estimated $1.9 billion price tag is based on an "expanded project scope to accommodate the differentiated 84-inch width and associated coil handling requirements. We also increased the galvanizing line from 450,000 tons to 550,000 tons."
Wagler said the project will receive about $150 million in local incentives over roughly 10 years. The new mill is expected to provide 600 jobs.
Construction is expected to kick off in early 2020, followed by the start of operations in midyear 2021. For more information, see Industrial Info's project report.
Steel Dynamics reported net income of $194 million for second-quarter 2019, down from $362 million in second-quarter 2018. Millett cited a "challenging steel pricing environment," adding that a "weakening scrap price environment, coupled with steel inventory destocking led to steel buying hesitancy."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
