Nucor Continues Growth and Readies Texas Steel Mill For Expansion

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) recently approved a new melt shop for its Jewett steel mill. The new melt shop will include a new electric arc furnace that will replace five existing 60 ton furnaces which the company currently operates and will increase capacity by 33% up to 1.2 million tons annually.

The new melt shop is actually the second phase of a $200 million modernization of the Jewett steel mill, which started in the early 90's. In 1992 the company began plans for what turned out to be a $100 million first phase, which included a major rebuild of a 75 ton per hour gas-fired billet reheat furnace, a major rolling mill upgrade, and an automated stacking system. Lockwood Greene (Dallas, Texas) provided engineering services for the modernization. The second phase will also represent about a $100 million investment for the company.

Nucor is also spending $100 million, at two other steel bar group mills, as previously announced in February.

The U.S. steel industry is ripe for consolidation with a record number of bankruptcies and heavy competition from overseas. Nucor seems to have weathered the storm and is coming out on top, continuing its steady acquisition and growth mode over the past several years in contrast to the direction that the majority of the U.S. steel industry is moving. Many steel market indicators point to improving conditions with capacity utilization up and foreign imports down from recent highs.

Nucor recently signed an agreement to acquire the assets of Birmingham Steel for $615 million. The acquisition would add over 2 million tons a year to Nucor's steel making capabilities. Approval of the deal is expected by the end of the year. Nucor also has agreements to purchase Trico Steel Company, LLC (Decatur, Alabama), which is a partnership between LTV Corporation (50%), Sumitomo Metals Limited (Japan), and Corus Plc (Britain) for $120 million and Qualitech Steel SBQ LLC (Pittsboro, Indiana) for $37 million.