Steel Dynamics Expects $1.5 Billion in Capex for 2023

Researched by Industrial Info Resources (Sugar Land, Texas)--After reporting record financial results for 2022, Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) announced last week it plans to spend $1.5 billion on capital projects in 2023, up from $909 million last year, the majority of which is allocated for the completion of four flat-rolled coating lines as well as aluminum projects. Industrial Info is tracking $2.9 billion worth of active projects from Steel Dynamics in North America.

In an earnings-related press release, Mark Millett, Steel Dynamics' chairman and chief executive officer, offered an upbeat outlook for the upcoming year, saying the company "is in a position of strength as we enter 2023." He pointed directly to the startup of a grassroot flat-rolled steel mill in Sinton, Texas, where operations are ramping up. The facility will produce 3 million tons per year of various flat-rolled steel products, utilizing the electric arc furnace (EAF) process, and Millett expects Sinton's annual utilization to be around 80% percent for 2023. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals project and plant databases can click here for a detailed project report and here for a profile on the Sinton mill.

In terms of ongoing growth projects, Millett noted the addition of four flat-rolled coating lines, all of which are currently under construction: two at the Sinton mill--a 300,000-ton galvanizing line and a 240,000-ton paint line--and another two lines at the company's Heartland facility near Terra Haute, Indiana. The projects are targeted for startup in the second half of 2023. Subscribers can see Industrial Info's detailed project reports on the Sinton Addition #1 and Addition #2, and Heartland projects.

Aluminum
Steel Dynamics also is advancing its production of aluminum flat-rolled products, as "a significant number of our flat-rolled steel customers are also consumers and processors of aluminum flat-rolled products," Millett said on the earnings-related conference call.

In July, the company announced plans to build a 650,000-ton-per-year, $1.9 billion aluminum flat-rolled mill, which was later selected to be in Columbus, Mississippi, along with two supporting satellite recycled aluminum slab centers--one in the Southwest U.S. and another in north-central Mexico. Click here for the mill's detailed project report, here for more information on the facility, and here for reports on the two recycling centers.

Millett provided an update on the total cost of the three projects, saying the amount has grown from its initial estimate of $2.2 billion to about $2.5 billion. "The increase is somewhat associated with now that we've truly defined the equipment costs, but we've also added scope ... we put in scrap processing and treatment of segregation at both the slab centers, which has increased that number a little."

Regarding the new aluminum mill, Millett said: "It's a state-of-the-art facility and will be serving the sustainable beverage and packaging markets ... the automotive sector and industrial sectors. Breakdown would be 300,000 tons of canned sheet, 200,000 tons of auto, and about 150,000 tons of industrial. All the principal equipment is on order, allowing for a pretty firm startup of the mill mid-2025."

He noted the mill is located along the Kansas City Southern (KCS) Railway line--which runs from Illinois to Mexico--allowing the company to bring slab up from Mexico and send material back down. He also added it sits on a Tennessee Valley Authority (TVA) (Knoxville, Tennessee) power grid, which could supply the mill with green energy.

Millett said the mill is designed to be equipped with two continuous annealing solutions heat-treating lines, a coating line, and downstream processing and packaging lines, adding the scope has been expanded "to include additional scrap processing and treatment to maximize recycled content."

According to Millett, the company's metals recycling arm, OmniSource, "is the largest North American recycler of non-ferrous products, including aluminum."

Earnings Results
Steel Dynamics' roughly 65% year-over-year jump in capex for 2023 comes on the heels of record financial results for full-year 2022. Record annual profit of $3.8 billion--up from $3.2 billion in 2021--was supported by record annual net sales of $22.3 billion, up 21% from 2021. The company also saw record total annual operating income of $5.1 billion, across all business segments.

In the earnings-related press release, Steel Dynamics said: "Higher net sales and earnings were driven by record product pricing and volume within the company's steel fabrication business." Millett said the non-residential construction market drove the segment's earnings, "resulting in record annual shipments of 856,000 tons and record 2022 operating income of $2.4 billion."

Millet also said the company's steel operations shipped a record annual amount in 2022--12.2 million tons--and featured a production utilization rate of 92%, excluding the Sinton mill.

Major U.S. steelmaker Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) also reported record results for 2022 and is looking toward a healthy steel market in 2023. For more information, see January 27, 2023, article - Nucor Upbeat About U.S. Steel Market in 2023.

Subscribers to Industrial Info's GMI Database can click here for a look at the reports for all of the projects discussed in this article, and click here for the related plant profiles.

Click here for a full list of active projects from Steel Dynamics in North America.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).