Steel Prices in U.S. Soar, Steel Dynamics to Expand Flat-Rolled Operations

Researched by Industrial Info Resources (Sugar Land, Texas)--It's a good time to be a steelmaker in the U.S. Steel prices are soaring, and companies are having problems meeting increased demand from end users. This low supply and high demand, along with former President Donald Trump's 25% tariff on imported steel, have been boosting domestic prices. As of late February, U.S. steel prices had risen 160% since last August, according to news media. Despite some uncertainty on whether the Biden administration will maintain the Trump-era tariffs, some steel companies are expanding operations. To this end, U.S. steelmaker Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) said last week it will be expanding flat-roll operations with new coating lines in the southern U.S. and Midwest.

Steel Dynamics made about $1.2 billion in capital investments in 2020, most of which went into growth-oriented projects. About 75% went into the company's new flat-rolled steel mill in Sinton, Texas, near Corpus Christi. Construction on the Sinton facility began in late 2019 and is expected to be completed this summer. The 3 million-ton-per-year mill will produce a variety of flat-rolled products, including hot-rolled, cold-rolled, galvanized and painted steel in order to serve the energy, automotive, construction and appliance sectors. For more information, see Industrial Info's project report.

The company is pleased with the progress being made at the Sinton site, and due to this success, is further expanding its flat-rolled coating operations. Mark Millet, chief executive officer of Steel Dynamics, said, "Given the success of our Sinton construction team, we are planning to add two additional value-added flat-roll coating lines more quickly than originally planned. The site is yet to be determined, but it will be located in the Southern U.S." The additions will help provide the Sinton facility with increased diversification and high-margin product capabilities, according to the company.

According to Steel Dynamics, the coating lines in the south will be composed of a 300,000-ton flat-rolled galvanizing line and a 240,000-ton paint line. Site location and selection are underway, and the company expects the new lines to begin operating in the second half of 2022. Steel Dynamics says it plans to invest about $225 million in these new lines.

The company also plans to invest $175 million to $200 million in two new flat-rolled steel coating lines in the U.S. Midwest to support its flat-rolled operations in the region. The lines will comprise a 300,000-ton galvanizing line and a 240,000-ton paint line to help differentiate Steel Dynamics' supply chain. The company also expects these lines to be operational in the second half of 2022.

Click on the image at right for a graph detailing active steel mill projects by market region.

There is definitely a growing U.S. market for steel. According to the U.S. Census Bureau, in the last quarter of 2020, unfilled orders for steel were at the highest level in five years, and inventories were near a 3 ½-year low. While consumer orders for the products of steel-using factories in the U.S. plunged in the first half of 2020 due to the COVID-19 pandemic, several companies' order books are similar to or above pre-pandemic levels, driving steel demand. According to Reuters, record-high steel prices in the U.S. are turning into a bonanza for steelmakers, which have seen their shares rise more than 65% since last August. U.S. steelmaker Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) expects to post its highest-ever first-quarter profit this year.

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.