Steel Sector Sends Metals & Minerals Industry Above the $20 Billion Mark for 2007 Planned Construction Starts

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Researched by Industrial Info Resources (Sugar Land, Texas). The U.S. Metals & Minerals Industry is experiencing strong growth in capital spending activity related to planned project construction starts in 2007. Currently, there are 686 Metals & Minerals projects totaling $21.7 billion that fall into this category. Geographically, the Southeast, Great Lakes, Rocky Mountain, and West Coast regions lead the nation in Metals & Minerals Industry spending, each with more than $3 billion. The Midwest and Southwest regions are no slouches with $2.5 billion and $1.8 billion in planned construction starts respectively.

Click on the image at right to view a chart showing the breakdown of project spending by market region.

One of the main reasons for the jump in activity this year is a healthy steel sector. The consolidation trend of the last five years has resulted in a leaner meaner sector. This coupled with strong corporate profits has spawned increased capital expenditures, including grassroot mill construction, expansions, modernizations and upgrades, as players look to increase North American market share and improve niche market capacity. Grassroot steel mill activity in the U.S. was almost unheard of five years ago, but lately, a series of major grassroot carbon and stainless mill construction projects starting with SeverCorr (Mississippi) are under development. In addition, a half dozen grassroot steel pipe mill projects are scheduled to begin construction this year at sites from California to Mississippi.

Project spending for the steel sector accounts for more than 40% of the total Metals & Minerals Industry capital spending. That’s up from its historical average over the last decade of about 25%. Currently, there are 210 steel sector projects totaling $8.7 billion that have already started construction or are scheduled to begin construction before the end of 2007. At the top of the list is a plan by ThyssenKrupp (Dusseldorf, Germany) to construct a $3.7 billion grassroot steel mill complex in the U.S. The company held a much-anticipated press conference last week in Alabama, with state and local officials, announcing the selection of a site north of Mount Vernon, Alabama, with barge access on the Tombigbee River. Pending permit approvals site work could begin as early as Fall 2007. When complete, the massive project, which includes 7 million square feet of building space, employing 2,700, will produce in excess of 5 million tons per year of carbon and stainless steel, catapulting it into the North American market as a major player.

ThyssenKrupp is not the only foreign investor looking at the North American steel market lately. JSW Steel Limited (Mumbai, India) announced that it was studying a similar sized facility in the Southeastern U.S. To the north, earlier this year, Essar Global Limited (Mumbai, India) acquired Canadian producer Algoma Steel for $1.58 billion, and then subsequently acquired Minnesota Steel LLC in the U.S., which is planning a $1.65 billion iron ore mine restart and integrated steel mill complex in Minnesota.

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