Steel Market Update spoke with ThyssenKrupp Steel USA earlier this week regarding when the new U.S. mill would begin rolling their first hot rolled coils. The following is from our article in our Steel Market Update newsletter published earlier this week:

If you are an old-timer or just love steel mills you can’t be but excited…

You can hear it in their voices. The excitement, the anticipation and the nervous energy that comes with bringing up the first new full scale mill in the United States since Burns Harbor was brought up by Bethlehem Steel in the 1960’s.

Steel Market Update had the opportunity to speak with Bob Holt, VP of Sales & Marketing of ThyssenKrupp Steel USA who on Wednesday spoke to us from the new slab facility in Brazil. Here is something those of us in North America need to remember: it is not just the Calvert, Alabama mill which is coming alive over the next few weeks and into the following months, but there is a new slab mill which will be breathing fire in Brazil at close to the same time. The combination of the two will represent the total experience which will be TK USA.

According to Mr. Holt, the mill in Brazil is projected to make their first slabs for the U.S. sometime during the month of August. If successful those first slabs should be received at TK in Alabama during the month of September.

Prior to the slab shipments from Brazil the plant in Alabama will be quite busy beginning to heat and roll the slabs they have from their parent company in Europe. During the first few months 2010 TK has received a minimum of 22,000 metric tons of slabs with at least one vessel on the water and another soon to be loaded. From a slab perspective the mill is ready to come alive.

ThyssenKrupp has narrowed the timing of the rolling of their first slab to sometime in the first half of July. This is close to the end of June/early July timeframe we had been told during our visit to the mill back in March.

Bob Holt advised SMU, once the hot mill has started the first 4 to 5 months will be spent qualifying the equipment. From there, during the fifth through the eighth month the equipment will go through an “optimization” period during which the limits (heaviest and lightest gauges, narrowest and widest widths as well as special chemistries) of the mill will be pushed.

After eight months the hot mill should be ready for full scale production.

SMU knows the financial analysts out there are calling for doom and gloom with this new mill coming on-stream. So, I will repeat what Mr. Holt told SMU – the hot mill could take up to eight months before it is ready for full scale production.

When Will the Mill Begin Delivering its First Commercially Acceptable Product?

The question on everyone’s mind is when will the mill start making and delivering commercially acceptable hot roll against customer’s orders. Mr. Holt tried to be very careful with his answer as with any new piece of equipment there is a production learning curve and break-in period which we articulated above. The belief of TK at this time is the first commercial shipments should happen some time during the month of August.

A steel analyst recently sent a note to their clients stating the price level at which the first TK hot bands will be sold was going to be $25 per ton below the existing prices at the time of shipment. Mr. Holt assured SMU that was not a correct statement. TK position is they will be commercially competitive with prices in the market.

Bob assured SMU they had a sufficient order book for the first three months of the life of the new mill.

Mr. Holt made it quiet clear to SMU, “We don’t want to take 4 million tons to the market in our 1st year.” We discussed what he meant with this comment and essentially TK understands the potential of this mill to destabilize the domestic steel market. They expect to be careful as they bring up equipment and begin shipping prime steel into the markets which they have identified as key to the mills ultimate success. This includes service centers, pipe and tube manufacturers, construction products, etc. prior to their ultimate goal of supplying exposed sheet products for the automotive and appliance industries.

Status of Individual Mills

The ThyssenKrupp mill is not just a couple of reheat ovens and a hot mill. The Pickle & Tandem mill (P&O to Cold Rolled) is forecast to come online in August to early September of this year.

The first of what will ultimately be four coating lines (one will be a CAL line in the beginning – cold roll annealing line) will come online during late 4th Quarter 2010. The second galvanizing line will then be ready in early 2011.

The CAL line (cold rolled annealing) is scheduled to come online during the first quarter 2011. The number 4 coating line – which will be a dual pot and will be able to produce Galvalume and galvanized will be up at the end of the 1st Quarter 2011.

SMU Less than subtle attempt to watch early production runs on the new hot mill

The United States is going to witness a sparkling new mill begin rolling slabs to hot band, pickled, cold roll and galvanized over the next six months. For those who love large pieces of equipment and the grandeur of a steel mill the coming of ThyssenKrupp, Alabama will be a sight to behold.

SMU has not been shy about dropping hints with various members of the ThyssenKrupp Steel USA staff and management of our desire to witness the hot mill in action once the first burps and spurts are worked through.

Steel Market Update was fortunate enough to have visited the mill within the past couple of months. We witnessed the thousands of workers feverishly working on a all of the above mentioned mills as well as the Stainless Mill which will be housed next door to the flat rolled mill in the Alabama complex. We are looking forward to witnessing the replacement of the construction workers with real steel workers.

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