Steel Mills

SDI: New Mill to be Built in Texas or Louisiana

April 23, 2019

Steel Dynamics has narrowed the choice for its new flat rolled steel mill to either Texas or Louisiana.

The planned $1.8 billion EAF mill will have an annual production capacity of 3 million tons and include a 450,000-ton galvanizing line and 250,000-ton paint line with Galvalume capability. The mill will differentiate itself by producing higher strength and tougher materials for the energy and auto sectors, the company said, with capability for 84-inch wide, 1-inch thick, 100 ksi hot rolled coil.

Said SDI CEO Mark Millett during the company’s quarterly earnings call, “The mill will provide a significant freight cost savings and delivery time advantage to many customers in the U.S. and Mexican regions. This will provide a competitive supply chain allowing the new mill to effectively compete with imports flowing into Houston and the West Coast that have inherently long lead times and speculative price risk. Customers are excited and have already expressed interest in possibly locating facilities on or near our site.”

Responding to analysts who questioned if SDI is adding to an industry oversupply, Millett claimed the new mill will have capabilities beyond existing electric-arc-furnace flat roll steel producers and will compete even more effectively with the integrated steel model and foreign competition. “And to be clear,” he added, “we’re not just adding production capacity. We’ll have a differentiated product portfolio, we’ll have a significant geographic freight and lead time advantage, and we’ll have targeted markets.”

In fact, SDI said it is targeting three regional markets representing nearly 28 million tons of flat rolled consumption: approximately 8 million tons from the state region of Texas, Oklahoma, Louisiana and Arkansas, which has limited domestic regional supply and relies heavily on imports; 4 million tons from the underserved West Coast region, which also relies heavily on imports; and about 16 million tons from the growing Northern and Mid-Central Mexican region. “Based on their growing manufacturing base, we believe Mexican demand growth will continue to outpace supply, making this an even more attractive underserved market in the coming years,” Millett said.

Assuming timely receipt of required environmental and operating permits, SDI expects to begin facility construction in 2020 and to start operations in the second half of 2021. “I think the opportunity for the market is definitely in front of us. We just have to get the thing up and running by 2021,” Millett said.