Steel Mills
JSW USA Mills Suffer Losses
Written by Sandy Williams
January 25, 2020
JSW Steel USA reported dismal results for the third quarter of 2020, but the company expects losses will be reduced substantially in the fourth quarter.
JSW Steel – Baytown produced 70,479 metric tons of plate and 14,669 MT of pipes during the third quarter of 2020, reported JSW Steel India. The plate mill operated at a 29 percent capacity utilization and the pipe mill at 11 percent capacity during the quarter. The division reported an EBITDA loss of $12.5 million for the quarter due to lower production and an inventory writedown of approximately $1.77 million.
The Baytown plate mill has 1.2 million tons of annual capacity and rolls plate from slab. The pipe mill at Baytown has a 450,000-ton annual capacity. Plans for a $500 million electric arc furnace and slab caster were put on hold in August 2019 due to market conditions and the current policy environment.
During the earnings call it was noted that Phase 1 of the project is completed and the benefits are beginning to be realized. Work is expected to resume on Phase 2 with completion by the end of the next financial year, resulting in a significant turnaround for the Baytown plate and pipe mill.
JSW Steel – Ohio produced 74,272 MT of hot rolled coil in the quarter. Sales volume was 48,611 MT. EBITDA was reported as a loss of $25.19 million, including a writedown of $2.02 million.
The mill in Mingo Junction, Ohio, was acquired by JSW Steel in June 2018 after sitting idle for 10 years. The hot strip mill was restarted in July 2018 and the EAF/slab caster in December of 2018. The EAF is capable of producing 1.5 million tons per year.
JSW plans to quickly ramp up production in Ohio and achieve positive EBITDA results in the next financial year.
“In the case of Ohio, what we are planning to do is spend some money on the electric arc furnace modernization. So, that EAF modernization will take 10 to 11 months’ time,” said JSW CFO M.V.S. Seshagiri Rao. “Pending that, with the existing equipment, we are trying to stabilize ramp-up capacity and take the benefit of improving U.S. market and pricing. There we will reduce the losses, and we’ll make it EBITDA positive next year. I think the following year, we’ll be able to make money in Ohio.”
Sandy Williams
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