Ternium on Track for Early June Start at New HSM, Selling Aug-Sept: Sources

Ternium did not respond to a request for comment for this article.

But the company is now taking orders for some items out as far as August-September, sources said.

One manufacturer source said the company had offered him material for August-September delivery at a base price of approximately $1,360 per ton ($68/cwt).

Steel Market Update’s average US hot-rolled coil price stands at $1,410 per ton, a record high. SMU does not officially track prices for Mexican hot-rolled coil, although they tend to trend with prices in the U.S. once adjusted for currency.

Ternium’s new mill will gradually ramp up into different products and sizes, some that are made at existing Ternium mills and others – such as coils more than 72 inches wide – that are not, sources said.

The company is in the meantime staging slabs of various sizes and chemistries to support its ramp-up schedule, they said.

The new hot mill is expected to have an annual production capacity of 4.4 million tons of hot-rolled products, 1.6 million tons of cold-rolled products, 830,000 tons of hot-dipped galvanized products and 120,000 tons of pre-painted products, according to Ternium’s website.

SDI

The timeline outlined above puts Ternium on track to start up its new mill slightly before Steel Dynamics Inc. (SDI) fires up its new melt shop and hot rolling mill in Sinton, Texas.

The Fort Wayne, Ind.-based electric-arc furnace (EAF) steelmaker has said that mill, slated to have capacity of 3 million tons per year, is expected to come online in late summer.

SDI will start up Sinton’s coating lines ahead of the hot end.

The Sinton campus will feature two coating lines: a 550,000-ton-per-year galvanizing line with Galvalume capability and a paint line with annual capacity of 250,000 tons, SDI President and CEO Mark Millett said during an earnings call with analysts earlier this month.

“We plan for these two value-added coating lines to begin operating by the end of the second quarter,” he said.

The second quarter ends at the end of June.

Who’s Afraid of 7 Million Tons?

The two mills combined could add approximately 7.4 million tons a year of new capacity to the North American market.

But while Ternium seeks to establish regular business with U.S. customers, it intends to focus primarily on serving the Mexican market, industry sources have said.

And SDI has stressed that many of its tons will be fed into downstream products – including not just its own coating lines but also 1.3 million tons per year that have already been earmarked for customers that have agreed to co-locate on the Sinton campus.

Market participants remain sharply divided on their outlook for U.S. steel prices for the balance of the year.

Some sources think that prices will continue to move upward – or at least to be supported at high levels – thanks to strong consumer demand, high prime scrap prices, lean customer inventories and extended lead times.

They also reason that the hot-rolled coil market will not be swamped by the new capacity because many of the new tons will be aimed at displacing imports or will be used to make value-added products, such as Galvalume, that continue to see strong demand.

Those sources also point out that other expansions – notably Nucor Steel Gallatin in Ghent, Ky., and North Star BlueScope’s in Delta, Ohio – won’t have a big impact on the domestic steel market until next year.

But others think that supply, most likely a combination of increased domestic capacity and increased imports, will catch up with demand later in 2021 and send prices lower.

While some in the latter camp predict that prices will come down slowly, others fear that any correction could be violent given the notorious cyclicality of the steel industry.

By Michael Cowden, Michael@SteelMarketUpdate.com