Steel Mills

SDI Sinton to Hit Full Capacity in late 2H, Expansion 'Likely Is Unlikely': CEO

Written by Michael Cowden

Steel Dynamics Inc. (SDI) expects that its new electric-arc furnace sheet mill in Sinton, Texas, will reach a run rate close to its rated capacity in the second half of the year, the company’s top executive said.

“We are anticipating the final piece of the jigsaw to be put in place here in the next few days, if not the next week or so,” SDI President and CEO Mark Millett said on a quarterly earnings conference call on Tuesday.

SDIThe Fort Wayne, Ind.-based steelmaker has said the entire mill – which sports capacity of three million tons per year – will officially start up by the end of February following “challenges” that prevented its hot end from being fully commissioned by the end of 2021.

SDI has in the meantime been running its hot strip mill with slabs produced at other company facilities or purchased from third parties, Millett said.

“The actual specific ramp over the next three months is difficult to predict,” he said, estimating that Sinton would be running at full capacity late in the third quarter or, more likely, in the fourth quarter.

The Sinton mill could in theory produce more than three million tons per year given that its hot strip mill has capacity of 4.5 million per year. The rate limiting factor is its caster, Millett said.

“The addition of a second caster likely is unlikely, but we have designed that facility to add somewhere between 1 million-1.5 million tons of additional capacity. So … the capability is definitely there,” he said.

While it might be uncertain whether or when SDI expands Sinton, one thing that is certain is the mill’s freight advantage. Freight from Sinton to the West Coast is approximately $55 per ton, well below that of other flat-rolled producers east of the Rocky Mountains. Sinton also sports a freight advantage shipping into Monterrey, Mexico – $40 per ton compared to the approximately $100 per ton it would cost from a northern mill, Millett said.

SDI executives were also asked on the call whether they planned to buy or expand rebar capacity. That question comes on expectations that infrastructure spending will benefit rebar more than flat products and as competitors such as Nucor Corp. and Commercial Metals Co. are boosting rebar capacity.

Millett poured cold water on that speculation. “In all honestly, rebar is not a focus of ours. … Rebar is not a target, so to speak, of any major growth.”

SDI will instead focus on expanding in value-added businesses – notably when it comes to processing capabilities on the flat-rolled side. “It’s an intriguing marketplace out there, and we’re seeing a pipeline that is full of transactional opportunities today,” he said.

By Michael Cowden,

Michael Cowden

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