Most SDI Mills Continue to Achieve High Operating Rates

The company’s overall Q3 utilization rate was 93%, down two percentage points from the 95% rate achieved in Q2, SDI chairman, president, and CEO Mark Millett said on the company’s Q3 earnings conference call this week with analysts.

When asked about the company’s higher utilization rates compared to its industry peers, Millett gave three reasons for the contrast:
   •   SDI has a much more diversified product portfolio mix, allowing it much more optionality,
   •   It has some unique supply chain partnerships with customers that gives the company resilience,
   •   The pull-through volume of its downstream conversion facilities is quite considerable.

SDI’s downstream New Millennium Building Systems business, which it acquired in 2010, designs, engineers, and supplies structural steel joist and deck building systems. Millett said New Millennium will consume 800,000 tons of substrate this year, much of which is procured through SDI’s own mills, “So there’s massive pull-through there,” he explained.

Additionally, there are other pull-through volumes from other portions of its business. The Heartland facility in Terre Haute, Ind., converts 800,000 tons of sheet into light-gauge galvanized and cold-rolled steel products, and The Techs Division consumes 850,000–900,000 tons for its GalvTech, MetalTech, and NexTech operations in Pittsburgh.

“When there’s a need, we bring it in house to maintain utilization,” Millett said, resulting in utilization rates 10–15% higher than the industry in general.

The American Iron and Steel Institute (AISI) estimates the overall US mill capability utilization rate to be 79.3% year-to-date through Oct. 15.

Meanwhile, utilization rates at SDI’s newest sheet mill in Sinton, Texas, remain much lower. Its rates are not included in SDI’s 95% Q3 operating rate as it is still in the start-up phase — now in its ninth month. So far in October, the hot mill has been operating at about 65% of the mill’s overall 3 million tons of shipping capability. There have been days that have seen 85–86% production rates, Millett noted. The company expects the mill to achieve sustained 80% operating rates in 2023.

By Laura Miller, Laura@SteelMarketUpdate.com