Futures

Nucor: Brandenburg Ships First Customer Orders

Written by David Schollaert


Nucor Corp. shipped its first customer order from its new $1.7-billion plate mill in Brandenburg, Ky., on Jan. 25, Allen Behr, executive VP of plate and structural products, said on an earnings conference call with analysts on Thursday, Jan. 26.

Nucor“We are sitting here today exactly where we wanted to be,” said Behr when addressing Brandenburg’s ramp-up. “So we are on the board, and we are ready to go.”

The Charlotte, N.C.-based steelmaker also confirmed that mill’s ramp-up is on schedule, and will reach run rates capable of capacity by end of year.

The Brandenburg plate mill — slated to have an annual capacity of 1.2 million tons — is projected to reach between 500,000 and 600,000 tons of plate shipped by the end of 2023. Nucor expects between 10,000 – 20,000 tons shipped in Q1, followed by roughly 100,000 tons in Q2, 200,000 tons in Q3, and 200,000 tons in Q4.

Behr cautioned that the market would ultimately dictate part of that schedule.

He also stressed that the strategy around the new plate mill was to “build the most broadly capable mill in the Western hemisphere, and put it in the biggest plate market in the US.”

“We have built the capability set, and we intend to go use it,” he added.

Nucor looks to capitalize on its efforts to decouple discrete plate from hot-rolled coil by differentiating their plate product mix, a key driver, Behr said to the strong pricing exhibited by domestic plate.

“Our prices in plate are not elevated, and I do look forward to them returning to normal levels closer to $2,000 a ton,” said Leon Topalian, Nucor’s chair, president, and CEO. He had been asked about plate’s current demand environment, and whether elevated prices would normalize, or would the decoupling from its relationship with hot band continue.

“We don’t think they are elevated at all,” he added. “We think we are in a supply-and-demand environment, and in a commodity business, demand will always dictate pricing.”

“We bifurcated our order book this year,” commented Behr. “We separated coil and cut-to-length plate from discrete plate to make sure that a highly differentiated product like discrete plate—that can only be made at the plate mill—collects the premium that is warranted vs. some of the other products that can be more influenced by hot band pricing. And so that has been largely successful if you follow the pricing of both of those.”

Currently, Nucor’s plate order book is roughly two-thirds discrete and one-third cut-to-length, and Brandenburg will be primarily a discrete plate mill.

Once Brandenburg is through the ramp-up phase, Nucor’s discrete plate product mix will increase to three-quarters discrete.

By David Schollaert, david@steelmarketupdate.com

David Schollaert

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