Steel Dynamics Inc. (SDI) executives said the company’s Sinton, Texas, flat-rolled steel mill is now EBITDA positive.
“Sinton was showing significant operating improvement and was EBITDA positive in December, with a clear path to profitability in the first quarter of 2024 and thereafter,” Mark Millett, SDI’s co-founder, chairman, and CEO, said in a Q4’23 earnings call on Wednesday.
President and COO Barry Schneider also highlighted Sinton’s achievements on the call.
“Sinton and the team have achieved significant improvements in operating efficiency and consistency,” he said. “They averaged about 65% of capability in November and December, and have been running even stronger rates here in January.”
He said for Sinton, additional improvements in production are expected after the team makes changes to certain transformers at the end of Q1’24.
“Transformer problems have been unfortunate, but we have several fixes in the works,” Schneider said.
EVP and CFO Theresa Wagler emphasized that “for the last two years, unfortunately, Sinton has been negative from an EBITDA perspective.”
However, with Sinton being EBITDA positive starting in the first quarter, “that’s a significant swing in earnings itself as it relates to the ramp-up of Sinton.”
Millett said the company is “quite confident” it will achieve its 80% mill utilization operating target for this year.
He said they’re at “75% utilization today in January, and 80% is right around the corner.”
Value-add lines coming online
SDI said on the call that four previously announced value-add lines have started or will begin operations soon.
“Our four new flat-rolled coating lines have or will begin operating this quarter, increasing our higher-margin, value-added product mix by an additional 1 million tons,” Wagler said. This will make “our capacity in value-added and flat roll at 7 million tons on the coating lines.”
Two of the new lines, a 300,000-short-ton-per-year flat rolled galvanizing line, also with Galvalume coating capabilities, and a 240,000-stpy paint line, are at Sinton. These will begin “operating in the first quarter, supporting increased volume and margins,” according to Schneider.
The other new painting and galvanizing lines are at SDI Heartland in Terre Haute, Ind.
“Two of the lines have actually run first coils, one at Heartland, the paint line, and a coating line down in Sinton,” Schneider said.
He said the next two lines are in hot commissioning now, and they anticipate running the first coils in the “March time frame.”
“I envision prime sales in Q1 from the two lines that have run first coils, and we see all four of the lines making and shipping salable goods into the marketplace in Q2,” Schneider said.
Ethan BernardRead more from Ethan Bernard
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