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UPDATED: Nucor plans $1.35B steel plant in the Midwest

UPDATED: Nucor plans $1.35B steel plant in the Midwest


 


News is brought to you by Mr. Shailesh Karia


 


Published on 8th January, 2019


 


Nucor Corp. is scouting locations in the Midwest for a $1.35 billion plate-steel mill.
 


Nucor (NYSE: NUE) says the plant will employ 400 and be capable of producing $1.2 million tons of steel a year. The Charlotte-based steel company expects the plant to start operating in 2022.
 


With investments already announced, this puts Nucor’s total construction and expansion plans at more than $3.5 billion.The company says it is looking at sites in Indiana, Kentucky, Ohio and West Virginia.
 


“This investment is consistent with our drive to continue delivering sustainable, profitable growth and superior returns for shareholders,” said Nucor CEO John Ferriola. “We have a strong foundation to build upon as we advance our goal of leading in every market in which we compete.”
 


Nucor is the second-largest producer of plate steel in North America. But its goal is generally to be the top producer in all important steel categories it produces.
 


Larger product mix

The company already operates three plate mills, including one in Hertford, North Carolina. Ferriola told analysts in a conference call Monday the new plant will make Nucor the North American leader in plate steel.


 


The new Midwest plate mill will complement mills Nucor already operates in the South.


Nucor Corp


Leon Topalian, head of beam and plate products for Nucor, said it has decided to build in the Midwest because that region is the largest consumer of plate steel in the United States. “We expect to select a site for the new mill early this year,” he said.
 


In addition to increasing the company’s geographic balance for production, it will allow Nucor to produce plate products it does not currently offer. It will make cut-to-length, coiled, heat-treated, and discrete plate ranging from 60 to 160 inches wide. The plate will range from 3/16 of an inch to 14 inches thick.
 


Right now, no Nucor plant produces any plate steel more than 120 inches wide or 3 inches thick. So Nucor expects the new plant will expand its share of sales in markets outside the Midwest as well as in it.
 


Outstripping demand?

Analysts on the conference call questioned whether there was sufficient demand for such a large increase in steel plate production in the country. Analyst David Gagliano for BMO Capital markets noted that current projections show demand for plate steel growing from about 5.9 million tons in 2017 (the last complete year for which figures are available) to about 6.4 million tons by 2022. That means that Nucor`s new capacity would outstrip expected demand growth by about 700,000 tons.
 


And analyst Timna Tanners with Bank of America Merrill Lynch noted that JSW Steel is already building a 1 million ton-a-year mill in Texas.
 


Ferriola said locating the mill in the Midwest will mean lower shipping costs to customers in that market. And he said that Nucor`s David J. Joseph subsidiary has significant scrap steel available in the region, holding down the costs of raw materials for Nucor.
 


"We are confident that this is going to be a low-cost producer," he said. "The location of it is very strategic to us."


He also said Nucor expects stable growth for plate steel. And he added that current projections in the industry do not account for some potential growth. He cited, for instance, the possibility that there will be moves to upgrade infrastructure in the United States, and plate steel is key for bridge construction and for the heavy equipment industry.
 


Infrastructure needed

He said Nucor has no specific information that a much-talked about federal infrastructure bill is in the offing. But some activity in that sector is likely.
 


"We believe strongly, and I`ve said this several times, that something has to be done on the infrastructure on this country, and this would be a market that will be very directly supplying to so we have a high level of confidence that we will see something happening in infrastructure to add to supply that," Ferriola said.
 


He also said Nucor sees continued growth in the gas and oil industry, which consumes pipe made from steel plate.
 


Ferriola did not directly address the JSW plant, saying Nucor does not discuss competitors` plans.
 


"I will point out again ... we`re targeting the Midwest, and we will be building right there in the Midwest," he told Tammers. "So it will give us an incredible trade advantage on how we, in terms of the logistics, will cost and also being able to be closer to the customer — better on-time delivery, shorter lead times — and also great access to a very scrap-rich environment, some of which, frankly, we control."
 


Keybanc Capital Markets analyst Phil Gibbs asked if the mill was targeted to push imported steel out of the market more than at domestic growth.
 


"Frankly, it`s both," Ferriola replied.
 


 


 


 


Source : https://www.bizjournals.com//


 





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