SDI targeting 80% capacity at Sinton by Q3
Steel Dynamics Inc (SDI) is aiming for its new $1.9-billion electric-arc furnace (EAF) mill in Sinton, Texas, to be operating at 80% capacity by the third quarter before hitting full capacity by year-end, chief financial officer Theresa Wagler said at Fastmarkets’ Steel Success Strategies conference in Miami Beach, Florida, on Monday June 6
“We’re getting to the point where we hope to be operating 24/7. We’re currently operating 5 days a week,” she said, noting that the steelmaker has benefited from having many customers online already at the site.
SDI previously said that Sinton’s new hot-rolled steel facility will have a production capacity of 3 million tons per year, of which 2 million tons was earmarked for consumption in the Southwest and West, and 1 million tons for Mexico.
The greenfield mill is designed to serve automotive assembly and heavy industrial facilities that are increasingly being built in the Mid-South, the Gulf Coast and the US South Atlantic region.
Raw materials strategy
Against a backdrop of surging prime scrap and pig iron prices over the past several months due to supply disruptions, many US steel mills have been forced to finesse their raw material purchasing strategies in a bid to cover the shortfall, exacerbated by the momentum shift towards electric-arc furnace production and away from blast furnace output.
SDI’s Butler, Indiana, sheet mill, for example, has reduced its need for prime grades of scrap like No1 busheling from 70% in 2018 to 40-45% in March this year, and still managed to hit the same quality of steel produced, Wagler noted.
“And what we’ve supplemented that with is not pig iron, which is more expensive and more scarce, but we’ve replaced it with something we call shred number one,” she said,
“It’s literally just additional processing. It might be as much as $15 per ton in additional cost but with the spread between obsolete scrap and prime scrap at $100 or more dollars per ton, and the availability is so much more broad, it’s fantastic.”
She added that this switch into low copper shredded scrap had already been rolled out at its Columbus, Mississippi, mill and a plan is now in place to do the same at Sinton. “We’ll put facilities around there that can help facilitate that,” Wagler said.
In terms of circumventing the tightness and high prices seen in the pig iron market this year following the Russia-Ukraine conflict, SDI has also embarked on what it calls a “pig iron diet.”
“Columbus generally likes to use maybe 20-25% pig iron for the quality of steel. We’ve been able to manufacture the same quality at only 15% pig iron. So we’re going to continue to be innovative, it’s what we do, and hopefully it’ll be a long-term solution.”
Russia’s war with the Ukraine has disrupted the pig iron supply chain and sent No1 busheling prices up by an unprecedented $175 per gross ton in the March monthly trade, forcing mills to scramble to cover their requirements.
Supplies of pig iron from Russia and Ukraine accounted for around 61% of total US pig iron imports last year.
Looking forward, Wagler said she did not believe there would be a shortfall in scrap supply despite all the new US capacity coming onstream as scrap is “elastic,” meaning generation levels usually respond to a high-price environment.
“We also believe in the next five years-plus you’re going to see a scrap reservoir in China grow significantly. So the big question is what will China do with that scrap reservoir? Will they allow it to come offshore and allow the rest of the world to benefit or not?” she said.
“I believe personally that there’ll be sufficient supply of scrap in the world to take care of the current situation.”