NEW YORK Commercial Metals Co. (CMC) has
received permitting to increase capacity at its Arizona rebar
micro-mill, according to a top executive.
We did recently get the permits to expand that
(mill), Carey Dubois, vice president and treasurer, told
participants at Dahlman Rose & Co.s third annual
Global Metals, Mining and Materials Conference in New
The company will not be installing new equipment, a company
source told AMM
, but it will be increasing
productivity beyond the level initially permitted.
The Mesa, Ariz., mill has a nameplate capacity of about 300,000
tons, although it managed to produce 306,000 tons in fiscal
2012, Dubois said, declining to comment further on the higher
productivity levels being targeted following the receipt of
President and chief executive officer Joseph Alvarado had said
in October that CMC was seeking permitting to grow capacity at
the mill, noting at the time that the company felt it had
taken full advantage of everything that (mill) was
designed into it, and then some (
amm.com, Oct. 25
The Irving, Texas-based steelmakers plans in Arizona
come at a time when the company is expecting an uptick in its
key end marketnon-residential construction.
We have begun seeing a positive trend in the residential
sector. We believe that the sector is a strong leading
indicator for the non-residential sector. As we start up that
up-cycle, there should be an upwards trajectory, Dubois
said, adding that while demand is still somewhat subdued after
the last downturn, past recessions have historically been
followed by a five- to seven-year bull market for steel.
CMC is also looking to make some changes in its scrap business
as it moves to become more integrated.
Weve made some changes there and you should expect
to continue to see some changes there, probably more in
supporting our mills and probably less on the retail
side, Dubois said, noting in a presentation that about 40
percent of CMCs scrap goes to its own mills
Meanwhile, the company expects scrap prices to continue to
rebound as China, a significant buyer pre-recession, comes back
into the market.
I think well continue over time exporting there,
and I think it will get the scrap prices back up to normalized
levels, Dubois said, adding that, nonetheless, prices are
unlikely to return to heights seen before the downturn.
I dont think well see the margins that
weve seen in the past. Everything was going right and,
obviously, there was a huge demand for steel, he said,
pegging margins in a $20- to $40-per-ton range going forward
compared with pre-recession levels of as high as $100 per
The company still believes its focus on the long products
market, in general, is a strategic advantage, as the sector has
seen higher profitability compared with the flat-rolled sector
over the past years, he said.
Theres been more pricing discipline and weve
been able to benefit from that, Dubois said.
CMC produces angles, channels, flats, rounds, squares, rebar,
post and special shapes, according to its website.
Responding to an audience question about product
diversification, Dubois said the company was unlikely to move
into other product segments like special bar quality (SBQ) or
flat-rolled steel anytime soon.
Im not sure that were ever going to get there
in a big way. We like the space were in; we understand
it, he said.