NEW YORK The domestic stainless market might see little immediate impact from the start-up of ThyssenKrupp Stainless USA Inc.s melt shop at its Calvert, Ala., facility, although at full capacity it is expected to put pressure on the domestic stainless market, sources told AMM.
"Congratulations to them, but I dont think it changes the dynamics in the marketplace (in the short run)," one analyst said, adding that with the company having already been cold-rolling material at the facility since late 2010, its market behavior was unlikely to change dramatically. "They could have done that (grow market share aggressively) last year or this year."
Sources said it would likely take a while for the melt shop, which has the capacity to make 900,000 tonnes per year, to ramp up.
"It will take most of 2013 until they can reach any kind of capacity," the analyst said, adding that reaching full production could take two years.
A company spokeswoman didnt respond to a request for comment on how much production the company is targeting for next year.
With the start-up, the company will switch to producing its own feedstock rather than relying on slabs shipped from its European operations.
"They can fill up 50 to 60 percent of the melt shop with existing business," the analyst said.
The company has previously stated that about 340,000 tonnes of the melt shops production will go to Mexican subsidiary ThyssenKrupp Mexinox SA de CV in San Luis Potosi, while 525,000 tonnes will be processed in Calvert (amm.com, Dec. 10, 2010).
Once the companys internal needs are fulfilled, any extra capacity brought to market will pressure the domestic industry, sources said.
"My opinions been the same the whole timefrankly, that I think its not a good idea for the market as a whole to be built. But now that its built, its a very high-quality operation and theyre going to give the existing mills here a run for their money," one Midwest service center source said. "Now it will supplant some of the imports, but it has much more capacity than is being imported."
A competitive advantage for the facility will be its 72-inch-wide caster and 74-inch cold-rolling mill, which can make coils up to 72 inches wide.
"For some people, their wide caster and wide coils will be very nice," the Midwest source said.
The ramp-up of the facility will largely fall under Finnish stainless producer Outokumpu Oyj following its proposed merger with ThyssenKrupp AG stainless arm Inoxum Group, of which ThyssenKrupp Stainless is a subsidiary.
"Maybe Outokumpu says, Were not going to be that aggressive, " the analyst said, citing ThyssenKrupps previously stated goal of getting 25 percent of the domestic stainless market by 2014.