NEW YORK A second Turkish steel producer is considering setting up a scrap recycling facility and steel mill on the Gulf Coast, but that doesnt mean its a sign of things to come.
Houston-based Ozkan Steel USA LLC, the U.S. subsidiary of Turkish steel producer Ozkan Demir Celik Sanayi AS, is in the process of identifying a final location in southern Louisiana and expects to start the scrap recycling facility by June this year, a company executive confirmed.
M. Fehmi Nuhoglu, the companys vice president for investments and strategic development, also confirmed plans to build a 300,000-tonne-per-year steel plant that would cater specifically to the shipbuilding industry. It would cost $150 million.
Ozkan Steel USA is looking for a 50-acre site on the Mississippi River with a deepwater port.
Ozkan is the second Turkish producer to announce a U.S. scrap sourcing facility in recent months. In November, Colakoglu Metalurji AS set up a scrap facility and finished product trading house in Houston (amm.com, Nov. 12).
U.S. exporters were mixed on the moves by the two steelmakers from Turkey, the largest offshore consumer of U.S.-generated scrap.
"The U.S. is the place to be due to cheap energy and surplus scrap. I think more companies will come here. I would if I was them," one source said. "I am not sure how this will impact the flows, but it will. I would say the Turkish mills will even consider buying scrapyards in U.S."
However, Ozkans plans seem "preliminary," another source familiar with the developments said.
"Many companies look at coming into the U.S. to set up operations, but it takes time and a tremendous amount of preparation and work to make all the pieces come together," he said.
"It is no coincidence that Colakoglu commenced in November and after only two months in the market will do its first scrap cargo in February. It took a year and a half of preparation to get set up for that result. If any company moves too quickly and doesnt do thorough due diligence, they can make a big mistakei.e., ThyssenKrupp Mobile, and several Chinese projects that never got off the ground," the second source added.
A third source questioned Ozkans choice of location.
"I agree that it is an advantage to be on the water, but not for the same reason they are saying. Louisiana is not a scrap-rich area. There is a lot of competition on the lower Mississippi for scrap," he said.
"They would be better off to locate their plant farther north into the scrap-rich areas of the Midwest/Ohio Valley. I would rather be on the river there than in Louisiana, since they would be able to be competitive via barge and have local supplies of scrap by truck and carload," he added.
But its unlikely that the announced investments offer early signs of a rising trend, a fourth exporter said.
"I dont think it is an emerging trend; 300,000 tonnes per year is very small. It is a micro-mill. They must think they can make money at this niche marketshipbuilding. As far as a trend by Turks, I dont think this is a trend," he said.