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Lull not curbing SBQ expansions: Nucor, SDI

Keywords: Tags  special bar quality, SBQ, 2012 shipments, production capacity expansions, Nucor, Steel Dynamics, SDI, James Frias James Darsey

CHICAGO — Nucor Corp. and Steel Dynamics Inc. (SDI) are working to boost special bar quality (SBQ) production capacity despite weaker shipments in 2013 and no expectations of an immediate recovery.

SDI shipped 535,882 tons of engineered bar last year, down 15.6 percent from nearly 634,964 tons in 2011, the Fort Wayne, Ind.-based company said Jan. 29.

Charlotte, N.C.-based Nucor, which doesn’t break out hot-rolled bar sales from all steel mill shipments, shipped 492,000 tons of cold-finished bar last year compared with 494,000 tons in 2011.

Nucor plans to spend roughly $150 million this year to expand production capacity at its bar mills in South Carolina, Nebraska and Tennessee, chief financial officer James D. Frias said during the company’s Jan. 29 conference call with investors.

The investments would yield an additional 1 million tons of capacity, Frias said. "We’ll be able to ship products that we don’t make today," he said.

The expansion projects are slated for completion this summer and fall, with others planned to roll out in mid-2014, Nucor executive vice president of bar products James R. Darsey said.

Demand has been consistent, if muted, from the automotive, heavy truck and agricultural equipment sectors, Nucor president and chief executive officer John J. Ferriola noted.

At SDI, added production is expected to come online at its Pittsboro, Ind., operations before year-end, president and chief executive officer Mark D. Millett said Jan. 29 during the company’s quarterly earnings call. The expansion will increase utilization at the company’s Columbia City, Ind., structural and rail facility, which will supply billets and blooms for the Pittsboro plant.

The Pittsboro mill is focused on 3- to 5-inch diameter bar, which Millett said makes up some 50 to 55 percent of the domestic SBQ market. The total market equals 8 million to 10 million tons of U.S. consumption; SDI could add market share of 300,000 to 350,000 tons.

Pittsboro had been shipping up to 150,000 tons per quarter since 2011, but fourth-quarter 2012 shipments fell below 100,000 tons, so the facility is running furnaces at off-peak hours and doing other things to contain costs, SDI steel operations president Richard P. Teets said.

"(Melting and rolling schedules) are not full, and I can’t tell you what it’s going to take to get there," he said.

One off-road equipment maker told Teets that his business was "just more ho-hum" and expects that to continue throughout 2013. The good news is that SBQ inventories seem to be in line throughout the supply chain.

"We weren’t taking orders in December ... that were really for January consumption," Teets said, "so there wasn’t a wild stock-up-at-the-end-of-the-year type of ride."

The move by producers to boost SBQ capacity is in response to a quicker than expected ramp-up in automotive and other end markets, and represented an opportunity for producers to right-size melting capacity that had been curtailed when the recession hit, as well as to modernize and upgrade equipment.

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