NEW YORK Overcapacity in the U.S. steelmaking industry will not discourage Turkeys Ozkan Demir Celik Sanayi AS from building a micro-mill and related scrap facility in Louisiana, a company executive told AMM, as the company plans to produce only niche products not currently available from domestic steel mills.
"We are not here for rebar or regular profiles," Ugur Ozkan, president of Houston-based subsidiary Ozkan Steel USA LLC, said in an interview. "We are entering this market not like the other steel producers; we are here to produce niche products."
Ozkan Steel USA, which confirmed plans to build a scrap facility, micro-mill and rolling facility at a yet-to-be-determined location on the Louisiana Gulf Coast in late January (amm.com, Jan. 24), will primarily serve consumers in the U.S. shipbuilding, transmission tower, trailer and mining industriessectors today largely served by imports from Europe rather than domestic operations, Ozkan said.
"We will never produce something thats already produced in the U.S. We will always be the first one," said M. Fehmi Nuhoglu, the companys vice president for investments and strategic development.
Ozkan agreed that the company is not aiming to displace domestic steel suppliers. "This is bad news for German producers, not (U.S. producers)," he said.
The multipart project is still in the preliminary stages, Ozkan said, but if everything goes according to plan the company hopes to select a site by June and bring the recycling facility online before the end of the year. Ozkan Steel USA would then begin construction on the steelworks in 2014, followed by the rolling mill, with the entire integrated facility slated for completion by the end of 2015.
The steel mill, which Nuhoglu said would have a maximum installed capacity of up to 1 million tonnes but would target an annual output of around 300,000 tonnes, is already in early talks with potential customers, Ozkan said.
The Turkish companys decision to build steelmaking capacity in the United States is driven partly by a desire to slash logistics costs, Ozkan said. Today, the company sources U.S. scrap for its Turkish operations and then ships finished product to consumers around the world, including many buyers in the Americas. By setting up its own domestic scrap and melting facilities, it will be able to reduce lead times, costs and carbon emissions, Ozkan said.
"Our rolling mills location must be in America," he said. "Theres no sense building (another) mill in Turkey. Scrap is here, our customers are here, so we need to be here."
Ozkan is the second Turkish steel producer to announce a U.S. scrap facility in recent months. In November, Istanbul-based Colakoglu Metalurji AS set up a scrap facility and finished product trading house in Houston, although the company does not have plans to build a mill at this time (amm.com, Nov. 12).
Some players in the metals sector have questioned Ozkan Steel USAs decision to locate in southern Louisiana, since the majority of ferrous scrap reserves are in the Midwest. But according to Ozkan, incentives from the state of Louisiana, as well as the states year-round warm weather, made the location a no-brainer.
"Our aim is to be in Louisiana. The weather conditions are suitable for 12 months (of) trading," Ozkan said, noting that the company intends to barge scrap from the Midwest to the new site. "We know the best-quality scrap comes from Chicago, but we are interested in Louisiana."