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SDI’s rail, SBQ expansions on time: Millett

Keywords: Tags  Steel Dynamics Inc., SDI, Capacity expansions, SBQ, special quality bar products, standard and premium rail, Mark Millet, Dick Teets Thersa Wagler

CHICAGO — Steelmaker Steel Dynamics Inc. is making progress toward adding production capacity for both special bar quality (SBQ) and rail products, executives say.

A mill expansion at SDI’s Pittsboro, Ind., facility will add 325,000 tons of smaller-diameter engineered bar products, president and chief executive officer Mark D. Millett told investors during an April 18 earnings call.

"This project will make our facility the largest single-site supplier of engineered and SBQ bars in North America with an annual production capacity of 950,000 tons," Millet said, adding that the project is on schedule, on budget and will be commissioned in the fourth quarter without material interruption to current operations.

If SDI should need to produce bar at Pittsboro at full capacity, semi-finished blooms made at its structural and rail division in Columbia City, Ind., could feed the bar mill, effectively diversifying the rail division’s product mix and increasing cycle utilization.

"The SBQ facility is not necessarily going out and taking new market share," executive vice president Richard P. Teets said. Rather, "It’s a recovery of a market."

Fort Wayne, Ind.-based SDI shipped 112,821 tons of engineered bar in its first quarter ended March 31, a year-over-year decline of 28.4 percent.

Millett said construction has begun on a project to add premium rail production capability at SDI’s structural and rail division in Columbia City, which will "further diversify our markets with value-added products," he noted.

"We plan to eventually produce up to 300,000 tons of standard-strength and premium rail for North America’s railroad industry," he said. "Test material has already been approved by several of the major domestic railroads.

"The new rail capabilities will position us to become North America’s preeminent rail manufacturer for rail quality, straightness and dimensional control," Millett added. The ability to produce 320-foot lengths that can be further welded into 1,600-foot strings "reduces installation time and track maintenance costs for railroads."

Commissioning of the project, which is also on budget, should occur before year-end, he said.

"We’re adding very little overhead to put in that additional (SBQ) rolling line," chief financial officer Theresa E. Wagler told investors. "The same is true for the addition of premium rail, because we’re just adding equipment of about $26 million and the rest of the process stays basically the same."

SDI shipped 52,808 tons of rail during the first quarter, up 55.6 percent from the same period a year ago.

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