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SDI expansions, products bolster outlook

Keywords: Tags  SDI, Steel Dynamics, steel sheet, SBQ, special bar quality, rail, Mark Millett, Richard Teets Catherine Ngai

NEW YORK — Steel Dynamics Inc. (SDI) is forecasting growth ahead, citing a number of planned expansions slated to be completed in the fourth quarter coupled with improving construction and housing data, according to its top executive.

The Fort Wayne, Ind.-based steel producer, whose second-quarter net income plunged 34.9 percent from the same year-ago period, cited a challenging finished steel sector, among other reasons, for the difficulty experienced in the quarter (, July 17). But, even so, the finished steel segment has a lot of upside in the future.

"I think the (sheet) market is certainly firming and solid where it is and should remain stable there," president and chief executive officer Mark Millett said during an earnings call July 18. "I think obviously the market will dictate pricing going forward ... but certainly the current market would suggest that things are stable and slightly up for the rest of the year."

Three rounds of successful sheet hikes that started at the end of May have given steel producers slightly more breathing room, which Millett said has remained "intact as the supply and demand dynamic has resulted in extended lead times."

As a result, hot-rolled coil lead times at its mills are set for the end of August, while coated material is into September, Richard Teets, SDI’s president and chief operating officer for steel, said during the call.

Steel shipments in the flat-rolled division edged up 1.9 percent to 720,582 tons during the quarter. This included some 307,000 tons of hot-rolled, 102,000 tons of pickled and oiled, 24,000 tons of cold-rolled coil, 172,000 tons of galvanized, 89,000 tons of painted and around 26,000 tons of galvalume.

However, a challenging international marketplace remains a concern, causing buyers to be wary of stocking material, the company said. But bright spots include expansions in its bar and rail segments, particularly due to upgrades that it said are on track.

SDI pointed to its Pittsboro, Ind.-based mill’s expansion for smaller-diameter engineered bar products as being "on schedule" and "on budget," adding that it is slated for commissioning in November or December without material interruption to current operations. The project, which will add 325,000 tons of product, is on schedule to ramp up through 2014.

SDI is also adding premium rail production capacity at its structural and rail division in Columbia City, Ind., which will produce up to 300,000 tons of standard-strength and premium rail for the domestic industry. It will likely start in December and ramp up through 2014.

In terms of trade, the company said that it isn’t a "big enough rebar producer to really worry or participate" in a rumored trade case on Turkish rebar, adding that the recent oil country tubular goods filing would be beneficial to its sheet market (, July 3) even though it ships low volumes into the energy tubular market.

Looking forward, the company’s outlook is rosy. This year "is a little bit of an implementation year for us," Millett said. "We have a lot of good things going on in 2014."

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