NEW YORK With Nucor Corp.s capital expenditures slated to exceed $1.1 billion in 2013 and a range of projects coming online this year, the steelmaker is positioning itself to take advantage of new market opportunities in the coming years, president and chief executive officer John Ferriola told investors April 18.
"Our teams continue to push through our growth initiatives," Ferriola said during a conference call to discuss its first-quarter earnings report. "These investments have dramatically increased Nucors long-term earning power."
The Charlotte, N.C.-based companys 2.5-million-ton direct-reduced iron (DRI) facility in Louisiana is set to start production late in the third quarter following delays due to severe weather during the first quarter.
The facility will give the company increased flexibility in controlling its input costs, Ferriola said, although DRI production will add $15 to $20 per ton to the cost of production due to refractory costs and extra operating costs.
"Itll displace pig iron and it will displace prime scrap (to the extent that it is used). ... One of the great advantages this is going to give us is the flexibility to make good economic decisions on iron units as we move forward," Ferriola said. "Simply put, we see this strategy as a game-changer for Nucors cost structure for high-quality iron units."
The Louisiana facility also has the infrastructure and support in place for a second DRI unit, Ferriola said.
The company also is adding close to 1 million tons of special bar quality (SBQ) capacity over the next couple of years, with expansions under way at its facilities in Memphis, Tenn.; Norfolk, Neb.; and Darlington, S.C.
The Memphis facility will see production lines start up in the third and fourth quarters as part of the companys initiative to produce higher grades of SBQ products (amm.com, Oct. 24, 2011).
Nucors Norfolk facility is being updated this year, with a capacity expansion set for 2014.
"Given the continual growth in the automotive markets, there will be an increased need for SBQ as we move forward. We have automotive, we have energy, which consumes a lot of SBQ, continuing to grow strongly," Ferriola said. "Were going to compete fiercely and successfully with (any) additional SBQ that comes into the marketplace" from competitors.
The companys new wire rod mill in Darlingtonan expansion of its steel worksis expected to start up in the third quarter and will produce rod and bar in coil from 7⁄32 to 2 inches (amm.com, April 11, 2012).
Other investments include a normalizing line at the companys Hereford, N.C., plate mill, which is slated to begin production in the third quarter; another expansion in South Carolina to add wider and lighter-gauge hot-rolled steel; and the construction of a new reheat furnace at the companys Connecticut bar mill.