Nippon Steel & Sumikin Bussan Americas (NSBA) and Pacesetter Steel Service will jointly operate a new flat-roll service center in Houston, the companies announced.
The $18.6-million joint venture will be called NSPS Metals and will start with processing capacity of 100,000 tons per year, NSBA's Japanese parent, Nippon Steel & Sumikin Bussan (NSSB), said in an emailed statement to Fastmarkets AMM on Tuesday December 4.
After the new plant is built, staff at Pacesetter's existing Houston facility will transition to NSPS, which will also be based in Houston, Pacesetter chief executive officer Aviva Leebow Wolmer said in a letter to customers dated November 29
The new service center will expand the ability of both companies to provide material in the southwestern United States and Mexico, Pacesetter said in a press release.
"The relationship with NSBA represents a powerful opportunity for Pacesetter to significantly expand our market presence and our product offerings," Leebow Wolmer said in the press release.
NSBA will own 70% of the joint venture, with an equity investment of $13 million, its Japanese parent said. Kennesaw, Georgia-based Pacesetter's shareholding is $5.6 million, for 30% ownership.
The Houston service center will process sheet and coil. The companies intend to install $29 million in equipment, including two levelers, one mini-leveler and one slitter, according to NSSB.
NSSB said the objective of the joint venture is to "capture demand [in a] flat-rolled-steel market that is shifting from imported materials to US domestic materials due in part to the effects of trade issues in the United States" and to "enter the market in the southern US where demand growth is expected."
Fastmarkets AMM's daily hot-rolled coil index stands at $37.85 per hundredweight ($757 per ton), down $7.99 per cwt from its 2018 peak of $45.84 per cwt ($916.80 per ton) achieved in July.
NSSB said the joint venture was created in November. Neither company said when the new service center will be constructed or how large the property will be.