Nucor has brought on a host of new steelmaking capacity across both long and flat products and will continue ringing it in through the New Year.
The moves, while not unexpected, come at a time when other mills are also boosting capacity.
“We are not adding capacity simply to get bigger. These projects target defined market opportunities where we are confident that we will compete and win highly profitable market share,” Nucor president and chief operating officer Leon Topalian said during a quarterly earnings conference call last week.
Nucor has completed expansions at its flat-rolled mills in Hickman, Arkansas, and Ghent, Kentucky, as well as its rebar mill in Marion, Ohio, Topalian said.
It expects to complete by year-end a $270-million galvanizing line in Mexico that it is building with Japanese steelmaker JFE steel; a merchant bar quality (MBQ) expansion at Nucor Steel Kankakee in Bourbonnais, Illinois; and a rebar micro-mill in Sedalia, Missouri, he said.
Nucor recently held a ribbon-cutting event at the new $240 million cold-reduction line at its Nucor Steel Arkansas flat-rolled mill in Hickman, Arkansas, according to local media reports.
The mill’s flexibility and ability to make advanced high strength steels separates it from competitors, Topalian said. “Our Hickman team continues to increase production and improve yield performance,” he said. “There is no other carbon mill like this in North America.”
The Hickman expansion will give Nucor an additional 500,000 tons of cold-rolled capacity. Commissioning began over the summer.
Nucor on September 27 coated the first coils on the new galvanizing line at its Nucor Steel Gallatin flat-rolled mill in Ghent, Kentucky, Topalian said.
The line specializes in galvanizing heavier gauge hot-rolled coil - as opposed to thinner cold-rolled product - and is capable of producing material up to 72 inches wide, making it the widest hot-rolled galvanizing line in North America, he said.
“Gallatin is extremely well positioned to grow Nucor's share of the underserved Midwest heavy-gauge galvanizing hot-band market,” Topalian said.
Nucor spent $176-million on the hot-rolled coil galvanizing line at Gallatin. It will increase the mill’s galvanizing capacity by 500,000 tons per year and will allow Nucor to make automotive parts such frames, control arms, supports and brackets.
Also at Gallatin, Nucor plans to spend $650 million to nearly double its hot-rolled capacity from 1.6 million tons per year to 3 million tons per year by mid-2021.
The additional galvanized capacity has dented prices in some markets for coated material because established mills and coaters are trying to protect market share from a new competitor, sources have told Fastmarkets.
Case in point: Fastmarkets’ weekly price for hot-dipped galvanized (base) steel coil, fob US mill, stands at $33.50 per hundredweight ($670 per ton) - its lowest point since being assessed at $32 per cwt in April 2016, approximately three and a half years ago.
Nucor in August completed commissioning of a new line at its rebar mill in Marion, Ohio. The facility is ramping up production and will install quench and temper equipment early next year that will help reduce alloy costs, Topalian said.
“These investments combined with a more energy efficient reheat furnace installed last year will position Marion as a low-cost producer in the region,” he said.
Nucor in 2017 announced plans to invest $85 million at the Marion long products mill. The plant has capacity of 400,000 tons per year and makes rebar and signpost.
Nucor is pressing ahead with the expansions despite steep declines in steel prices for both flat and long products over the last year.
Fastmarkets’ steel hot-rolled coil index, fob US mill, stood at $23.44 per cwt when this article was filed, down 12.5% from $26.80 per cwt a month ago and down 43.2% from $41.27 per cwt in late October of 2018.
Rebar price declines have been modest in comparison. Fastmarkets’ price assessment for steel reinforcing bar (rebar), fob US mill, averaged $30.25 per cwt at the time of filing, down 4.7% from $31.75 per cwt last month and down 14.8% from $35.50 per cwt this time last year.