Nucor targets plate dominance with new US mill

US steelmaker Nucor will build a new plate mill in the midwest by 2022 to expand its product offering and address demand in the country's largest consuming region in a larger bid to take the lead in the US plate market.

The 1.2mn st/yr plant will produce cut-to-length, coiled, heat-treated and discrete plate from 60-160in wide and up to 14in thick, meaningfully expanding Nucor's current offering from its plate mills in North Carolina, Alabama and Texas. Such plate is used in a variety of applications, including line pipe used by the energy industry; buildings and bridges; heavy equipment; ships; rail cars; tankers and barges.

The $1.4bn project is the most aggressive of the Charlotte-based steelmaker's recent announced investments in flat-rolled and long product capacity, and is aimed at taking the lead in a consolidated US plate market dominated by three producers.

"This investment is driven by Nucor's desire to be the clear leader in terms of market share, product capability, cost positioning and geographical reach," Cleveland-based investment bank KeyBanc said today in a research note.

Nucor plans to identify a site in the US midwest for the greenfield development early this year, with plans to begin producing steel in 2022. The company is considering sites in Indiana, Kentucky, Ohio and West Virginia.

The planned location provides Nucor with a logistical advantage in serving buyers in the country's largest plate-consuming region, accounting for around a third of domestic consumption.

The region is also home to "abundant, low cost scrap," the company said today.

The addition will also broaden Nucor's plate product offering, enabling it to produce over 97pc of products demanded in the US market. Only one other domestic producer currently supplies the range to be offered by the company, Nucor said.

The move will boost supply in a domestic plate market dominated by Nucor, SSAB and ArcelorMittal, which combined account for around 80pc of market share.

Nucor estimates that it currently supplies around 30pc of the 6mn st/yr of domestic US cut plate demand. Imports have plummeted to around 15pc in response to a round of anti-dumping and countervailing duties imposed on 12 countries and products in late-2016. The Section 232 25pc tariff imposed in early 2018 has also weighed on the use of foreign plate in the US.

Plate prices have increased as declining imports have tightened the market, rising to around $1,000/st in recent weeks from below $600/st in 2015-16.

Nucor expects growth in US plate demand to remain "relatively stable" in the coming years, but the passage of a long-discussed US infrastructure bill could significantly boost activity.

Such growth would come amid a relative dearth of new capacity builds compared with flat-rolled and bar mill projects from Nucor and others.

JSW is expected to complete the modernization of its 1.2mn t/yr Texas plate mill in the coming months. The addition of a 1mn t/yr EAF at the mill is expected by 2020.

ArcelorMittal last year idled its 500,000 st/yr rolling mill in Conshohocken, Pennsylvania, suggesting it would transfer capacity to other plants.

Still, Nucor chief executive John Ferriola is looking beyond the current environment.

"This is a long-term, strategic decision for profitable growth," he said on a conference call.

"It's not dependent upon 232, it's not dependent upon infrastructure."