SDI remains on track for mid-2021 startup at Texas steel mill

New York — Steel Dynamics Inc. remains on track to begin operations at its new $1.9 billion flat-rolled steel mill in Sinton, Texas in mid-2021 as the coronavirus pandemic has not impacted construction, SDI CEO Mark Millett said July 21 during the company's second quarter earnings call.

"We're having weekly conversations with the equipment suppliers regarding the impact of COVID-19 and don't believe our planned schedule has been meaningfully impacted thus far," Millett said.

The new EAF mill is expected to have an annual production capacity of approximately 3 million st. SDI currently has two customers committed to locate on-site in Sinton, representing over 800,000 tons of annual consumption, Millett said. "We still have others in conversation," he added.

SDI's steel mill utilization was almost 80% in Q2 compared with an overall domestic industry rate of 55%, which allowed the company to increase market share, particularly in the flat-rolled market, Millett said.

SDI shipped 2.52 million st of steel in Q2, including 2.15 million st of external sales.

"As a result of reduced flat-rolled steel demand and lower pricing, a considerable number of high-cost flat-rolled steel operations came off-line since the end of 2019," Millett said. "We believe about 15 million tons or so of flat-rolled sheet capacity has been idled, representing over 20% of annual domestic production capacity."

SDI's Columbus, Mississippi, flat-rolled mill has been expanding its presence in the automotive market, Millett said: "A lot of our automotive customer base is actually European, so BMW, [Volkswagen], Mercedes, and they tended not to be as hard hit in Q2 as some of the domestic producers, and we certainly benefited from that."

The Columbus mill produced the first prime coil on its new 400,000 st galvanizing line on July 9, SDI further reported.

"It will be nice to see that getting into the market and actually increasing the value-add portion of their capabilities in the second half of this year," SDI CFO Theresa Wagler said. "I think there's a lot of opportunity for us to both enrich the mix and then to continue in that market share gain."

SDI reported net income of $75.5 million on sales of $2.09 billion in Q2, down from net income of $194.3 million on sales of $2.77 billion in the year-ago quarter.