US electric arc furnace (EAF) steelmaker Steel Dynamics (SDI) plans to operate its flat-rolled steel mills at 80pc utilization through May amid Covid-19-related shutdowns in steel consuming industries.
SDI chief executive Mark Millett said the steelmaker has enough demand to keep utilization rates at that level possibly through June.
The rates would be significantly above the 57pc capacity utilization rate that was published yesterday by the American Iron and Steel Institute (AISI), a steel industry group.
SDI has flat-rolled mills in Butler, Indiana, and Columbus, Mississippi, with a combined capacity of 6.4mn st/yr of flat rolled steel products. Their daily production capacity is 17,500 st/day, which would be lowered to just over 14,000 st/day at 80pc capacity.
SDI said it could also delay investments in its greenfield Sinton, Texas, steel mill in late 2020 because of Covid-19-related market impacts.
The company is currently moving ahead with construction of the $1.9bn, 3mn st/yr flat rolled steel mill near Corpus Christi.
The company expects to spend around $1.3bn on the Sinton mill in 2020. Of that money $700mn is expected to be spent in late 2020, of which SDI may push some into 2021 if needed.
The company expects to start up the Sinton mill in mid-2021.
Millett said SDI has one customer committed to the Sinton mill and another near a final decision, with both representing 800,000 st/yr of consumption. Another four potential steel customers representing at least another 200,000 st/yr are looking into placing businesses near the mill.
Millett expects that lower industrial scrap flows due to coronavirus-related shutdowns in the US auto industry to be offset by falling steel production and lead to flat scrap prices in May after around a $30/gross ton (gt) drop in April.
In the first quarter, SDI's average cost of ferrous scrap fell by 21pc to $267/st compared to $338/st in the same period prior year.
Over 10mn st/yr of flat rolled steel production has been taken offline in the last month, with the majority taken down by integrated steelmakers.
SDI's first quarter flat-roll shipments increased by 4pc year over year to 1.58mn st, while shipments by its steel processing divisions rose by 23pc to 406,000st.
SDI's metal recycling division shipped 1.19mn gt of ferrous scrap in the first quarter, an increase of 2pc compared to the same period of 2019. The company's first quarter nonferrous shipments fell by nearly 20,000gt year over year to 272,000gt.
Shipments for SDI's fabrication division rose by 18,000st to 163,000st.
SDI's first quarter profit fell by 8pc to $187.3mn compared to the same period prior year.
