In the US, the emerging themes of steel tariffs and self-reliance have been prominent during the past few years. With Covid-19 in the rear-view mirror, US steel producers are embracing the ‘new steel economy’ of green steel and electric vehicles (EVs).
The
US economy is bouncing back as US steel imports in August were 2.51Mt up significantly
from Covid-19 induced levels of 1.15Mt back in September 2020. AME expects US
finished steel demand to remain strong for the next few years with growth rates
of 7% for 2021; 5% for 2022; and 3.2% for 2023.
US
steel producers have continued to make record-breaking revenues and operating
EBITDA for the first half of 2021. Company preliminary results for the September
quarter for both Nucor and Steel Dynamics indicate the record-breaking results
will continue again through the December quarter. The recent strong financial
results have been caused by higher steel prices, particularly in flat roll
steel, with many companies reporting low inventories. Also, supply issues
causing a semi-conductor shortage have contributed to falling US motor vehicle
production.
In
a developed economy like the US, the market for steel in the automotive
industry is approximately 13% of the total market, compared to building and
infrastructure which is more than half at 51%. Motor vehicles also have a
medium service life, meaning they are typically replaced every 8-12 years
depending on personal preference.
According
to the International Organisation of Motor Vehicle Manufacturers, global
provisional data for the number of vehicles (cars and commercial vehicles) produced
for the first half of 2021 is 40.3m units. Specifically, US government
statistics for total domestic vehicle sales for August were 13.47m units
(seasonally adjusted annual rate). Units peaked in April 2021 to 18.72m units,
before the Covid-19 trough in April 2020 reduced the number to 8.96m units.
Excluding the pandemic, total domestic vehicle sales (seasonally adjusted
annual rate) from 2016 were typically between 17m and 18.3m units. The US
automotive market is lucrative, and it appears many new projects are targeting
the expected growth required from EVs and in particular, advanced high-strength
steels (AHSS).
AME’s
forecast for US crude steel production for 2021 is 85Mt, up 16.5% from the
prior year. Moving forward, AME’s forecasts for 2022 and 2023 are 90Mt, up 6.3%,
and 93Mt, up 3.6%. Beyond 2024 AME forecast of US crude steel production will
continue at a moderate growth rate averaging approximately 3%.

New Projects
US steel producers have provided new
announcements for significant capacity expansion during September. Both Nucor
and United States Steel are targeting the premium market for flats which
include galvanising lines and AHSS. Both facilities will utilise EAF
technology, with Nucor adding a new melt shop at one of the existing bar mills
in the Western US.
United
States Steel (USS) will invest $US3bn in a new mini mill as it transitions to
its ‘Best of All’ strategy. The new 2.72Mt EAF mill is expected to produce flat
rolled products and AHSS. The exact site location is still under consideration,
which can include USS’s existing site operations as well as greenfield sites. The
mini mill will be funded by surplus cash and expected free cash flow. The new facility
will expand US Steel’s verdeXTM sustainable product line, providing customers
with steel solutions with significantly lower greenhouse gas emissions compared
to traditional steelmaking. Once the final site is selected and construction
requirements and operating permits are met, the final approval will be given by
the board. The company expects construction of the mini mill to commence in
first half of 2022 with production anticipated by 2024.
Nucor will invest US$2.7bn in a state-of-the-art
greenfield sheet mill. The board has recently approved its construction and is
now considering possible locations in Ohio, Pennsylvania or West Virginia. The
new facility will allow better service of its customers in the Midwest and
Northeast markets and be equipped with the most up-to-date technology available
to minimise its carbon footprint. The mill will have a crude steel capacity of 2.72Mt
and include hot-rolled sheet products, a tandem cold mill, annealing equipment
and two galvanising lines. The galvanising lines includes an advanced high-end
automotive line and construction grade line, with full inspection capabilities.
Construction is expected to take two years, notwithstanding state, local and
regulatory approvals.
The top four steel companies in terms of crude steel production in the
US include Nucor, Cleveland-Cliffs, Steel Dynamics, and United States Steel
(USS). AME’s crude steel production forecast in 2021 for the above top four
companies is approximately 62Mt and represents 73% of total US production.

Nucor will build a new melt shop at one of its
existing bar mill operations in Western US. The board of directors have
approved the construction of a new melt shop, with investment of US$100m with
crude steel capacity of 0.54Mt and expected commissioning in 2024. The exact
location is under consideration with likely sites being Nucor Steel Kingman,
Nucor Steel Plymouth, or Nucor Steel Seattle. Nucor’s new melt shop will
enhance its market position along with the anticipated growth of steel bar
production in the Western US region.
Company Product Mix
The
company product mix of steel producers has been changing in recent years, with
new capacity seeking to fill the demand of premium markets in the automotive
industry for AHSS and in particular the growing electric vehicle (EV) market. AHSS
requirements are lighter, stronger and more resistant to corrosion. Nucor’s product
mix is forecast to change in the years ahead from an automotive end market
allocation of 6% in 2020 to approximately 10% in the next several years.
Steel
Dynamics’ end market within the automotive industry is 12%, its Sinton plant
will increase production of both galvanised and painted products when two new
lines commence in 2023, to 31.4% from 20.5%. United States Steel via the Big
River Steel facility located in Arkansas, is planning to become the leader in
non-grain oriented (NGO) electrical steels. The new electrical steel line will
be constructed adjacent to the existing steel finishing line at Big River Steel
Campus and target the EV market. NGO electrical steel is ideal for power
generation, with demand in the automotive market growing at up to 25% a CAGR to
2025. The new facility will have annual capacity of 0.2Mt with operations
commencing in September 2023. The investment will be approximately US$450m and
funded from cash generated at Big River Steel.
Cleveland-Cliffs
product mix is highly weighted towards the automotive end markets, representing
approximately 29% of its total production. The company has various steel brands
available to the market, one of these is Nexmet AHSS and includes third generation
AHSS offering higher strength and high formability for lightweight structural
components. The EV expansion means steel becomes more critical in motor, body
and battery casing and vehicle charging networks. The Biden administration has
recently signed an Executive Order to reach a target of ensuring 50% of all
vehicles sold by 2030 have zero emissions. Also, infrastructure legislation includes
$7.5bn for EV charging networks.
Other US Projects
Steel
Dynamics’ new Sinton plant was delayed due to heavy flooding throughout Texas
and now expected commissioning is November 2021. The company has invested US$1.9bn
during the past three years. The facility is a flat roll steel mill with EAF
technology and crude steel capacity of 2.7Mt. Further equipment includes a cold
rolling mill, hot-dip galvanising line and painted line with capacities of 0.72Mt,
0.43Mt, and 0.25Mt, respectively. The company expects total shipments of up to
2.4Mt by 2022, with 30% of shipments planned for Mexico's export market. The
Sinton mill will allow the company to be flexible in its production methods by
entering markets where demand is highest. The target markets for the Sinton
plant include the construction, automotive, energy tubular and appliance
sectors.
Commercial
Metals Company (CMC) will expand its capacity in long steel products, with
investment of US$300m.Unlike many US steel companies, CMC specialise within the
construction industry in concreate reinforcement and, in particular, straight
rebar and fabricated rebar. The new EAF micro-mill will have crude steel
capacity of 0.45Mt and be located adjacent to its existing micro-mill at the
Mesa steel facility site. The equipment supplied by Danieli for the new MIDA
QLP micro mill will be the first in the world capable of producing both steel
rebar and merchant product with rolling capacity of 0.32Mt and 0.14Mt,
respectively. The Danieli technology is a 54t side-charge EAF, a ladle furnace
and a single-strand high-speed continuous casting machine. The plant commission
is expected in 2023, and it will have the capability to directly connect to
renewable energy sources located at the site.
Nucor
have two other major projects currently under construction at Gallatin (Ghent) Steel
and new greenfield Brandenburg, Kentucky Plant. Gallatin Steel investment of
US$650m will increase crude steel capacity to 1.27Mt, bringing total capacity
to 2.72Mt. The new slabs and hot strip mill will modernise the facility to
supply heaver gauge, wider coils to approximately 1,854mm. This project was
announced in September 2018 and is due for commissioning in the December
quarter of 2021. The new greenfield project of Brandenburg, Kentucky with
investment of US$1.7bn with crude steel capacity of 1.09Mt, is a plate mill
with capability for wider and thicker plate products. This project was initially
announced in January 2019 and has expected commission in the December quarter
2022.