NS BlueScope Commissions New Melt Shop, Expedites Expansion

Installation of a second caster and tunnel furnace, meanwhile, are “well advanced.” Equipment is set, and piping and electrical installation work are getting underway, BlueScope said.

North Star BlueScope currently produces approximately 2.2 million tons of hot-rolled coil annually from two EAFs, according to the company’s website. The expansion will add a third EAF and a second caster.

The first coil from the expansion – aimed at increasing North Star BlueScope’s capacity by approximately one million tons per year (850,000 metric tonnes) – is expected early in the second half of the company’s fiscal year 2022.

BlueScope works off a fiscal year that ends on June 30. That means the second half of the company’s fiscal year 2022 refers to the calendar year period January-June 2022. In other words, the first coil is likely be produced in January-March of next year.

Once the first coil is produced, it will take another 18 months for the expansion to ramp up to its nameplate capacity.

The $700 million expansion project, announced in August 2019, is one of several major flat-rolled electric-arc furnace (EAF) capacity expansions in North America, as SMU’s new capacity chart indicates.

The total cost of the project is expected to be approximately 5-10% higher than initial estimates because of “inflationary pressure” and because BlueScope aims to complete the project “as soon as possible,” the company said.

The “imminent completion” of the melt shop and caster expansion will result in North Star BlueScope having slab-making capacity of approximately 3.9 million tons per year, according to a presentation released with earnings data.

Once the expansion is complete, the Delta mill will consider a “debottlenecking project” aimed at increasing hot strip mill capacity by approximately 600,000 tons per year, BlueScope Managing Director and CEO Mark Vassella said in a statement.

BlueScope thinks the increased capacity is justified by tons that have come offline in the U.S. over the last ~20 years.

There were 20 domestic producers with hot strip mill capable of making a total of nearly 83 million tons of flat-rolled steel in 2000. By 2019, there were only 10 producers with hot strip mills capable of making 77 million tons per year. And the trend has since accelerated, with 2021 seeing just nine producers with combined hot strip mill capacity of 68 million tons. In other words, there are fewer than half the number of flat rolled steel producers there were in 2000, and industry consolidation and capacity closures have resulted in hot strip mill capacity being approximately 15 million tons per year lower than it was two decades ago. The implication: current expansions are needed just to fill that void.

And North Star Blue Scope’s project is wrapping up during a period of record high hot-rolled coil prices. Hot-rolled coil prices stand at $1,900 per ton ($95 per cwt), up 93% from $985 per ton at the beginning of the year and up more than fourfold from $440 per ton a year ago, according to SMU’s interactive price tool.

By Michael Cowden, Michael@SteelMarketUpdate.com