Power, Supply Chain Issues Impacting Start-Up of SDI Sinton Mill

Commissioning continues on the hot side and tandem cold mill, but the rest of the mill, which is seeing an average run rate of 75-80% when it is running, is fully operational, said chairman and CEO Mark Millett. Once fully operational, the mill will be capable of producing 3 million tons per year of sheet products including hot-rolled, pickled-and-oiled, cold-rolled, and coated products.

“We are wrestling a little uptime in July,” Millett said on the call, noting that a substation arcing issue should be resolved this week. “We have some unique Texas power supply issues right now. And we are seeing some miscellaneous equipment failures that are typical of commissioning an integrated line,” he said.

Extreme summer heat in Texas this week has resulted in energy companies asking consumers to conserve energy so as not to overheat the state’s electrical grid.

Supply chain issues are also aggravating the equipment failures, causing part delays to sometimes take days instead of just hours.

“So we are wrestling with those alligators, not atypical of a start-up of a new plant, but we expect substantial resolution of these issues over the next few weeks,” he commented.

The issues this month have cost the mill 100,000–150,000 tons of production for the year, Millett estimated.

Millett said the surface quality of the sheet produced on the Sinton hot strip mill, which allows for thermomechanical rolling that produces higher strength grades with lower alloy content, has proven to be superior to that of both its Columbus, Miss., and Butler, Ind., mills.

The Sinton mill added 171,000 tons of shipments to SDI’s total Q2 shipments of 3.1 million tons – a company record.

SDI posted record profits in Q2, with net income of $1.21 billion on revenues of $6.21 billion.

By Laura Miller, Laura@SteelMarketUpdate.com