BlueScope officially mulling addition of CR and coating capacity in US

With upstream steel and scrap operations and downstream painting operations in its US portfolio, BlueScope is now considering adding a new midstream facility to fully integrate its value chain. While the focus of a feasibility study is on building a new facility, it is also considering seeding and acquisition options as well, the company said in its financial report for the six months ended Dec. 31, 2023 – the first half of BlueScope’s 2024 fiscal year.

“Our study is focused on a cold rolling and metal coating facility in the Midwest, providing a reliable supply of high-quality metal coated feed, which will be critical in delivering our US growth ambitions as we take our core DNA in coating and painting into the large and growing US market,” BlueScope CEO Mark Vassella said on the company’s quarterly earnings call on Monday, Feb. 19.

BlueScope is initially considering adding 550,000 metric tons (mt) of cold rolling and 550,000 mt of coating capacity “to be delivered in a phased approach to 2030,” the company’s report said.

Locations in Ohio, Indiana, Michigan, and Tennessee are being considered.

If the plan is fully executed, BlueScope estimates it will cost $1.2 billion over the next seven years.

The company said it will provide an update on the potential project in the second half of calendar 2024.

North Star expansion still ramping up

BlueScope said the ramp-up of its initial expansion at North Star BlueScope is progressing well, with the project producing 320,000 mt in the July-to-December period.

The company is targeting an additional 500,000 mt/year through a debottlenecking program under assessment at the mill in Delta, Ohio. Projects include down coiler upgrades, slab temperature upgrades, and ladle isle flow upgrades, according to the investor presentation.

“What’s interesting from a debottlenecking point of view is that’s already started to highlight where the opportunities are for further capacity expansion,” Vassella commented on the call.

“It’s pretty interesting how, even in the ramp-up, they’ve now started to push into some of the debottlenecking tons,” he added.

“We’ve got a fabulous asset at North Star,” Vassella stated. “If we were to push that to 3.5 million (metric) tons or 3.6 million tons with the debottlenecking, what’s the relative value of taking some of that and converting it through cold rolling, metal coating, putting it into BCP (BlueScope Coated Products) as opposed to finding a market for another 500,000 tons or 600,000 tons of hot band in that region? So that’s the end of the play that we’re going through.”

North American earnings results

The North Star operations saw solid demand in the six months ended Dec. 31, with the mill running at full capacity, other than during the scheduled maintenance outage in November.

The company noted robust underlying demand but some impact in the period from the United Auto Workers (UAW) strike.

North Star BlueScope had sales of nearly $1.17 billion in the six-month period, a 6% sequential decline but a 7% year-on-year rise.

“We’re guiding to a significantly higher result in North America. North Star is expected to deliver a result approaching double that of the first half of ’24 on stronger spreads, increased volume, and lower conversion costs,” CFO David Fallu commented on the call.

“Looking at activity levels across our North American end-use segments, the key takeaway here is the economy in North America continues to perform at a better level than what was expected in the half, with nonresidential activity setting new records and automotive sales and manufacturing activity remaining resilient,” Fallu added.

BlueScope Coated Products

The $500-million acquisition of Coil Coatings in 2022 (now its BCP segment) accelerated its painted strategy in the US market, BlueScope said. Work is underway to address under-utilization in the segment in the near term. Medium- to longer-term coated and painted opportunities in the US remain attractive, the company said.

BlueScope Recycling

The BlueScope Recycling segment provided the North Star mill with 30% of its scrap requirements in fiscal H1’24.

The company is moving forward with several initiatives aimed at increasing its self-sufficiency in scrap to 40%. Those initiatives include installing pre-shredders and leveraging AI and robotics for enhanced nonferrous recovery.

Vassella said in his comments that the recycling business has exceeded expectations, bringing “significant value” to the North Star business.