“Demand is pretty strong from primary metal producers. We are getting a lot of inquiries,” says Gene Buer, executive director of the crane group of Columbus McKinnon Corp., Amherst, New York. Jim Lang, general manager for inspections and training for Morris Material Handling, Oak Creek, Wisconsin, agrees, stating that business is not only strong for new equipment but for the servicing of equipment as well.
The growth of new steel mills has been occurring both in the flat roll and long products areas
“I think it is pretty clear that there is a lot of infrastructure building going on throughout the world,” says Buer. “China has been a big part of it. That is creating a lot of demand for raw materials,” and has sparked a number of expansion projects.
Magnetic lifting at Steel Dynamics Inc., Fort Wayne, Indiana
Michael Lipscomb, regional sales manager for Foley Material Handling, Ashland, Virginia, says this has been the case with several core primary metals companies that his company does business with, particularly in the steel, titanium and nickel-based superalloys sectors. But while the market for such base metals as copper and aluminium are also going strong, producers are not building a lot of new plants in North America, states Christopher Plummer, managing director of metals consultancy Metal Strategies Inc., West Chester, Pennsylvania, partly because aluminium and copper smelters are energy intensive and the cost of the electricity and natural gas is expensive in North America.
Lifting product at Steel Dynamics Inc., Fort Wayne, Indiana
The situation is quite different for steelmakers, both integrated producers and mini-mills, says Lang. “Their business here is going like gangbusters leading them to make strategic investments in their facilities.” This activity has been accelerating, says Plummer noting that 1990 to 2006 about 20 million US tons of annual greenfield steelmaking capacity was added with about 19 million US tons of that being added between 1990 and 2000. Meanwhile, from 2007 to 2010, it is projected that another 9 million US tons of greenfield capacity will be coming online. “This does not even take into account all the expansions of existing facilities being planned,” he states.
He adds that the market fundamentals would indicate that new plant investment will continue to remain strong for some time. “The United States is one of the top five places from an economical feasibility standpoint to build a steel mill,” he says, explaining that this is because of the strong market demand there, the availability of raw materials and the fact that imports could be displaced.
Steel Dynamics is in the midst of a greenfield expansion at its existing structural and rail facility in Columbia City, Indiana
The growth of new steel mills has been occurring both in the flat roll and long products areas, notes Dick Teets Jr., president and chief operating officer for Long Products at Steel Dynamics Inc., Fort Wayne, Indiana. “This is because the industry has been going through some very good times and some okay times, but no real bad times for several years.”
For much of this year, however, flat-rolled sheet has been a little weaker than most steel making segments given lukewarm end user demand for certain large steel consuming markets, particularly autos and appliances, and a large inventory overhang both on the service centre and end user level. Roy Platz, manager of marketing for ArcelorMittal USA, Chicago, notes that apparent steel consumption in the first half of this year was down 5.5 million to 6 million US tons versus the first half of 2006 with about half of the due to the inventory liquidation. “Service centres came into the year with record inventories after being very low for much of 2006,” he explains.
According to the Metals Service Centre Institute (MSCI), total US steel service centre inventories were 13.1 million US tons, or 2.7 months of stocks on hand, in January 2006 but that level consistently increased throughout last year to end the year at 16.5 million US tons, or 4.7 months of inventories. This build-up has been blamed on record US imports in 2006, especially from China. According to the American Iron & Steel Institute (AISI), total US finished steel imports reached a record 35.9 million US tons in 2006, up 42% from 2005 levels. A good percentage of the flat roll imports found its way into inventories given the fact that due to the bust of the residential construction bubble and weakness from the traditional Big Three automakers, steel demand began to wane while imports continued to wash ashore into the United States.
SeverCorr has purchased 23 cranes with another 18 on the books of which four (and two more for the expansion) are P&H cranes, ranging from 450 to 35 US tons in capacity
But both inventories and imports have since come down. MSCI reports that total steel service centre inventories fell to 13.0 million US tons, or 2.8 months of stocks on hand in August, their lowest level since December 2005. This was a long and arduous process that ate into mill orders and contributed to flat roll prices falling to about $520 a US ton in August from about $590 in April or May. However, with these lower domestic prices coming at the same time that steel prices were strengthening elsewhere in the world, John Ferriola, chief operating officer for steelmaking at Nucor Corp., Charlotte, North Carolina, observes, that while they are still high historically, US flat roll imports have declined considerably. AISI says that year to date US imports of finished steel products through August were 19.0 million net US tons, down 22.3% versus 24.5 million US tons in the first eight months of 2006.
With the help of this import decline and an up tick in orders from service centres, flat roll capacity utilisation has increased to a healthy rate of 85-87%, up from 65-70% in December, moving the market into early stages of a turnaround. While there is definitely not “galloping demand” at this point, it is on an upswing, Platz says. “Our order books are definitely strengthening.” This is definitely good news, says Teets, as while long products, especially structural steel, and plate has remained strong, flat roll represents the largest volume of all steel markets.
But even before the flat roll market started to pick up, new capacity started coming on-stream. One of the highest profile examples is the SeverCorr LLC steel mill in Columbus, Missouri, headed by steel veteran John Correnti. The 1.7 million US ton a year mill (to be eventually expanded to 3.4 million US tons), which was made possible through a strategic partnership with Russia’s OAO Severstal, has been ramping up throughout the year, first operating its pickling line at the end of January, starting its cold mill in June and at the end of August starting to make its first hot roll with an eye of being totally ramped up later this year. SeverCorr is expected to be the first thin slab mini-mill to be able to produce exposed automotive sheet.
The Konecranes units at SeverCorr range from 100 to 20 US tons in capacity
SeverCorr, states construction manager Jim Bell, has purchased 23 cranes with another 18 on the books of which four (and two more for the expansion) are P&H cranes and the remainder are Konecranes. The P&H cranes range from 450 to 35 US ton capacities. The Konecranes units range from 100 to 20 US tons. This includes both main and auxiliary cranes.
Several other substantial flat roll steel mill projects are expected in the next several years. A 4.5t million a year carbon and stainless mill is being built in Calvert, Alabama, by Germany’s ThyssenKrupp AG with an expected startup date of 2010.
Also Russia’s OAO Magnitogorsk Iron & Steel Works (MMK) plans to build a 1.5t million a year sheet plant either in Haverhill, Ohio, or in Quebec. Both of these projects are also expected to result in further bolstering demand for overhead cranes.
Also recent merger and acquisition activity has been a plus for crane suppliers, Wayne David, general manager for O’Brien Installations Ltd., Stoney Creek, Ontario, says, explaining, “when a mill is bought or sold, in general the company that buys it wants to make it more efficient. They spend more money to improve things and often that means the need for more cranes.” This, he says, is true with Pittsburgh-based US Steel Corp. acquiring Stelco Inc., a mill based in Hamilton, Ontario. John P. Surma, US Steel’s chairman and chief executive officer, says that while Stelco is generally in good condition, some money will likely be spent on its pickle line and cold mill.
Plate demand, according to Plummer, is second only to the red hot beam market. That, says Greg Maindonald, vice president of operations services fro Ipsco Inc., Lisle, Illinois, has been propelled by strong demand in a wide range of applications, most notably wind towers, large diameter pipe lines, rail cars and construction and agricultural equipment.
Wind towers alone are expected to consume an additional 800,000 US tons of plate in the next few years given that about 8,000 megawatts of wind energy generation (4,000 towers) are slated to be installed over that timeframe. At the same time, increased demand for energy transmission has resulted in burgeoning demand for new large diameter pipelines. “Our mill is completely full largely due to strong demand for skelp for large-diameter line pipe,” as well as the tremendous demand for armor plate, particularly due to the development of mine resistant ambush protected (MRAP) vehicles to replace Humvees, says Scott Montross, general manager for Evraz Oregon Steel Mills Inc., Portland, Oregon. And it is anticipated that going forward there will be a need to replace already installed large diameter line pipe given that many of the pipelines are 30-50 years old.
Despite the fact that most domestic plate mills are running almost full out, few new facilities, or major expansions for that matter, are planned at this time. One exception is that an investor group recently purchased an idled plate rolling mill in Hannibal, Ohio, with an eye to reopen it and produce about 100,000 US tons a year of heavy carbon and alloy plate there. Also, ArcelorMittal is expected to restart its long-idled Gary, Ind., plate mill, with a capacity of over 800,000 US tons a year, which its predecessor company (International Steel Group) picked up in an asset swap with US Steel in 2003.
Nucor Corp., Charlotte, North Carolina, has also increased its plate-making capacity over the last few years, doubling the capacity at its Tuscaloosa, Alabama, plate mill, acquired in 2004 from Corus Group Plc, and slightly stepping up the capacity at its Hertford, North Carolina mill. The Tuscaloosa expansion, according to Lipscomb, has resulted in Nucor adding a couple of 100 US ton cranes there. Nucor is also building an 850,000 US ton a year special bar quality mill in Memphis, Tennessee, which is expected to start up in the first quarter of next year as well as a second Castrip plant in Blytheville, Arkansas, at its Nucor-Yamato Steel Co. joint venture beam mill.
Even with the growth in demand for non-residential slowing down a touch, demand for structural steel beams continues to be quite strong, says Teets. Commercial construction, according to Plummer, was up 11.5% in August versus a year earlier and public works construction (for roads and bridges) was showing a 4.4% increase for the same comparison. Where the real strength has been, however, is in industrial construction (buildings with no roofs such as refineries, chemical processing facilities and power plants. With somewhere between 75 and 100 ethanol and other biorefineries either under construction or being expanded, the Renewable Fuels Association predicts that at least 6 billion gallons of new production capacity will be coming online by 2009.
While at this point much of the nation’s energy has been supplied by traditional fossil fuel sources, looking forward nuclear power, supplied by new nuclear plants, will be a bigger part of the mix, Buer predicts. Reportedly there are at least 30 new reactors being built worldwide and at least one that has been proposed in the United States (by NRG Energy Inc., Bay City, Texas). In addition, with most US power plant being 30-50 years old, many need to be refurbished. All of this is seen to mean increased demand for structural steel.
In light of this increase, Steel Dynamics is in the midst of a greenfield expansion at its existing structural and rail facility in Columbia City, Indiana, which, once completed at the end of next year, will bring the combined production capacity for structural steel and rail to 2 million US tons a year. As part of this expansion, Teets says that Steel Dynamics has ordered 14-15 cranes ranging from 300 to 15 US tons. Many have already been installed. The rest will be installed by December. “We are also having a few more cranes delivered in the next eight months to a year,” he says.
Teets declares, “many steelmakers throughout the industry are spending money and expanding and I think the crane industry has been benefiting from this.” Lipscomb also states that crane manufacturers are benefiting from the increased strength in the titanium market largely due the strong aerospace demand, both on the commercial and defense sides of the business, although there has been fairly strong demand also coming from certain industrial, oil and gas exploration and medical uses, according to a spokesman for Allegheny Technologies Inc., Pittsburgh.
Lipscomb says that Foley has recently gotten an order for eight cranes from Allegheny’s Monroe, North Carolina-based Allvac titanium and superalloys unit which has recently added both finishing and melting capacity in Bakers, North Carolina. Allegheny is also expanding its titanium sponge capacity at both its Albany, Oregon, and Rowley, Utah, production facilities.
And Allegheny is not alone making these kinds of investment. Pretty much all the major titanium and superalloy producers are expanding. In fact one, RTI International Metals Inc., Niles, Ohio, has announced plans to build a new premium grade titanium sponge facility in Hamilton, Missouri, that will have a total annual production capacity of up to 20lbs million of titanium sponge when it begins operation in 2010. This is very significant given that RTI has not been making its own titanium sponge since the early 1990s.
“Macro economic trends around the world indicate that the primary metals industry will stay strong for the next few years,” says Gene Buer, who says this is good news for crane manufacturers. “When primary metal demand is robust, the crane market tends to be strong to support that industry.”
Davis agrees, stating, “right now inquiry levels are better than ever. Orders are coming in and backlogs are strong. Last year was a phenomenal year for us and things seem to be picking further up. We look forward to another fantastic year.”
The Konecranes units at SeverCorr range from 100 to 20 US tons in capacity primary metals 7 SeverCorr has purchased 23 cranes with another 18 on the books of which four (and two more for the expansion) are P&H cranes, ranging from 450 to 35 US tons in capacity primary metals 6 Steel Dynamics is in the midst of a greenfield expansion at its existing structural and rail facility in Columbia City, Indiana primary metals 5 Lifting product at Steel Dynamics Inc., Fort Wayne, Indiana primary metals 4 Magnetic lifting at Steel Dynamics Inc., Fort Wayne, Indiana primary metals 3 ‘The industry has been going through some very good times and some okay times, but no real bad times for several years,’ says Dick Teets Jr., president and chief operating officer for Long Products at Steel Dynamics Inc. primary metals 2 The growth of new steel mills has been occurring both in the flat roll and long products areas primary metals 1
