OVERSUPPLY OF STAINLESS STEEL MAKING COULD DEVELOP IN NORTH AMERICA

ThyssenKrupp’s recently announced project to build a new stainless steel plant in the US has caused quite some stirrings. Although North American mills are running full-out this year, the prospect of a new competitor with up to 1 million tonnes of additional capacity may give them some sleepless nights.

Plans include melting and hot rolling capacity for 4.5 million tonnes of carbon steel and 1 million tonnes of stainless steel.

It is far from clear whether the North American market has room for new domestic supply on this scale. After Allegheny Ludlum acquired Arcelor’s US stainless subsidiary J&L in 2004, there were some expectations that this would lead to capacity rationalisation. But in fact Allegheny continues to operate the former J&L melt shop at Midland, Pa, and also the cold rolling mills there and at Louisville, Ohio. Moreover, less than 200,000 tonnes per year of melting capacity was eliminated from the market with the bankruptcy of Canada’s Atlas Stainless a couple of years ago.

But at the same time, North American Stainless – part of the Spanish Acerinox group – has continued to expand its works in Kentucky. NAS has increasingly come to dominate the market for 304 and other commodity grades of stainless, while Allegheny and AK Steel attempt to focus more on special qualities.

NAS is already working on plans to raise melting capacity by 40 percent to 1.4 million tonnes per year. Some of the extra supply will go into stainless long products. The company will also increase cold rolled strip output by adding a fifth Z-mill.

If ThyssenKrupp plans to produce mostly commodity grades at its new stainless plant, then it will be competing head-on with NAS.

The timing of the proposed installation is unclear. It may be that the additional capacity would be brought on stream in stages. But there is certainly a risk that over-supply would be created.

It has been reported that the entire project hinges on whether TK gets control of Dofasco. If it does, the US hot strip mill proposal will be dropped and it is possible that the stainless project would suffer the same fate.

Source: MEPS - Stainless Steel Review

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