November 2023 Volume 5

MAINTENANCE

MATERIALS

“There hasn’t been as much price pressure as we traditionally have seen, and that is an outcome of two Gerdau plants, a Timken melt shop and Republic Steel exiting the market. That capacity is gone, and it’s not coming back,” said panelist Jeff Hoerr, general manager of sales and quality at Alton Steel in Alton, Ill. Alton operates a 200 ton electric arc furnace and a 14-inch bar mill. The company has the capacity to melt 400,000 tons of steel and to roll 300,000 tons of steel bars each year. It offers SBQ in diameters from 0.75-inch to 3.9

disappointing, considering all the government spending. Inflation is the likely culprit. “A state’s department of transportation may have had a million dollars allocated for a bridge repair, but now that work costs two million dollars. So they delay the project because it has gotten too expensive. At a time when the infrastructure dollars should be flowing, it’s not happening as quickly as expected,” he said. Additionally, many buyers are holding off on placing orders in anticipation of lower prices in 2024—in line with the general steel trend. They may be disappointed, the executives said. Short supplies resulting from Republic’s exit, combined with a surge in demand from auto parts suppliers once the UAW strike is resolved, could cause bar prices to strengthen next year.

inches, in lengths from 16 to 60 feet. SBQ Outlook Points Upward

Fourth-quarter demand is soft in certain sectors, Hoerr reported. Besides automotive, which is stalled by the strike, infrastructure is

SBQ capacity closures in chronological order: • Arcelor Mittal/Inland East Chicago, IN, (2015) • Hamilton Specialty Bar (2018) • Gerdau LP St Paul (2020) • Gerdau SS Jackson (2020) • TimkenSteel Harrison Melt Shop (2021) • Republic Steel USA (2023) While this number is difficult to accurately target the estimated total domestic SBQ steel consumption is: Hot Roll SBQ 6 Million Tons (Note normal light vehicle auto build pushes this total to 7 Million Tons) Cold Drawn SBQ 1 Million Tons Thus, total overall steel production in USA is roughly 95 Million Tons

New capacity added in USA: • Charter Steel - Cleveland, OH mill commissioned a new SBQ rolling mill in 2019 • Alton Steel - Alton, IL., added SBQ coil capacity only in 2018 • Nucor - Norfolk, NE., modernization project that includes a new reheat furnace, intermediate mill, coil inspection and trimming station • Nucor - South Carolina – vacuum tank degasser • Frisa Monterrey Mexico - New SBQ bar mill late 2024 (3 ½” – 16”)

Chart courtesy of Eaton Steel Bar

Consolidation a Concern Consolidation of the steel market—SBQ production in particular— is an ongoing concern for forgers. Of the roughly 95 million tons of steel produced annually in the United States, SBQ represents a small 7-8%, including an estimated 6 million tons of hot rolled and 1.0 1.5 million tons of cold finished. Most new capital spending for steel production targets the larger, more commodity-based flat-rolled segments, which offer a quicker

return on investment. (Charter Steel’s new 250,000-ton rolling mill started up in Cleveland in fourth-quarter 2019 and FRISA Steel’s new Mexican SBQ mill planned for next year are notable exceptions.) “We think the forging industry needs support from a healthy base of SBQ suppliers, and that pool of SBQ suppliers has shrunk,” Hoerr said. “If there were a surge in demand right now…well…you don’t see many headlines about new special bar quality mills being built, not in the United States anyway.”

FIA MAGAZINE | NOVEMBER 2023 31