S.A. rents climbed 4% last year but still are cheaper than other big Texas cities.
$1.7B mill seen cutting manufacturers’ costs by boosting the domestic supply of steel
Steel Dynamics’ CEO on Tuesday touted the company’s planned $1.7 billion steel mill in the Coastal Bend as an “import killer” that will cut costs for manufacturers by increasing the domestic supply of high-demand steel.
“Customers are excited to have a regional supplier and have already expressed interest in possibly locating facilities on or near our site,” Mark Millet said during the Fort Wayne, Ind.-based company’s conference call to discuss second-quarter results.
The company announced its selection of Sinton, near Corpus Christi, for the largest steel mill in Texas — by production capacity — on Monday.
The plant is expected to bring 600 jobs to the area, with pay averaging about $76,000. Initial timelines have construction starting in 2021 and the plant running close to capacity by 2022.
Coastal Bend officials ponied up about $150 million in incentives as part of a package that beat out competing sites in Texas, Louisiana and New Mexico.
Tommy Kurtz, vice president of regional and strategic development for the Corpus Christi Regional Economic Development Corp., said the location offered key advantages, including access to rail and shipping lines and ready supplies of electricity and water.
“We think that with our geographic advantage — especially being only 2 1⁄2 hours from Mexico but also being close enough to reach the domestic market in Texas and basically the South-Central and Western U.S. — also provided advantages to us,” he said.
Economic development officials have aggressively marketed the area for a plant with an electric arc furnace that would complement the region’s “economic renaissance of manufacturing.”
“This is the third steel mill we have pursued,” Kurtz said, “so it looks like the third time’s the charm.”
In the last decade, the Corpus Christi region has announced more than $50 billion in major capital projects. Investments similar to Steel Dynamics’ included Voestalpine’s $1.3 billion hot briquette iron facility, TPCO America’s $1 billion steel pipe rolling facility, Cheneire Energy’s $15 billion Corpus Christi liquid natural gas export facility and Gulf Coast Venture’s planned $10 billion petrochemicals facility in Portland.
The Steel Dynamics mill will have an annual production capacity of about 3 million tons of steel for energy, automotive, construction and appliance manufacturers.
The company said the plant will serve three regional markets:
Texas, Arkansas, Oklahoma and Louisiana; Northern and MidCentral Mexico and the U.S. West Coast. The regions consume as much as 28 million tons of flat roll steel annually, Millett said, much of it imported through the port of Houston.
“To be clear, we’re not just adding production capacity — we have a differentiated product portfolio, we will have a significant geographic reach,” Millett said. “Sinton lies just 190 miles from the large steel-consuming city of Houston and 300 miles from the growing Monterrey, Mexico, region... These benefits provide a competitive supply chain allowing the new mill to effectively compete with imports flowing into Houston and the West Coast.”
Domestically, steel prices are recovering from reduced imports due to tariffs on foreign steel combined with manufacturers restocking their inventories.
Mexico in 2018 imported 7.5 million tons of flat-roll steel.
“Based on their growing manufacturing base, we believe Mexican demand growth will continue to outpace supply, making this an even more attractive underserved market in the coming years,” Millett said.
Steel Dynamics reported second-quarter earnings of $194 million on revenue of $2.8 billion. Its stock closed Tuesday at $32.10 on the Nasdaq, up 56 cents.