SDI announces unplanned outage of hot mill at Sinton, Texas, site

Fort Wayne, Indiana-based steelmaker Steel Dynamics Inc. (SDI) has announced an unplanned outage of the hot mill at its Sinton Texas flat-roll site and says it expects to restart within the next two to four weeks, or before July 30.

According to the electric arc furnace (EAF) steelmaker, the outage relates to caster shear equipment issues, which occurred July 1.

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SDI says it plans to continue to operate the cold mill and downstream value-added flat-rolled steel coating lines during the hot mill outage.

The mill achieved positive EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) for the second quarter of 2023, the company says, and it believes the additional expenses related to fixing the caster shear issue will be less than $1 million during the outage.

According to an article on the Seeking Alpha website, J.P. Morgan analyst William Peterson says the outage could cause a $45 million hit to the company's segment EBIT as it comes "during a pivotal time in the steel price cycle where mills in late June attempted price hikes to 'stop the bleeding' after benchmark hot rolled coil fell 27 percent since April's peak of $1,175/ton."

The Sinton mill saw a utilization rate of roughly 56 percent as of SDI's first-quarter results, with management targeting an average 2023 utilization rate of about 80 percent, which would require utilization to increase above 80 percent in the second half of the year, Seeking Alpha adds.