Steel Dynamics, Inc. (NASDAQ:STLD) Q2 2023 Earnings Call Transcript

Mark Millett: We certainly capitalized a little on the AMSA situation down there. And even as they restart, and obviously, there is a lot of projections as to how quickly they restart, if they restart. But we are quite confident that the customer base there around AMSA certainly in Monclova has recognized that single sourcing is a huge mistake. And even with an arms of startup, we are going to continue to secure a lot of that business that we have and market share that we have gained.

Timna Tanners: Got it. Thank you.

Operator: Your next question is coming from Bill Peterson at JPMorgan.

Bill Peterson: Yes. Hi. Good morning. Thanks for taking the questions. I wanted to ask you about the decarbonization strategy. You put some information on the about carbon initiatives. I mean you discussed the operations by early 2024, but just to confirm, I guess is the plant construction begun, or are there any other areas to prove out or technical readiness issues to address? That’s the first question.

Theresa Wagler: Thanks Bill. So, the biocarbon facility is actually going really well. The teams have done a lot of groundwork already. The major equipment is either has been ordered or is on order and some of it is actually going to be received fairly shortly. So, the team is doing a phenomenal job. I am very proud of them in Mississippi and the expectations are that it will start before the end of 2024. There is nothing left to prove as far as the product itself. There is a facility in Marquette, Michigan that Aymium operates, which is the technology provider. And we have tested the product extensively, both for injection and charge carbon. So, we don’t have any expectations for anything other than a wonderful product that we can replace eventually 100% or a very large portion thereof of our anthracite usage going forward. So, everything is going really, really well.

Bill Peterson: Yes, appreciate that. And I forgot to ask what do you expect in terms of the cost on that, but compared to traditional? But I guess my second question is, as we think about this additional galvanized capacity, you have mentioned this kind of end of the year and then more contribution for next year. But I guess how is your view given that there is also another – a lot of other plant capacity coming to market? What’s the risk you might see in terms of lower prices longer term with the additional capacity from competitors in the space in and so would that kind of – and for me to wrap up?

Theresa Wagler: Let me address the cost of the bio facility and then Barry and Mark can take the galvanizing pricing question. We believe that we are still kind of fine point on it, but it’s likely to cost somewhere between $200 million and $230 million for the entire project. But remember, it is a joint venture that we have with Aymium. And so we have 75% ownership of the facility and Aymium has 25% of the facility.

Bill Peterson: Okay. Thanks.

Mark Millett: And relative to the concern of overcapacity in almost over the years now, perhaps I have been in the industry too long. But everyone is – it wasn’t so long ago that there was going to be overcapacity in the iron ore business and it’s going to go down to $35 a ton. And then it was the sheet issue where I think everyone is recognizing now that with the continued shutdown of the old inefficient high-cost assets in the integrated business in the country. The desire for low-carbon products that we are not going to see a material impact to any increase in the sheet market. And I think the same with coated people are gravitating to produce their parts with more coated. I can remember cause a not so long ago, the outside skin was just galvanized and now you look at a car today and almost every single piece is galvanized.