It will also provide the plant with two separate rolling mills, one for wire rod and the other for rebar production, a company spokesperson confirmed to Fastmarkets.
The electric-arc-furnace (EAF) long steel producer has completed the first phase of melt shop upgrades that will boost its production of wire rod, coiled and straight rebar production, according to a June 5 press release from the company. large rolling mill
“This is a doubling of rolling capacity,” a company spokesperson said on Friday June 9. “The rebar outlet will commission in the late third quarter of this year. The new reheat [plus] roughing [plus] intermediate project will commission in late 2024.”
“When everything is complete, we will have one wire rod mill capable of 800,000 tons and one rebar mill capable of 800,000 tons,” the spokesperson noted.
Optimus Steel’s investment in expanding and diversifying its rebar product offerings can also give the company improved operating margins that can help it better compete for market share for both rebar and wire rod, according to a wire rod buyer.
The wire rod buyer described the scale of improvements at the Beaumont mill from the beginning to completion as “by far the largest expansion in the domestic wire rod industry in many years.”
While the company is expanding from coiled rebar into straight rebar, when all the work is done, “Optimus mill will still have a majority of its production in wire rod versus rebar,” the wire rod buyer said.
The task of upgrading and improving the facility has been undertaken in several stages, according to Optimus Steel’s June 5 press release. It declined to provide detailed information on a breakdown of expected production by product lines.
“The Optimus Steel expansion project has been going on for some time – they announced the expansion in 2021, when wire rod prices were very high,” a trader said.
Fastmarkets’ monthly assessment for steel wire rod (low carbon) industrial quality, fob mill US was $53.00-58.00 per hundredweight ($1,060-1,160 per short ton) on May 16, down by 8.26% from $58.50-62.50 per cwt on April 18, and 9.02% lower than March 21’s $59.00-63.00 per cwt.
Prices for low-carbon wire rod are now at their lowest since July 20, 2021, when they stood at $55-57 per cwt.
In the initial round of improvements and investments completed in 2021 and 2022, Optimus “upgraded their melt shop, including a new caster which was not only remedial/mandatory, but gave them more billet supply,” the wire rod buyer said.
“A lot of the impact of their new caster and melt shop upgrades will result in them being more self-sufficient regarding billet,” the wire rod buyer said.
At the same time, however, “the expansion did not necessarily result in a massive increase in the total amount of rod they can roll, but it will mean they will roll more of their own billet versus billet that was purchased from other US mills or from imported billets,” the buyer added.
Another major upgrade – the addition of a straight rebar outlet – is scheduled to be commissioned by the end of the third quarter, according to the company notice.
The final phase of improvements, including a new reheat furnace and a roughing and intermediate project, “will be commissioned in late 2024,” according to the company’s notice.
Before the improvements and upgrades were underway, Optimus Steel’s Beaumont facility – which was purchased from Gerdau SA in 2018 for $92.5 million – had the capacity to produce wire rod of 7/31-11/16 inches and coiled rebar in sizes #3-#5.
After the completion of the rebar outlet, it will be able to add cut-length stick rebar in sizes #3-#11, according to Optimus Steel’s press release.
The wire rod buyer expects the mill “to put in a system to allow them to go back and forth from wire rod to cut-length rebars [and that capability] could displace some imported cut-length rebar tonnage, especially in the strong Texas and regional construction market, as infrastructure spending, with a strong ‘Made in the USA’ requirement, becomes a reality.”
While more wire rod and rebar capacity could theoretically act to weaken prices “to some extent,” that may not necessarily be how it plays out, according to the wire rod buyer.
Instead, he added, “a stabl