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Steel Producer of the Year

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AK Steel

2016 rang in a number of changes at West Chester, Ohio-based AK Steel Corp.

Besides naming Roger Newport, a 31-year company veteran, its’ new chief executive officer, AK Steel shipped 6-million tons of steel during the year. The steelmaker also strategically withdrew from the commodity-grade, steel spot market, sacrificing volume but upping earnings and margins substantially.

The company spent relentlessly on research and development and by November of last year, completed construction of a $36-million research and innovation center in Middletown, Ohio. In the twelve months from 2015 to 2016, AK Steel expanded its innovation team by 35 percent and last year more than tripled the number of projects in its R&D pipeline compared with the equivalent figure for 2014.

Among its many mills and works, AK Steel’s Dearborn Works stood out. The company spent $29 million there to upgrade a key, hot-dipped galvanizing line. The investment paved the way for the subsequent launch in early 2017 of two new NEXMET advanced high-strength steels. Earlier in the year, AK Steel in collaboration with NanoSteel Co. debuted NanoSteel NXG 1200, an award-winning, third-generation steel.

Although AK Steel didn’t log any major acquisitions in 2016, it expanded steel tube operations into Mexico. Much of the steel substrate supporting tube making there will be supplied from the U.S. side of the border, preserving American jobs, the company noted.

On the financial front, AK Steel nearly doubled liquidity from a year ago to a solid $1.35 billion, raising $600 million in common stock and smartly refinancing $380 million of debt. AK Steel also scored major improvements in the environmental, safety and operations arenas, with one facility winning an award for 12 years of operation, without recording a single lost-time injury.

Top executive Roger Newport’s four-word mantra to employees in 2016 was simple and direct: “We can. We will.” AK Steel reckons it has delivered on a year of change, both financially and operationally.

Nucor

The twelve months of 2016 moved Nucor Corp. closer to being what the company describes in its’ own words as a “one-stop shop” for steel customers.

The country’s largest steelmaker, based on capacity, inked four major acquisitions, totaling more than $929 million, besides announcing the addition of a $230-million specialty cold mill complex at its Nucor Steel Arkansas division.

Charlotte, N.C.-based Nucor’s pipe and tube acquisitions, which targeted top hollow structural sections (HSS) producers Independence Tube Corp. and Southland Tube Co., catapulted the steelmaker to the No.2 slot in HSS domestic market share, while expanding Nucor’s presence in construction, its’ largest end market.

The acquisitions position Nucor well in the “non-energy” segment of pipe and tube, the company has noted, since HSS flows mainly into nonresidential construction and agriculture. The most recent purchases, plus others, will help the company grow its internal steel shipments – material sent from its steel mills to its subsidiary downstream companies – to 20 percent of Nucor’s total steel shipments, up from 8 percent in 2006. In 2016, Nucor already beat 2015 in terms of both production and utilization rates, running at 21.3-million tons and 80-percent full in 2016, vs. 19.3-million tons and 73 percent capacity in 2015.

Nucor’s bid to claim the industry’s most diverse steel product portfolio was also buoyed by its $29-million purchase of Joy Global Inc.’s specialty plate mill and its 50-50 joint venture with Japan’s JFE Steel Corp., which involves the construction of a galvanized sheet mill in central Mexico. The Texas mill adds more value-added plate products to Nucor’s sales inventory, while the JFE joint venture underscores Nucor’s ability to participate in the high-quality automotive steel market. The $270-million, 400,000 tons-per-year Mexican mill will help Nucor grow its automotive steel sales, which presently total 1.4-million tons annually.

Nucor wasn’t immune to the malaise overhanging the steel market in 2016, however, as average sales per ton slid to $601 per ton in 2016, down from $651 per ton in 2015.

Outokumpu Americas

Outokumpu Americas, a subsidiary of Finland’s Outokumpu Oyj, made measureable strides in 2016 vs. the previous year, cutting costs and upping deliveries

Impressive gains include a 30-percent improvement in conversion costs and a steady climb in deliveries, which totaled 690,000 tonnes in 2016, vs. 533,000 tonnes in 2015. On a per-tonne basis, variable costs were sliced by 25 percent. The advances charted last year were delivered in step with Calvert, Ala.-based Outokumpu’s company-wide vision – to be the best value creator in stainless steel by 2020.

Multiple operational improvements drove efficiency gains at the company’s Calvert, Ala. site and San Louis Potosi mills, in Mexico. Boosting speed, yield and quality at Calvert’s cold-rolling works paid major dividends. With tens of thousands of tons of steel produced monthly at the works, even small tweaks to operating speed add up dramatically when computed on an annual basis.

Notably, Calvert’s meltshop increased the number of heats sequenced by 15 percent while the overall nameplate capacity on the steelmaker’s equipment gained 20 percent, thanks to a company-wide equipment effectiveness program.

In customer service, a key priority at Outokumpu, the company cut freight costs by seven percent, in part by putting all its transport contracts out to bid. Internal safety and employee participation were also top priorities.

First aid and total recordable incidents plunged 33 percent year-over-year in 2016, as employee suggestions were acted on. A visual, shop-floor program enabled all teams to view targets, progress, and areas found wanting, in real-time, as displays tracked performance by operating unit.

Outage optimization programs, including hypothetical planning around complex outage scenarios, directly improved yield, on-time delivery, and conversion costs.

The results speak for themselves: Outokumpu has now enjoyed six straight quarters of shipments growth, even as the Americas company lost money on an underlying earnings basis in 2016.

SSAB Americas

SSAB Americas weathered the choppy waters of 2016 well, optimizing operations even as the U.S. plate market took a turn south.

Shipments by the Lisle, Ill.-based steelmaker, climbed to 1.92-million tonnes in 2016, up from 1.88-million tonnes in 2015, despite poor plate demand in North America. The unit, a subsidiary of Nordic steelmaker SSAB AB, also saw mill utilization rates gain by seven percent year-on-year, an impressive showing in a year when plate prices plunged and, at times, fell below hot-band prices.

Based solely on ongoing, continuous-improvement initiatives, SSAB Americas last year scored $22.7 million in savings, including $9 million in optimizations at its Mobile, Ala. and Montpelier, Iowa mills, with higher production capacity and lower energy inputs. Crude and rolled steel production in the Americas both climbed in the mid-single digit range year-over-year even as lower prices weighed heavily on sales revenue.

Notably, Sweden’s SSAB AB digested a major acquisition – of Finland’s Rautaruukki Oyj – in 2016 and as part of the integration cut 2,500 jobs globally, even as the Americas segment saw staffing virtually unchanged.

SSAB gained market share in North America, winning supplier awards from the likes for Caterpillar Inc. and John Deere & Co and positive customer feedback. SSAB America’s EcoSmart program, launched on Earth Day 2016, broke new environmental ground.

On the energy front, SSAB Americas has cut its energy consumption by 25 percent since 2010. For comparison, the American Iron and Steel Institute (AISI) estimates that industry-wide, North American steelmakers cut energy intensity by 35 percent, relative to 1990, though on a steel per-ton basis.

SSAB Americas uses wind and renewable energy in manufacturing and recycles scrap tires as a carbon substitute. The company contends that its approach to production results in 66-percent fewer CO2 emissions vs. the 2014 U.S. steel industry

Steel Dynamics Inc.

For Steel Dynamics Inc. (SDI), 2016 served up a series of strategic upgrades and expansions.

Last year, the Fort Wayne, Ind.-based steelmaker completed major paint line and Galvalume expansions at its recently acquired Columbus, Miss. mill, on time and on budget – in one case, even a month ahead of schedule. SDI also set in motion a productivity project to boost galvanized output at its Butler, Ind. mill, the company’s other big flat-rolled flagship.

The expansions weren’t small, with each set to add hundreds of thousands of tons of output annually. And that doesn’t count a 2016 ramp-up at Butler’s push-pull pickle line, which added 600,000 tons of extra pickling capacity.

Besides diversifying SDI geographically and in end-market terms, the projects drove the steelmaker deeper into niche and profitable steel products and away from plain-vanilla hot band. SDI also made significant strides on the safety, technology, and energy consumption fronts, advances that contributed to its status as a key, low-cost producer.

Robust financial and operating results rounded out a positive year. in a market where many U.S. steelmakers lost money. SDI saw revenue climb in 2016 vs. 2015, with record operating income of $927 million, more than double 2015’s $403 million. Shipments gained by some 900,000 tons, and utilization rates checked in at 87 percent, vs. industry averages of 71 percent.

SDI scored $105 of operating income per ton of steel shipped, what it called “best-in-class”, vs. industry averages of $53 per ton. The company’s fabrication division shipped substantially more tons in 2016 than in 2015, while its scrap division flipped a $20-million operating loss in 2015 into a $26-million operating profit in 2016.

After sealing two modest acquisitions in 2016, SDI ended the year with record liquidity totaling more than $2 billion, an enviable war chest.


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