U.S. Steel is expanding but not in Indiana.
The Pittsburgh-based company, which turned an annual profit only once since 2008, has been cutting back for years and temporarily idled East Chicago Tin and shut down the blast furnace at Granite Works in Illinois, is partnering with Japanese steelmaker Kobe Steel to invest $400 million to build a new finishing line in Ohio.
The timing for the investment seems right as market conditions have improved dramatically recently. U.S. steel prices fell below $400 a ton in 2015, but a hot-rolled band was selling for an average price of $702 a ton the week of Sept. 11, according to Steel Benchmarker.
U.S. Steel and Kobe Steel plan to construct a new continuous galvanizing line for advanced high-strength steels for the automotive industry at their PRO-TEC Coating Co. subsidiary in Leipsic, Ohio. U.S. Steel and Kobe Steel operate that non-unionized plant about an hour south of Toledo as a joint venture, similar to how ArcelorMittal partners with the Nippon Steel & Sumitomo Metal Corp. on I/N Tek and I/N Kote in New Carlisle.
U.S. Steel spokeswoman Meghan Cox said steel for the new galvanizing line would be sourced from existing facilities, including Gary Works. The steelmaker expects to start construction this year, and start up the new line in 2019.
U.S. Steel declined to comment on why it chose to invest in Ohio instead of at of any of their existing facilities in Indiana. The Ohio facility is closer to many of the end users in the Detroit area and across Ohio.
The steelmaker said it's building the new line, which will be able to produce up to 500,000 tons of finished product a year, in response to increased demand for the advanced high-strength steels the auto industry is using to make cars lighter.
"This line, which will utilize a proprietary process, will be capable of coating steel that will help automakers manufacture economically lightweight vehicles to meet increasing fuel efficiency requirements while maintaining exceptionally high safety standards," U.S. Steel said in a statement.
The new line at PRO-TEC will specifically produce Generation 3 steels. U.S. Steel says are both formable and weldable with a hot-dipped zinc coating. Automakers can use these steel products to make structural components for vehicle bodies with their existing stamping and assembly methods instead of investing in new equipment to utilize alternative metals such as aluminum.
“This line will be the first of its kind and utilizes proprietary technology capable of producing the high-quality, cutting-edge advanced high-strength steels that will meet our automotive customers’ needs and solve some of their most pressing challenges," U.S. Steel President and CEO David B. Burritt said in a statement. "Our Generation 3 steels continue to reinforce why steel remains the lowest cost, strongest, safest and most environmentally efficient material of choice. We are proud to be taking this step toward the future with Kobe."
Burritt expressed thanks to Ohio officials for their assistance with the project.
"We thank the JobsOhio team and Ohio’s regulatory authorities as well as the local, state, and federal elected officials for their support of our investment,” Burritt said.