Severstal North America is expanding its capabilities by modernizing two facilities
January 2011 - With thorough modernization programs underway at its Dearborn, Mich., and Columbus, Miss., facilities, Severstal North America is preparing to handle more diverse product lines and shed its image of operating purely automotive-based facilities.
"The scope of these projects allows us to really cover a wide, diverse product line from very formable steel to very high-strength steels and running from light gauges to heavy gauges," says Tom Marchak, vice president of commercial for Severstal North America, which has its headquarters in Dearborn. Previously, the Dearborn location largely has been labeled an automotive facility. "What we found in the past is when you start labeling a facility as a construction mill or an automotive mill or an appliance mill, you somewhat limit yourself," he says.
Severstal North America has a long tradition in the automotive market. The modernization project compliments the company’s strength in automotive steels and also enables it to branch out more fully into other consuming industries, says Marchak. Columbus supplies more than 20 different industries. "We supply light-gauge, we supply heavy gauge, we supply narrow, we supply wide, we supply forming steels, we supply high-strength steels, and you are going to see the same capabilities at Dearborn," he says.
The Dearborn operation became part of OAO Severstal, an international steel and mining company, in 2004, and Columbus in 2005. Severstal North America is among the largest steelmakers in the United States and produces flat-rolled carbon steel products, including hot rolled, cold rolled, electro-galvanized, hot-dip galvanized, tin and Galvalume, according to the company. Among its major markets are automotive, appliance, construction, container, converter and service center. The company operates multiple U.S. facilities, upstream and downstream operations, and joint ventures.
Severstal North America expects the Dearborn and Columbus projects to be completed in the second half of 2011 and 2012, depending on commissioning schedules of the respective units. "These projects are critical to furthering Severstal North America’s leadership position in the production of innovative, high-quality light flat-rolled products and strengthening our commitment to the North American steel market," Sergei A. Kuznetsov, CEO of Severstal North America, said in a press release.
The modernization effort is enabling Severstal North America to meet the current and future needs of demanding steel applications with the goal of continued leadership in product capability and service for customers in any market, according to the company. The projects at both facilities include not only new equipment but also improved business processes, logistics, systems and service.
Among the new, technologically advanced equipment the company is adding to its Dearborn facility is a continuous 72-inch linked pickle line and tandem cold-rolling mill, which has an estimated start-up date of September 2011. The equipment includes a five-stand, six-high mill that links pickling and rolling in one line, which will improve product quality and capability for shape, gauge, surface characteristics and mechanical properties.
Dearborn also will have a wide-exposed hot-dip galvanized line, which likely will be operational in January 2012. "If you take a look at the galv line, it allows us to go out to 72 wide, and it’s an exposed line. There’s no exposed hot-dip line that I’m aware of in the United States," says Marchak, noting the technology will give Severstal North America a competitive advantage in the marketplace. The line will be capable of applying a precise coating of either zinc or zinc alloy to the steel surface.
In addition, the Dearborn facility includes the "C" blast furnace; a hot-strip mill equipped with three walking beam reheat furnaces, four roughing stands, seven finishing stands and three coilers; and steelmaking facilities that include hot metal desulfurization, ladle refining and vacuum degassing. With its expanded product range, the Dearborn facility will increase its total output of cold-rolled sheet from 1.65 million tons to 2.1 million tons per year.
At the Columbus facility, the modernization project includes combining the efficiency of an electric arc furnace minimill with a sophisticated, wide-finishing mill. Phase II is underway at the facility, and it is expected to reach a capacity of 3.4 million tons upon completion, an increase from the 1.7 million ton capacity currently available.
"The mill was originally advertised as 72 wide, hot-rolled. We’re now rolling out over 75 wide. That gives you the ability to participate in 24-inch-diameter transmission pipe, which is a huge opportunity," says Marchak. "Most of this pipe was being supplied predominately from the Northern mills, and most of the customers are down in the Gulf area, so that kind of is giving us a leg up down there."
Phase II also will increase the capacity of Severstal Columbus’ downstream operations by 30 percent to 120 percent, depending on the unit, including a continuous pickling line, batch annealing, temper mill and continuous galvanizing line. The modernization also includes a second electric arc furnace complex, vacuum degasser, a second thin strip caster, a second shuttle-type tunnel furnace and a second downcoiler at the hot mill.
Marchak estimates the company will begin to see a return on investment for the projects at both facilities sometime in early 2012.
Work on the modernization projects resumed this year after Severstal North America put them on hold in the wake of a fall in both steel demand and pricing that occurred in the fourth quarter of 2008. Despite the difficulties in the automotive market in 2008 and 2009, the market has begun a steady recovery and Severstal North America sees potential for growth.
"The automotive build came to a crashing halt in 2008," but Severstal North America is anticipating conservative growth, says Marchak. The company projects that automotive production will reach roughly 11.9 million units this year, and it estimates an increase to roughly 12.3 million next year. "We always felt that it would turn around," he says.
Markets go in cycles, and few could have anticipated the steep downturn, says Marchak. Yet, the rate of recovery in 2010 was somewhat surprising, he notes. "I definitely see this continuing to move forward as far as growth. I think we most definitely hit bottom," he says.
The modernization effort also will help Severstal North America weather future market difficulties. "In the past, we probably ran between half and half automotive and then all other markets," says Marchak. "I think with the facilities and the upgrades, we will be able to get into more some specific OEM business like appliance or garage door or HVAC or water heater, so we will have some other additional contractual business that would also complement our automotive business," he says.
The facility locations also are beneficial for Severstal North America, says Marchak. Dearborn and Columbus are in the "backyards" of many major companies and industries, especially automotive, he says. From Columbus, the company can sell to the East Coast, west to Phoenix and up through the Tennessee area, says Marchak. For Dearborn, the company can sell throughout the Midwest and on the East Coast in Pennsylvania and New York. The two sales areas "really don’t interfere with each other," he notes. MM