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Too much coating capacity? Forecasts for construction and automotive hold promise for strong sales of galvanized and Galvanneal products in 2005, but the supply-demand balance is cause for concern.

Article Excerpt
Although hot-dip galvanized steels proved popular last year, some observers question plans to build new domestic capacity in a market that has more than enough, especially counting imports.

The American Iron and Steel Institute reports that U.S. mill shipments of hot-dip galvanized sheet and strip totaled 15,236,282 tons in 2003. From January through October 2004, AISI reported shipments of 13,900,196 tons, which represented a 6.1 percent increase over the first 10 months of 2003.

Some experts estimate that U.S. hot-dip galvanizing capacity exceeds 20 million tons, and that imports may account for up to 30 percent of domestic consumption.

Although hot-dip galvanized sheet products have a wide range of applications, the two dominant end users are the automotive and construction industries. Market participants cite several concerns for the balance of 2005.

NEW CAPACITY

International Steel Group, now Mittal Steel, announced last August that it would add a 500,000-ton automotive-quality hot-dip galvanizing line by converting an idled continuous anneal line at its Cleveland Works, for about $40 million. Startup is expected during the fourth quarter of 2005.

Although ISG declined to comment on the galvanized market for this story, during the company's third-quarter conference call President and CEO Rodney B. Mott said the objective of this project is to enhance business with automotive suppliers.

ISG has become more focused on each coating line, Mott said. "Our Columbus Coatings line is now totally committed to the Galvanneal product that is in so much demand by automotive. In turn, the Burns Harbor hot-dip galvanized line is now focused specifically on hot-dip, no longer making the changeover to Galvanneal. This has enhanced the operation of each facility and provides higher quality product to the marketplace." (Galvanneal is a hot-dip coated product in which the galvanized zinc coating is changed into a zinc-iron alloy for improved paintability.)

Automotive quality hot-dip galvanized sheet from Cleveland Works will be developed for use in 2006 model year vehicles, Mott said.

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