With an annual capacity of 1.5 million short tons, the pending closure will narrow overall U.S. capacity. That said, the domestic market continues to grapple with a supply glut. This issue has led to falling prices for HRC, CRC and HDG since late April. Beyond that, new capacity continues to come online. BlueScope, Nucor and Steel Dynamics (SDI) continue to ramp up production on expanded/restarted mills. Estimates suggest that those mills could add nearly 15,000 short tons per day of flat rolled and raw steel capacity.

At full capacity, SDI Sinton will produce 3 million short tons per year, with shipments expected to reach 1.5 million short tons by the end of 2022. The Nucor Gallatin expansion, which added 1.4 million short tons per year of capacity, will expectedly hit its full 3 million short ton per year run rate in Q4 of 2022. Meanwhile, North Star BlueScope added a 937,000 short ton per year expansion that will expectedly become fully operational over the course of the next 18 months. Those combined additions to the market will more than compensate for what is lost upon UPI’s closure.