US Steel adding NGO electrical steel line at Arkansas mill by 2023

US Steel is expanding its Big River Steel operations in Arkansas with a $450 million investment to add a 200,000 st/year non-grain-oriented electrical steel facility that will target growing demand from the electric vehicle market, a company spokeswoman confirmed to S&P Global Platts June 9.

US Steel expects to begin producing NGO coil at Big River in the third quarter of 2023, according to an investor presentation.

The Pittsburgh-based steelmaker said its expanded NGO steel capabilities will be necessary to support increasing vehicle electrification efforts by Ford, Toyota, General Motors and other automakers.

The technology at Big River will allow US Steel to commercialize thinner and wider NGO electrical steels to meet the specific requirements of various consumers, the company said in the presentation.

NGO steel is used in a number of power generation applications as it is needed to transform electrical power into energy.

Analysts with Credit Suisse said the investment in Big River represents a pivotal move for US Steel in "quickly charting a course to tier one global status."

"We view electrical steel as having strong demand growth potential and trade support and expect robust internal rates of return from the project, which we view as an excellent capital allocation decision and easily digestible," Credit Suisse said in a report June 9.

In a separate report, Morgan Stanley said US Steel's planned NGO steel production will ideally position the company to meet evolving demand trends.

"The investment rationale is, in our view, easily defendable given the attractive competitive landscape with only one domestic producer currently, healthy secular demand on the back of the growing penetration of EVs, Big River's competitive advantages of thinner gauge products and the attractive payback period of about 4 years," Morgan Stanley analysts said.

"Moreover, the recently released White House report on US supply chains could further support the market outlook as it recommends expanded incentives to stimulate the adoption of US-made electric vehicles."