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U.S. steelmakers said demand for steel will remain strong deep into next year, keeping prices high for customers such as auto and appliance makers and stoking continued investments in new mills.

The extended boom in the $180 billion U.S. steel industry that began last year following the Covid-19-related shutdowns of mills is giving steelmakers more time to bring new plants into service and renew customer contracts at higher prices, executives said. Steel inventories remain tight as mill outages and transportation bottlenecks have crimped shipments, keeping some steel buyers on edge about acquiring enough supply in the coming months.

“We are as bullish for the fourth quarter and going into next year as we ever have been," said Mark Millett, chief executive of Steel Dynamics Inc., during a conference call on Oct. 18.

Steel companies this month have reported record quarterly profits as the spot market price for hot-rolled sheet steel has been hovering at a record of just below $2,000 a ton since July, according to S&P Global Platts. Elevated consumer and business spending is driving higher demand for steel-bearing products ranging from food cans and recreational vehicles to farm equipment.

Cleveland-Cliffs Inc., the U.S. automotive industry’s biggest steel supplier, said buyers are willing to pay more as the steelmaker negotiates 2022 supply deals with auto customers, appliance makers and other big buyers.

“Every single contract that we negotiate right now we not only negotiate for a higher price, but also we’re growing the tonnage that we deliver," said Cleveland-Cliffs Chief Executive Lourenco Goncalves.

Mr. Goncalves said he anticipates North American auto production will rebound next year as supply-chain shortages, including a lack of semiconductor chips, ease. The Cleveland-based company is now planning for maintenance outages at mills in Michigan and Indiana during the fourth quarter this year, moving up work that originally was scheduled for 2022 to avoid idling plants when auto production increases.

Steel industry utilization of production capacity is at its highest rate in years, and Steel Dynamics plants are operating at 93% of their capacity, the company said. Steel users this year have complained that steel companies aggravated steel shortages by keeping some older mills closed after the pandemic shutdowns.

With prices at record highs and mills operating near their limits, some steel companies are rushing to open new mills. Butler, Ind.-based Steel Dynamics plans to start production at a new mill in southern Texas by the end of the year that will have an annual capacity to produce 3 million tons of sheet steel that the company intends to sell in the U.S. Southwest and northern Mexico.

Competitor Nucor Corp. is close to completing an expansion of its Gallatin, Ky., mill that will increase its capacity by nearly 88% to 3 million tons annually. The company plans to idle the plant for 25 days beginning in late November to finish the job.

Nucor also is constructing a mill in Kentucky to produce steel plate, forecasting the facility to be completed late next year. The company, based in Charlotte, N.C., is searching for a site in the Midwest for another new sheet steel mill. That plant, with a planned annual capacity of 3 million tons, will supply steel to the automotive, appliance and heating-and-air-conditioning industries.

United States Steel Corp., which is scheduled to report quarterly results Friday, in September outlined plans to build its own new sheet steel mill with 3 million tons of capacity.

Cleveland-Cliffs’ Mr. Goncalves said his company has no plans to add mills, and he warned that the steel industry is putting itself at risk for having too much capacity when steel demand and prices inevitably weaken. Steel industry analysts expect prices to start receding next year as inventories are replenished and manufacturers’ supply-chain bottlenecks improve.

“Building new capacity is a mistake the steel industry insists on making time and time again," Mr. Goncalves told analysts on Friday.

He said Cliffs is focused on boosting production and reducing emissions from its existing mills by using more scrap steel and processed iron ore in the company’s furnaces. Cliffs, which had been mainly an iron ore mining company, opened a plant in Toledo, Ohio, last year with the intent of selling ore briquettes to Nucor and Steel Dynamics. But Mr. Goncalves said the company is now consuming all of the Toledo plant’s output at its own steel mills.

Nucor, Steel Dynamics and other companies adding new mills are counting on their plants’ efficient, low-cost production processes to draw customers away from steel imports and older, higher-cost domestic mills that typically need high steel prices to remain profitable.

The industry’s aggressive expansion comes as companies struggle to shrink order backlogs, and operate mills near their full capacity. Nucor’s third-quarter steel shipments to customers slipped 4% from the second quarter to 5.1 million tons because the company took a week of maintenance outages at each of its sheet steel plants. Overall, Nucor’s quarterly profit increased to $2.1 billion, an 11-fold increase from the same period last year.

Steel Dynamics said its steel shipments during the three months ended Sept. 30 fell by 5% from the June quarter. The company attributed the decline to difficulty getting trains and trucks to haul finished steel to customers.

“We built inventory as a matter of transportation," said Mr. Millett, the CEO. “We would expect to move that in the fourth quarter."

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