(Bloomberg) -- Steel Dynamics Inc. shares jumped on a report that its new Texas plant could soon be supplying Tesla Inc. with steel for its upcoming truck, thrusting the producer into the automotive market in a big way.
A potential supply agreement, reported previously by local outlet 3News and the blog Electrek, would send metal from Steel Dynamics' new plant in Sinton, Texas, currently under construction to Tesla's new factory, which is also being built in the state. Shares rose as much as 3.7% to touch the highest in two years on the Nasdaq, and were up 1.7% to $39.44 a share at 2:05 p.m.
The reports do not give the volume or value of steel the company would supply, but they do note that Tesla, the biggest U.S. electric-vehicle maker, plans to produce its electric pickup truck in late 2021, which would correspond with Steel Dynamics' plan to open its mill by the middle of the year.
Steel Dynamics didn't immediately return a call seeking comment
Chief Executive Officer Mark Millett told analysts during an earnings call in October that the company has recently seen gains in automotive market share. He said the fact that the company's mills remained running amid the pandemic gave automotive customers optionality and availability of their metal products as the auto industry ramped back up after nearly two months of closures.
Speaking in a phone interview, a major steel industry group said they were unaware of the deal but that if it's true this shows steel will continue to be an important material in the electric vehicle revolution.
“It's good news that Tesla is building cars with steel,” Kevin Dempsey, the CEO of the American Iron and Steel Institute, said. “Steel is going to play a big role for electric cars.”
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