Final Thoughts

September preliminary census data was reported by the U.S. Department of Commerce around 5 PM ET today. The big number is total imports for September were 2,760,821 net tons which is lower than August when the U.S. received 2,878,367 net tons. Slabs were much lower than the license data had projected with 633,951 net tons vs. license data of 771,300 net tons. We will have a full report in Sunday night’s edition of our Executive issue of Steel Market Update.

Our next steel market survey will begin on Monday morning, November 4th.

I haven’t been reading the other industry newsletters’ coverage of the ThyssenKrupp Steel Americas rumor mill. However, I am aware of the comments being made regarding ArcelorMittal, Nippon and potentially U.S. Steel joining forces to pursue the Calvert, Alabama facility. Here are some of my thoughts and opinions on the subject.

It has been known for more than a year that the two primary interested parties were CSN out of Brazil and ArcelorMittal with their headquarters in England. Other companies who had expressed interest were Nucor and U.S. Steel for the Calvert operation and Ternium for the CSA slab mill in Brazil.

Ternium dropped out of the bidding almost immediately feeling the price being requested was not reasonable.

CSN became the lead bidder because they were interested in both assets – CSA, the slab mill in Brazil and the Calvert, AL rolling mill here in the United States. No other company expressed interest in the Brazil facility as AM and USS are both long slabs.

Our opinion is Nucor is only interested from a commercial standpoint and has been upgrading the Decatur and Berkeley operations in order to become a larger supplier to automotive and doesn’t really need the Calvert operations.

CSN has wanted to become a larger player in the North American market and has made several attempts to purchase mill assets in the United States only to be spurned by the unions. The one asset they did manage to purchase was the former Heartland Steel in Terre Haute, Indiana. The Heartland Steel facility was a non-union plant and is now called CSN.

This may be CSN’s last chance to purchase a quality non-union steel asset in the United States or Canada.

If ArcelorMittal becomes the lead buyer there most likely will be questions by the U.S. Department of Justice. Since the mill is only a rolling mill and is not yet considered to be a major automotive supplier they may or may not be required to divest themselves of other U.S. assets.

When speaking with buyers and mill people the expectation is if AM is the buyer there will be fewer competitors and a potential elimination of one of the more competitively priced mills in the United States.

If CSN becomes the new owner they then become a “wild card” as no one is quite sure how they will go to market.

Our sources do not believe that the CEO of CSN has thrown in the towel and admitted defeat after spending almost 9 months in constant negotiations with ThyssenKrupp.

Second, a sale to ArcelorMittal without a resolution to the CSA plant doesn’t help ThyssenKrupp AG as much as a sale to CSN with some form of slab agreement which potentially provides some value to the Brazilian assets over the next five years.

The candle has been lit and is now sitting beneath a few executives seats in Germany, Brazil and England…

The next couple of months may prove to be quite interesting indeed.

As always your comments and your business are both truly appreciated.