Steel Mills
Bloomberg Reporting Severstal Close to Sale of U.S. Steel Mills to SDI and AK Steel
Written by John Packard
July 20, 2014
Steel Market Update is well aware of the rumors which have been circulating regarding the potential sale of the Severstal North American steel mills. Late last week we learned from our sources that Steel Dynamics and AK Steel were close to purchasing the two U.S. steel mills owned by OAO Severstal out of Russia. Steel Dynamics is reported to be interested in the Severstal Columbus mill while AK Steel is after Severstal Dearborn. On Saturday, Bloomberg reported that the deal was close to being done and that it is valued at $2 billion and could be announced as soon as this coming week.
Conveniently, Steel Dynamics (SDI) reports 2nd Quarter earnings at the close of business on Monday, July 21st and will conduct their earnings conference call on Tuesday, July 22nd at 10 AM.
A breakup of the two Severstal NA plants would result in AK Steel gaining approximately 2.2 million tons of pig iron production from the Dearborn single blast furnace. However, the hot strip mill has the capacity to roll 3.8 million tons of hot bands and the mill has a number of brand new pieces of equipment including a pickle tandem cold mill and exposed automotive quality galvanizing line. Besides hot dipped products the mill also produces electro galvanized. The new capacity coming from Dearborn would be added to AK Ashland (2.1 million tons); AK Middletown (2.7 million tons) and AK Butler (1 million tons) which would grow AK Steel production to an 8 million tons of carbon flat rolled steelmaking (not including stainless). However, the actual rolling capabilities of AK would be well above 8 million tons when supplemented by slabs coming from other producing mills.
SDI, an EAF mini-mill producer would pick up the newest and most modern EAF mill in North America. The Severstal Columbus facility consists of two electric arc furnaces and has the capacity to produce 3.1 million tons of flat rolled steel products. This tonnage would be added to SDI existing flat rolled facilities at Butler (3.0 million tons) giving them 6.1 million tons of flat rolled steelmaking capacity. The company website shows their current total steelmaking capacity as 6.4 million tons (all products) and the addition of Columbus would take them to 9.5 million tons of total steelmaking capacity.
If the Bloomberg report is correct, Steel Market Update would anticipate that CSN out of Brazil will work hard to purchase the Gallatin Steel facility in Kentucky which would complement their existing Terre Haute, Indiana flat rolled conversion mill.
A note to our readers: At our September 3 & 4 Steel Summit Conference we have Saikat Dey, CEO of Severstal NA as one of our keynote speakers.
We will have more information on this story as it develops in our Steel Market Update newsletter.
John Packard
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