The New Landscape After Consolidation

On Monday, Nucor announced their intention to acquire Gallatin Steel and its approximately 1.8 million tons of hot rolling capacity. Today, AK Steel and Steel Dynamics (SDI) completed the purchase of the Severstal North America assets. The biggest pieces of the Severstal deal are the Dearborn steel mill, which went to AK Steel, and the Columbus steel mill, which went to SDI.

By the end of this calendar year, approximately 8.8 million tons of steel making and rolling capacity will have changed hands and the number of competitors in the marketplace will have been reduced by two. Everyone is going to need a new playbook in order to recognize all of the players. Brian Robbins, CEO of MidWest Materials, Inc. and President of the Association of Steel Distributors was supportive of the consolidation of the industry. He told SMU in an email earlier today, “The recent M&A activity in the steel industry has been quite exciting.  The preservation of our steel assets under the stewardship of world class domestic steel suppliers will hopefully inspire competition that improves each mill, their capabilities, and the quality of the products they supply.  It should also help encourage stabilization based more on true market dynamics rather than short-term individual mill needs, with the larger mills directing each specific location’s efficiencies as part of their portfolio of assets.”