Consolidation Will Strengthen Steel Mills

Steel Market Update received the following from a member of the financial community regarding consolidation and its impact on the steel industry both short and long term. I am reproducing the email in its entirety and you are welcome to add your comments:

“Hope you are well.  Wanted to touch base on your recent steel consolidation commentary.  While I understand the need to express some caution regarding the benefits, I am also perplexed by some of your comments.  First of all, I think it is necessary to remember the STLD / AKS transactions closed 3 weeks ago.  NUE has not yet taken control of the Gallatin mill.  MT just took control of TK Alabama 6 months ago.  The idea new management teams would have been in a position to show up and immediately change the mill approach to marketing is crazy to me.  Just from a practical standpoint, mills typically have different software programs that would slow the process of integrating into a new ownership model.  However, I don’t believe that this suggests STLD / AKS will continue to allow those marketing teams to run autonomously potentially at the expense of realized steel prices across the mill’s total tons.