SDI's $2.2B Rolling Mill Project Will Reshape Aluminum Scrap

Backward physical integration comes to the aluminum rolling industry

SDI’s decision to “jump the fence” and enter the aluminum rolling sector was, in and of itself, blockbuster news. However, the repercussions on the aluminum scrap market may be even more profound. CRU has argued for some time that the big aluminum rolling mills would eventually borrow from the SDI and Nucor business model and embrace backward physical integration. These companies’ purchases of Omnisource and The David Joseph Company, respectively, in 2008 enabled both steel companies to gain more direct physical control of their scrap feedstock. These companies’ footprint in auto shredding and other steel origination “across the scale” have been major contributors to their bottom-line success. SDI, for example, reported that Omnisource secured 42% of their ferrous supply during fiscal year 2021. That surety of supply is a big plus.