Market cheers SDI move, frets about AK Steel

Jul 21, 2014 | 04:52 PM | Michael Cowden

Tags  Severstal, Steel Dynamics, SDI, AK Steel, Christopher Plummer, Metal Strategies, Charles Bradford, Metals Industry Advisory Group John Tumazos

CHICAGO — The sale of OAO Severstal’s U.S. mills to Steel Dynamics Inc. (SDI) and AK Steel Corp. means further consolidation of the domestic market and could lead to more-disciplined pricing, market sources said.

"Consolidation is great—one less rogue mill chasing prices down," a Midwest service center source said.

While sources were optimistic about SDI’s acquisition, concern’s were raised over AK’s move. Reflecting this, SDI’s shares ended July 21 at $20.76 apiece, up 11.7 percent from the previous close, while AK’s shares fell 4.2 percent to $8.46 in the same comparison.

Analysts generally praised SDI’s buy of Columbus as transforming it into one of the biggest mini-mill steelmakers in the country and making it owner of some of the newest steelmaking capacity in the United States.

"In both cases, it’s good for the domestic steel market in that you have good buyers that are existing players in the market and probably would be the least-disruptive owners," said Christopher Plummer, managing director of West Chester, Pa.-based Metal Strategies Inc.....

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