Scrap brokers split on Severstal NA sale impact

Jul 21, 2014 | 05:38 PM | Sean Davidson

Tags  scrap, ferrous scrap, steel, SDI, Steel Dynamics, OmniSource, AK Steel, Severstal Big River Steel

NEW YORK — OAO Severstal’s sale of its North American assets to Steel Dynamics Inc. (SDI) and AK Steel Corp. could hurt several scrap brokerage businesses, according to market participants.

SDI procures scrap through its own scrap company, OmniSource Corp., while AK Steel secures its scrap needs through an exclusive arrangement with Tube City IMS LLC.

"For open market traders, this acquisition erodes open market opportunities. If you are an independent dealer or broker it shrinks the market a bit as SDI will always use the OmniSource yards as a positioning tool against the open market. Tube City is less effective, but they too lock out people in favor of their own brokerage and scrap options. Both Omnisource and Tube City will continue to make it more difficult for the independents to do business. That hurts the market," one broker said.

A second broker said the effects of the asset sale will be much greater in the South than in Detroit.....

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