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Steel buyers mull impact of possible ThyssenKrupp plant sale

Keywords: Tags  Association of Steel Distributors, ThyssenKrupp, U.S. Steel, Ternium, CSN, Nucor, ArcelorMittal, Bill Feniger Universal Metals


CHICAGO — As various global steelmakers consider acquiring ThyssenKrupp AG’s assets in the Americas—particularly the rolling mill complex in Calvert, Ala.—steel buyers are weighing the potential impact of such a sale.

Analysts have pointed to Pittsburgh-based U.S. Steel Corp., Luxembourg’s Ternium SA and ArcelorMittal SA, Charlotte, N.C.-based Nucor Corp. and Brazil’s Cia. Siderúrgica Nacional (CSN) as potential suitors for the facility, among others (amm.com, May 18).
 
Under any new management, the Calvert facility will “supply everyone down South and will shoot steel up north. They’ll operate at such a (favorable) number because their investment is going to be so much less than the original owners spent, $4 billion,” Bill Feniger, president of Universal Metals LLC, Toledo, Ohio, said during an AMM-led roundtable Jan. 24 at the Association of Steel Distributors’ meeting in Detroit.

“ThyssenKrupp lost so much money (on the Alabama mill), and it’s still not ramped up where they can make money,” said Mike Dallek, president of MD Metals Inc., Bedford Park, Ill. Plus, “that’s an enormous amount of extra supply that’s been weighing on the market.”

“It’s one of the most modern, unbelievable mills I’ve experienced,” Feniger said. “Someone will run that mill and make it effective. But it will only be profitable if somebody puts the hot end (melt shop) in front.”

Even if slabs were sourced locally, rather than shipped from Brazil, “it won’t run that great,” he argued. “Whoever buys it—Nucor-Louisiana, ArcelorMittal or U.S. Steel—eventually the only way that mill runs right is when they put the hot end on.”

The addition of a melt shop would be ideal, “but that mill could run properly if it were managed to its capacity,” said Lisa Goldenberg, president of Delaware Steel Co., Fort Washington, Pa. “It’s like Disney World there. I’ve never been to a more magical place.”

However, the German parent and the U.S. operators have hit obstacles—putting the moving parts in place, proper communication between systems and people, recording and analyzing accurate data that operators can work with—in trying to make good decisions, she said.

“Anyone buying it will buy it with the thought process that they are going to have to put a hot end on,” Feniger said. “That is why you’ll get a $1.5-billion or $1.8-billion bid on it.”

No matter what, he added, “That mill is going to run.”

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