NEW YORK Esmark Steel
Group LLC, Chicago Heights, Ill., has entered into an agreement
with Partners in Steel International LLC to sell its special
bar quality (SBQ) assets as the service center effectively
exits the steel bar business.
The purchase of the assets,
inventory and other equipment at Esmark subsidiary Chicago
Steel & Iron Bar was finalized late June 6 for an
undisclosed amount, according to Partners in Steel, which said
the terms of the deal were in the multi-million-dollar range, a
figure that was confirmed by Esmark.
As for the future of Chicago
Steel & Iron Bar, the company will be dissolved within the
next week, according to James P. Bouchard, chairman and chief
executive officer of Sewickley, Pa.-based parent Esmark
"One of the reasons for the sale
is because Esmark is exiting the bar business. Our focus will
be on the flat-rolled side, which has kind of been our
expertise for years," Bouchard told AMM. "Obviously,
our next focus will be getting Yorkville (Ohio) fired up and
ready for the 2014 tin season."
facility, originally part of defunct steelmaker RG Steel LLC,
will supply substrate to Ohio Coatings Co., a 50-50 tinplate
joint venture with Seoul, South Korea-based TCC Steel Co.
Bouchard said that while the bar
business had been relatively resilient despite a softer steel
market, it recently suffered from shorter lead times and
oversupplied markets. "Its just a different type of
business than what were used to in the flat-rolled side,"
he said. "We got uncomfortable with the bar side because
its just not in our expertise. We built (Chicago Steel
& Iron Bar) up from scratch and deployed a tremendous
amount of working capitalapproximately $30
millionand didnt have the returns we expected."
But while Esmark continues to
focus on the flat-rolled side, Partners in Steel managing
director John D. Foster said that the future looks bright for
the bar market. Foster, a former president and chief executive
officer of steel trader Coutinho & Ferrostaal Inc., created
the consulting, marketing and investment services company in
"Were not buying the
company, but were buying certain assets of it. I see
significant value in specialty steels. I think the challenge in
the sector has tremendous upside potential," Foster told
Foster declined to specify what
the purchased assets will be used for, but confirmed that he
will not be entering the distribution business himself and
instead advising further transactions.
"I think the market has reached
a turning point. Were buying at a time when theres
a lot of upside potential," he said.