NEW YORK Market
rumors have been circulating since late last week on the
imminent sale of ThyssenKrupp AGs Steel Americas
operations in Calvert, Ala., with some market players expecting
the deal to help tighten supply and increase pricing in the
are expecting an announcement as early as this week from the
Essen, Germany-based steelmaker or from the likely joint
buyersLuxembourg-based ArcelorMittal SA and Tokyo-based
Nippon Steel & Sumitomo Metal Corp. While AMM
could not confirm the bid, the move by the worlds largest
and fourth-largest steelmakers, respectively, could mean
consolidation in the U.S. market.
spokeswoman said the company knows "there is a lot of
speculation going on" but it is still in negotiations and would
not comment on market rumors.
spokeswoman said the company was unable to comment because it
is in a "closed period" prior to releasing its third-quarter
results Nov. 7. Nippon Steel could not be reached for
Siderúrgica Nacional SA was a recent bidder, but many
speculated that the Brazilian companys offer was not as
The announcement of a
joint bid could impact the flat-rolled sector.
"One thing this
ArcelorMittal (Nippon)-Thyssen deal will do is firm up the
marketit absolutely will," one Midwest service center
source said, adding that industry consolidation would help an
At least one U.S.
competitor millin anticipation of a ThyssenKrupp
saledrafted an Oct. 29 internal letter to temporarily
suspend all contract negotiations and price offers in a move
that seems to validate the rumored upcoming announcement.
expected to announce its sales agreement of the Alabama
facility in May, but clarified in an earnings call that it was
still in "advanced" negotiations with the leading bidder (
amm.com, Aug. 13).
Others speculated that
if a ThyssenKrupp acquisition announcement was made, U.S.
steelmakers could use it as a catalyst to raise prices because
of the perception of fewer tons in the marketplace.
"If the announcement
happens, the mills can quickly raise prices again," one trader
One concern among
buyers, however, is how 2014 contracts will play out,
particularly as any signed deals with customers will be
transferred to another mill. Sources indicated that concessions
that are part of ThyssenKrupp contracts will be carried
It makes sense to have
ArcelorMittal and Nippon as the top contenders in the bidding
process, according to Charles Bradford, an analyst at New
York-based Bradford Research Inc.
"The plant in Alabama
was built for companies like Mercedes(-Benz) and BMW using IF
(interstitial-free) steel. No one has IF-grade slab except what
ThyssenKrupp can make in Brazil, what ArcelorMittal can make in
Brazil and what Nippon Steel can ship over," he told
AMM. "Its scarce because there isnt much
of a market for that product."