NEW YORK David J. Joseph Co.s (DJJs) acquisition of a bulk scrap export facility in Florida is expected to have minimal impact on the export market to Turkey but could bolster the companys position in the domestic market, according to industry participants.
Cincinnati-based DJJ recently announced that it had purchased the Tampa, Fla., assets of OneSteel Recycling Inc. through wholly owned subsidiary Trademark Metals Recycling LLC (amm.com, April 24) after the Port of Tampa Bay authorized a change in the ownership of the lease (amm.com, April 22).
Rumors that DJJ was set to acquire OneSteels facility in Tampa first circled the market late last year and strengthened over the following months, so there was little surprise when the company finally confirmed the deal.
The OneSteel sale includes its Tampa shredder operation and deepwater export site, as well as Florida locations in Clearwater, Hudson and Seffner. The acquisition brings the number of Trademark Metals facilities to 30, including another scrap metal facility it already operates at the same port.
"The impact of the Trademark purchase would be a good defensive move by Trademark in Florida," one trader said, adding that hypercompetition and an overcapacity of shredders in Florida has made that market extremely challenging. "This puts Trademark in a more competitive situation and prevents any other companies from operating a deep-sea operation in Florida," he said.
Another market participant said the acquisition makes sense. "DJJthrough Trademarkhas a pretty good footprint in Florida," he said. "Theres been a struggle in Florida because its become super, hypercompetitive. (Following this deal) I doubt that a lot of the other yards that have opened up will stay around. There will be a consolidation of yards down there."
Although OneSteel used its operations in Tampa primarily for bulk exports of ferrous scrap to Turkey, some market participants suggested that DJJ will likely take a different route since it has not exported much cargo to Turkey in recent years.
Others were uncertain about potential exports from the port.
"DJJ has exported sporadically, so its anybodys guess what they intend to do with it," a third trader said. "The additional production that would come from this is not strategically suited for domestic consumption over and above what they already do, unless they shut down the shredder and lower collection prices."
Scrap buyers and traders in Turkey said they expect the impact to be minimal, regardless of whether the company exports or not.
"I dont think this will have an impact. OneSteel used to ship one 30,000-tonne cargo per month to Turkey, so at worst this tonnage will be diverted into the domestic marketwhich wont count as an important impact," a Turkish trader said.
A buyer for one Turkish producer echoed that sentiment, while others noted the imminent launch of another operator in the region.
Should DJJ not export to Turkey, buyers would lose one seller but quickly gain another once Topsham, Maine-based Grimmel Industries LLC completes the installation of its shredder in the same region, a fourth U.S.-based trader said. "Grimmel is putting a shredder down just south of Tampa, so they could become the exporter from there."