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AM may sell Penn mills; Liberty shows interest

Jan 03, 2020 | 05:51 PM | New York | Dom Yanchunas

Tags  ArcelorMittal, Coatesville, Conshohocken, steel plate, M&A, Liberty Steel, Dom Yanchunas


ArcelorMittal USA is considering a plan to sell its mills in southeastern Pennsylvania, according to the president of a local United Steelworkers (USW) union branch, which represents workers at ArcelorMittal’s Conshohocken facility.

Liberty Steel Group, the United Kingdom-based company keen to expand in the United States, is among at least four prospective buyers who have visited the two facilities in Coatesville and Conshohocken, USW Local 9462 president Kameen Thompson told Fastmarkets AMM on Friday January 3. 

Production at the 500,000-ton-per-year plate rolling mill at Conshohocken has been idled since 2018. The Coatesville mill can produce 900,000 tons of raw steel and is a producer of wide, thick and heavy plate. 

"Recently we found out that we may be sold," Thompson said. As a prospective buyer, "Liberty definitely had strong interest, but there are about three or four others that I'm not sure of who they are."

Thompson said the USW workforce at Conshohocken totaled about 300 before the idling and has dropped to about 100 people while that facility remains engaged in processing and finishing services. Feedstock routinely comes from Coatesville, but Conshohocken currently also receives material from ArcelorMittal USA's mill at Burns Harbor, Indiana. 

The Coatesville and Conshohocken facilities are located about 32 miles from each other and operate largely as an integrated enterprise. Coatesville employs 633 people, according to the ArcelorMittal USA website

"The Coatesville facility refines more than 450 different steel chemistries and - together with the Conshohocken facility - produces some of the widest, thickest and heaviest steel plates in the industry," ArcelorMittal USA states on its website.

Representatives for ArcelorMittal USA did not respond to Fastmarkets' requests for comment on a prospective sale. A Liberty Steel spokesperson did not immediately reply to a request for comment on Friday.  

The dual Pennsylvania mills should have plenty of work, and their outlook is good because of US Navy contracts that procure specialized steel for submarines and ships, Thompson said. A large federal infrastructure spending bill would enhance the enterprise further, he said. It would not make sense to acquire one facility without the other.

"If we're being sold, mostly likely Coatesville is, too," Thompson said. "We really can't be separated. We're important to national security because of the high-strength alloy."

Picking up one or both of the Pennsylvania mills would extend Liberty Steel's foray into the US market, which already includes its Georgetown mill in South Carolina, the former Keystone Consolidated Industries facility in Illinois and Bayou Steel in Louisiana, as well as scrap operations in Florida. In Pennsylvania, Liberty owns the former Johnstown Wire Technologies

The union president in Conshohocken thinks his team would be a good fit for that expanding footprint. 

"I think if the facility is bought, they would want to invest in the business," he said. "Hopefully it would increase some jobs." 

One East Coast plate buyer, who was surprised when ArcelorMittal idled the Conshohocken mill in the first place, was surprised again by the idea that the company may sell the facilities. If ArcelorMittal is retreating from the plate business in one or more regions of the United States, that's likely a boost for prices and for the outlook of its competitors. It's potentially detrimental to customers.

"Nucor would love it," the East Coast customer said. ArcelorMittal USA is "the K-Mart of steel suppliers." 

If Liberty gains market share in the US, it has the potential to be "a good competitor and help the market" and be a worthy counterweight to Nucor, that buyer said.  

Fastmarkets' price assessment for steel cut-to-length plate carbon grade, fob mill US, stands at $32 per hundredweight ($640 per short ton). A year ago, the price was $49 per cwt ($980 per ton).


 

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