Steel consolidation predicted - Scrap Industry News - Brief Article

Recycling Today, Oct, 2002

AmeriSteel is buying Co-Steel, Nucor has purchased Birmingham Steel and Steel Dynamics Inc. has picked up what was left of Qualitech Steel--and that could be just the beginning.

Steel industry consolidation is both underway and destined to gain momentum, according to Keith Busse, CEO of Steel Dynamics Inc., Fort Wayne, Ind., and Phillip Casey, president of AmeriSteel Corp., Tampa, Fla. Both executives spoke to attendees of the Institute of Scrap Recycling Industries Inc. (ISRI) Commodity Roundtables, held in September in Chicago.

"I think the era of consolidation is just beginning. Over the next 18-24 months you'll see an acceleration of activity," said Casey. He predicted that by 2005, there would be just two or three U.S.-based integrated steelmakers and four or five electric arc furnace (EAF) mini-mill operating companies in the U.S.

Casey said a "critical mass" of from 10 to 15 million tons of steelmaking capacity will be needed by surviving EAF companies, and that steelmakers will need operations over a wide geographic range and across a broad product line.

AmeriSteel, now owned by Brazil's Gerdau Co., has made its bid to be among the survivors by picking up a former Birmingham Steel facility in Cartersville, Ga., and with its pending acquisition of Co-Steel. After the Co-Steel acquisition, AmeriSteel will have 11 mini-mills and 13 scrap facilities in the U.S. and Canada.