SteelScope
Whereare theynow?
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n early 2013 Prime magazine rolled out a series of predictions for the year: which steel producers were most likely to invest in new facilities or beef up capacity? Which were most likely to expand downstream or get acquired? After a year of newsworthy ups and downs, the answers to those questions and more have become mostly clear. is roundup of the class of 2013’s Most Likely list highlights whether last year’s alumni followed their predicted path, or diverged to a more exciting—or disappointing—trajectory instead.
Most likely to expand across borders Big things were expected for Deacero in 2013, and it seemed as if they were moving along at full steam ahead. roughout 2012, many US long product insiders believed the company would expand their market foothold by opening a wire rod mill on US soil, and the reasoning made sense—in February 2012, the US Wire Rod Producers Coalition filed a petition alleging that Deacero and Ternium Mexico S.A. de C.V. were responsible for a surge in imported wire rod in gauges below the nominal diameter of the wire rod covered by the standing antidumping duty order in an effort to evade them. at September, the DOC confirmed its preliminary determination that “wire rod with an actual diameter of 4.75 mm to 5.00 mm by Deacero S.A. de C.V. constitutes merchandise altered in form or appearance in such minor respects that it should be included within the scope of the order on wire rod from Mexico.” Ternium Mexico S.A. de C.V. was exempt from the determination. Two months later, the DOC calculated a new dumping margin for Deacero-produced wire rod of 12.31 percent, less than the current dumping duty deposit rate of 20.11. With such stringent complications placed on Mexico’s wire rod export market, the idea of opening up a wire rod mill in the US would have made tremendous business sense. While Deacero Chairman Raul Gutierrez
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told reporters in December 2013 that he does expect a recovery in steel demand in 2014, for now, the company would not be making any new investments, including expansion into the US market. Instead, Deacero will focus on consolidating operations, which is expected to help sales within export markets. “In our case, we export 40 percent of our production and that can also help to trigger further growth.” he said. So where does this put the company in terms of an alumni of 2013 reunion? At a table in the back of the room with the rest of the graduates who have yet to leave town.
Most likely to get acquired e will-they-or-won’t-they speculation that surrounded the sale of yssenKrupp’s Americas holdings did pan out, although the eventual suitor arrived late to the dance. To recap, mid-2012 rumors solidified that yssenKrupp had a less than positive outlook for the Americas. At that point company’s Chief Executive Heinrich Heisinger admitted in a quarterly conference call that the company was considering its options for the Americas, including moving forward with the sale of its Alabama-based steel processing plant and Brazilian-based slab mill. In August of that year, Heisinger tossed out a for-sale price of approximate US$8.8 billion for both facilities, indicating there were a number of interested parties. Shortly after the announcement, South Korean steel giant POSCO submitted a letVolume 7; Issue 1
ter of intent indicating their desire to take over both plants, although Brazil-based CSN and Japanese steelmakers Nippon Steel and JFE Steel Corp. were also rumored to have tossed their hats into the ring. Although many within the industry had their chips on POSCO, CSN came to the table with an offer for US$3 billion for both plants, which was significantly less than the US$8.8 billion asking price. In the end, yssenkrupp settled for even less. In late November 2013 yssenKrupp announced they would be postponing the publishing of their annual financial results because they were in exclusive negotiations on the possible sale of the Alabama steel plant. e finalization of the sale was announced on December 2. ArcelorMittal and Nippon Steel & Sumitomo Metal Corporation (NSSMC) announced they had entered a 50/50 joint venture partnership to acquire the steel processing plant for US$1.55 billion. Although yssenKrupp was unsuccessful in unloading the Brazilian slab mill as part of the deal, they were able to negotiate a six-year agreement in which ArcelorMittal and NSSMC would purchase 2 million mt of slab per year as a condition of the sale. ArcelorMittal said they would source the remaining slab balance for the Alabama steel mill from their plants in the US, Mexico and Brazil. A spokesperson for the company said the facility will help complement their existing auto business within the US, especially considering the NAFTA automotive market
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