Primary Steel Manufacturers Continue Industry Consolidation with New Acquisitions Amidst Improving Steel Mill Market

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Getting a boost from an industry-wide consolidation, escalating steel prices, and increasing demand/orders, primary steel manufacturers experienced first quarter profits and a turnaround in the U.S. steel industry. Not everyone is as happy as the steel manufacturers over this turn of events. Just ask the armada of downstream steel processors, foundries, fabricators, and contractors, who have gone out of business or scaled back operations and they will tell you that primary steel products are too expensive and supply is weak. However detrimental to the downstream end users, this trend bodes well for the 120 integrated and scrap steel mills in the U.S., which have gone through a period of downsizing, closures, and consolidation. Poor performing steel mills or failed integrated steel operations such as Bethlehem Steel, and LTV have been taken over by stronger organizations such as Nucor Corporation (NYSE: NUE) (Charlotte, North Carolina), International Steel Group (NYSE:ISG) (Richfield, Ohio), and United States Steel Corporation (NYSE:X) (Pittsburgh, Pennsylvania), who are capitalizing on the current market upswing and bringing the operations back into profitability.

As a continuation of the steel mill industry consolidation trend, ISG is in the process of acquiring bankrupt integrated steel producer, Weirton Steel Corporation (Weirton, West Virginia). On April 22, ISG's bid to acquire the assets of Weirton Steel was approved by the U.S. Bankruptcy Court. Both companies’ boards of directors previously approved the acquisition. The acquisition price is approximately $255 million, including ISG's assumption of certain liabilities. The Weirton Steel mill (Plant 1013539) can produce three million tons of steel per year. The complex includes two blast furnaces and a 95 megawatt power plant.

ISG is also in the process of purchasing Georgetown Steel Corporation (Georgetown, South Carolina). The Georgetown steel minimill (Plant 1518821), which has the capacity to produce one million tons per year, idled its furnaces on October 20, 2003, and filed for bankruptcy the next day.

The two mill acquisitions if finalized would give ISG an additional four million tons per year steel making capability, making it the nation's largest with about 22 million tons of capacity. The additions would eclipse former leader Nucor Corporation who operates over 19 million tons per year of steel making capacity.