US Steel acquires Big River Steel
United States Steel Corp. (U.S. Steel), headquartered in Pittsburgh, announced in early December of last year that it plans to acquire the remaining equity in Big River Steel, Osceola, Arkansas, for approximately $774 million from cash on hand. The company ended November with approximately $2.9 billion in liquidity, including more than $1.7 billion in cash. According to a news release from U.S. Steel, the transaction is expected to close in the first quarter of this year.
U.S. Steel made an initial $700 million investment in Big River Steel in October 2019, acquiring a 49.9 percent stake in the company. At that time, the company indicated that it planned to acquire the rest of the company sometime before 2023.
The transaction combines the oldest and second-largest steelmaker in the United States with the newest and most advanced flat-rolled steel producer in North America, U.S. Steel says.
“For months, I’ve said that we can’t get to the future fast enough,” says David B. Burritt, president and chief executive officer of U.S. Steel. “Today, I can say the future is now. We are acquiring Big River Steel, the cornerstone of our ‘Best of Both’ strategy. With Big River Steel, we can offer customers the high-performance, innovative steel products they expect from U.S. Steel’s scientists and application engineers made through a state-of-the-art, environmentally sustainable and efficient minimill process.”
“I’m extremely proud of what our Big River Steel team has achieved in building the most technologically advanced and only LEED-certified steel mill, and I’m equally proud that we are joining a company that not only values our many accomplishments but shares our vision as well,” says Big River Steel CEO David Stickler. “Being an entrepreneurial disrupter is in our DNA, and I’m excited about the possibilities we have already demonstrated by leveraging U.S. Steel’s industry-leading research and development capabilities.”
Big River Steel operates a LEED-certified flex mill in northeast Arkansas that U.S. Steel describes as an “advanced flat-rolled mill” that offers products and services to customers in the automotive, energy, construction and agricultural industries. Its manufacturing technology and skilled operators combined with U.S. Steel’s product development capabilities and intellectual property have allowed Big River Steel to produce 11 advanced U.S. Steel grades, including substrate for its XG3 grade of Generation 3 advanced high-strength steels (AHSS), U.S. Steel says.
Big River Steel’s Phase II-A expansion doubled the mill’s hot-rolled steel production capacity to 3.3 million tons annually, establishing it as one of the largest electric arc furnace- (EAF-) oriented flat-rolled mills in North America. The Phase II-A expansion was completed in November of last year, ahead of schedule and below Big River Steel’s previously disclosed budget, according to the company.
Burritt says, “We are acquiring now to expand the benefits of this powerful partnership. This is aligned with the strong strategic execution and meaningful progress we’ve demonstrated in 2020 toward our goal of $1 billion in capital and operational cash improvements. By completing our top strategic priority, Big River Steel, we expect to strengthen our order book, increase our competitiveness and accelerate further product innovation for our customers. Longer term, the lower, variable cost structure will increase our efficiency, profitability and cash flow across the business cycle.
He adds, “We look forward to welcoming the Big River Steel team to the U.S. Steel family. We have already successfully produced 11 of U.S. Steel’s proprietary grades at Big River, including our most innovative Generation 3 grades of advanced high-strength steel. With Big River Steel, we expect to more nimbly respond to improving market conditions in the near-term and disrupt the steel industry to the long-term benefit of our customers.”
U.S. Steel says its partnership with Big River Steel has created strategic benefits. Some key accomplishments of that acquisition include Big River Steel’s production of substrate for U.S. Steel’s XG3 AHSS and other automotive grades that will increase the company’s competitiveness. The acquisition also has helped to validate the role Big River Steel’s sustainable steelmaking technology will play in meeting U.S. Steel’s commitment to reduce greenhouse gas emissions across its global footprint by 20 percent by 2030 based on 2018 baseline levels.
Copper output steady, but secondary shares down
Statistics gathered by the Lisbon, Portugal-based International Copper Study Group (ICSG) indicate world refined copper production increased by 1.2 percent in the first eight months of 2020 compared with the same time frame in 2019. While primary production rose by 2.5 percent, scrap-fed secondary production output fell by 5 percent in the January-to-August period of 2020 compared with 2019.
“Globally, constrained scrap supply due to the COVID-19 lockdown and lower copper prices during the first half of the year have negatively impacted world secondary refined production,” ICSG states in its November 2020 Copper Bulletin.
The pattern might have been different within the United States, even with tight scrap supplies, since “temporary shutdowns and a long strike at Asarco’s operations led to a 13 percent decline in refined output” at that Arizona facility, notes ICSG.
In China, ICSG writes, “Refined production growth was negatively impacted by temporary shutdowns related to COVID-19 restrictions, tight scrap supply and constraints associated with concentrate imports and oversupply in the sulphuric acid market.”
The consumption of copper might have been slightly behind the global 1.2 percent increase, with ICSG saying global refined copper usage increased by 1 percent during the first eight months of 2020 compared with 2019. “The COVID-19-related global lockdown has had a significant negative impact on the world economy and subsequently on key copper end-use sectors in all regions,” ICSG writes.
Outside of China “refined copper usage was significantly impacted and is estimated to have declined by about 10 percent,” the association says. In China there was “a 48 percent (940,000 metric tons) increase in net refined copper imports, [and] Chinese apparent usage increased by 12.5 percent, offsetting the declines in other regions of the world.”
Factoring a drop in mining output globally, the ICSG calculates that during the first eight months of 2020, “the world refined copper balance indicated a deficit of about 293,000 metric tons,” potentially rising to 296,000 metric tons “adjusted for changes in Chinese bonded stocks.”
China’s government clears high-grade ferrous scrap imports
The Standardization Administration of China reportedly has approved previously published definitions for grades of ferrous and stainless steel scrap, reclassifying them from a “waste” to a “resource.”
Under the new classification and after follow-up guidelines for customs officials have been distributed, the higher grades of scrap can be imported after the Jan. 1 ban on scrap materials that have not received the resource designation is in place.
According to a news alert from Fastmarkets AMM, the Standardization Administration of China approved the standard definitions for the 13 ferrous scrap grades and two stainless grades Nov. 29, 2020. If subsequent guidelines for the ferrous and stainless grades lead to a flow of such shipments into Chinese ports, it will follow a similar pattern as high grades of red metal and aluminum scrap that have begun to arrive in China without the need for China Certification & Inspection Group (CCIC) inspections or an assigned quota.
Buyers and sellers of recovered fiber continue to await the approval or implementation of any such standards that would create acceptable grades of baled paper to be able to clear Chinese ports.
Davis Index, Sealink form partnership
Sealink International, a freight forwarder based in Plano, Texas, serving the metals recycling industry, and Singapore-based Davis Index, a global commodity price reporting agency, have introduced a new platform integration that gives members of Davis Index real-time access to shipping rates and the ability to book freight shipments online.
“As the market leader in providing freight and shipping solutions to metal recyclers, Sealink is excited to be integrated with the world’s best data intelligence platform built only for the recycling industry,” Shaizad Shroff, CEO of Sealink International, remarks. “Metal recyclers shipping to, or from, anywhere can now research competitive container rates and book their shipments instantly online.”
The partners say shipping cost transparency and the slow process of booking container shipments have challenged metal recyclers, who will continue to face difficult market conditions heading into 2021. The Sealink-Davis Index integration is designed to help companies make better strategic business decisions and data-driven choices, the companies say.
Through the integrated platform, metal recyclers can research shipping rates; book shipments across ocean, air, truck and parcel modes; track delivery locations in real-time; manage and pay invoices; and access detailed reporting and data analytics.
“Our integration with Sealink allows our members to access real-time container freight rates and book their containers from within our platform,” Sean Davidson, CEO of Davis Index, says. “It reduces resource costs for companies and gives market participants the information they need—when they need it. Both companies are technology-led, which allows us to deliver solutions like these to make the everyday roles at companies more seamless and effortless.”