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Steel News February 16, 2017 06:57:30 AM

Resurgent US Steel industry embarks on fresh investment, expansion plans

Paul Ploumis
ScrapMonster Author
More number of US steel companies are expected to announce similar revival plans in anticipation of better market conditions.
Resurgent US Steel industry embarks on fresh investment, expansion plans

SEATTLE (Scrap Monster): The change in administration has brought new hopes to the country’s steel industry. The proposed boost to infrastructure projects by President Donald Trump is expected to take domestic steel demand to new heights. In addition, protectionist measures may likely restrict uncontrolled flow of cheaper steel products from other countries including China. Consequently, many major US steel firms have announced significant investment towards mill upgrades and expansions. Several idled mills are slated to restart in the immediate future.

Sources indicate that favorable developments on steel trade cases have provided some sort of relief to US steel producers. The steel market conditions have also improved, thanks to the President’s initiatives including Buy America policy, which aims to promote use of domestic steel. The reform initiative is also expected to create massive number of jobs in the country’s struggling steel industry.

First to announce a series of capacity expansion and restart of operations was the Pittsburgh, Pa.-headquartered United States Steel Corporation (US Steel). In end-December last year, the company had announced its decision to reopen the idled Keetac iron ore plant in Keewatin, Minnesota. The plant, with a production capacity of approximately 6 million net tons of taconite pellets, is expected to restart production during March this year. US Steel had also announced reopening of the idled hot strip mill in Granite City, Illinois, which has 3.6 million tons per year production capacity. The company has also promised increased investment in US steel facilities in light of the proposed changes in regulation and tax laws.

Meanwhile, Charlotte-based Nucor Corp. announced four major acquisitions in 2016, the most recent one being the purchase of Republic Conduit from its European owner for a sum of $335 million in December 2016. During the same month, the company had announced acquisition of Birmingham, Alabama-based Southland Tube, an independent manufacturer of hollow structural section (HSS) steel tubing for $130 million. In November last year, Nucor had closed in the acquisition of Independence Tube Corporation for approximately $435 million. Also, it had reached an agreement with Joy Global Inc. in April to acquire its steel plate mill in Longview, Texas for a sum of nearly $29 million.

In another major development, Export, Pennsylvania-based Dura-Bond Industries had recently announced purchase of manufacturing assets of an idled U.S. Steel Corp. steel plant in McKeesport, Pittsburgh plant. More companies are expected to announce similar revival plans in anticipation of better market conditions, sources noted.

The most recent figures released by the American Iron and Steel Institute (AISI) indicate that the US steel mill shipments rebounded sharply by nearly 6.7% month-on-month in December last year. Also, the Dec ’16 shipments recorded notable increase of nearly 9.4%, when matched with the shipments during the same month in 2015.

According to survey conducted among top analysts, the US steel industry is most likely to return to growth in 2017. The projected growth is mainly on account of lower imports and rising domestic demand. The crude steel output by the US is expected to increase by 4.4% in 2017, after two consecutive years of contraction. Easing of coal prices coupled with rise in steel prices will help steel companies to report higher profitability during 2017. The steel producers are expected to report better margins starting from the second quarter of 2017. The second, third and fourth quarter of 2017 are expected to be better when compared with this year.

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