Nucor Announces Joint Venture with Mitsui
Early this morning Nucor announced a joint venture agreement with Mitsui which owns Steel Technologies. This arrangement puts Nucor into the steel processing and service center business and changes the playing field for both Nucor and their customers.
Here is a typical response from a U.S. based service center:
In 2008, Steel Technologies had $1.6 billion of revenue and 24 locations. Now they have 23 locations and Nucor’s JV in Monterrey is back on the table. This is huge in scale. It allows Nucor to become more vertically integrated downstream, it gives them sizeable market share in the service center area, as well as into automotive. The Mexican operation is absolutely huge in scope and could be quite instrumental in securing transplant business.
This helps them to better understand customer demand, and likely helps secure more scrap.
It amazes me how Nucor has gone from mini mill to Big Steel with their Pig Iron facilities, to now embracing the European model with mills owning service centers.
Here is a copy of the original press release from Nucor:
CHARLOTTE, N.C., March 2, 2010 /PRNewswire via COMTEX/ -- Nucor Corporation (NYSE: NUE) announced today that it has entered into an agreement with Mitsui & Co. (U.S.A.), Inc. ("Mitsui"), a wholly owned subsidiary of Mitsui & Co., Ltd., wherein each would indirectly own a 50% interest in a newly created company, NuMit LLC. NuMit will invest in various steel and steel related activities, both in North America and globally. Coinciding with the formation of NuMit will be its first investment, Steel Technologies LLC, which will own all of the assets, operations and business currently held by Mitsui in Steel Technologies, Inc. Closing of the transaction will occur after satisfactory resolution of regulatory approvals and other closing conditions.
Steel Technologies operates 23 sheet processing facilities throughout the U.S., Canada and Mexico. It will continue to operate as an independent unit with the existing management team maintaining responsibility for the performance of the business. This management structure will allow Nucor to continue its long-standing supply chain relationships with other sheet processing companies while at the same time allowing Steel Technologies the ability to independently manage its supply needs. Nucor's focus will remain on providing the most efficient supply chain solutions for all of its customers.
Nucor's previously announced plans to construct a greenfield flat rolled processing center in Monterrey, Mexico will be implemented by Steel Technologies LLC. The processing center is expected to include pickling, slitting and cut-to-length capabilities to serve customers in Mexico.
Dan DiMicco, Nucor's CEO and Chairman, noted, "We are very excited about forming the NuMit venture with Mitsui. For several years, Nucor has stressed the importance of finding the right partners to grow with internationally. Mitsui fits that criteria and will complement Nucor's other growth efforts. The excellence of both companies, Mitsui's global market experience and Nucor's operational and technological expertise will allow us to seize opportunities that may not otherwise exist."
Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and non ferrous scrap. Nucor is North America's largest recycler.
For more information about Nucor, their arrangement with Mitsui as well as new price moves the mill is making this week - stay tuned to our Steel Market Update newsletter. You can sign up for a free 4-week trial online at www.steelmarketupdate.com