Final Thoughts

Longer term changes or market adjustments may have more impact on future supply and demand scenarios. This will also depend on what the DOJ and FTC decide regarding ArcelorMittal continued ownership of their existing North American facilities.

Elimination of ThyssenKrupp Steel USA and the integration into the ArcelorMittal commercial department is expected to result in a more disciplined market price structure. TK USA is well known as the lowest priced flat rolled mill due to its position as the “new guy on the block” coupled with failures to deliver due to software and other issues which plagued the mill when it first came online. The mill continues to be aggressively priced as they work to build their order book.

My expectation is ArcelorMittal will attempt to run the mill as full as possible. This may result in some interesting competitive dynamics as AM competes with Nucor and Severstal Columbus as well as USS Fairfield in the south. As one steel buyer put it to me in an email this afternoon – who is going to roll over and give market share to ArcelorMittal?

Another issue raised by a steel executive with whom I had dinner recently. He reminded me that there could be some credit line issues with existing customers of ArcelorMittal as they absorb the ThyssenKrupp exposures onto their books.

We will broach this subject further in our next SMU market analysis questionnaire which will begin on Monday morning at 8 AM ET.  If you receive an invitation to participate please take a few moments to provide SMU your thoughts and opinions on this and other subjects of interest to the flat rolled steel markets.

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