Steel Mills

Nucor Buys Vale Stake in CSI for $400M, Expands into West Coast Sheet

December 13, 2021

Nucor has acquired a majority stake in California Steel Industries (CSI) for approximately $400 million in a deal that will significantly expand its presence on the West Coast.

The Charlotte, N.C.-based steelmaker paid that amount for Brazilian iron ore miner Vale’s 50% stake in Fontana, Calif.-based CSI. It also acquired 1% of Japanese steelmaker’s JFE interest in CSI – leaving Nucor with a controlling interest of 51% in the West Coast slab converter and JFE with a 49% stake.

Nucor The deal is expected to close in the first quarter of 2022 subject to typical closing conditions, Vale said in a statement.

Steel Market Update reported last week that Vale was looking to sell its stake in Fontana, Calif.-based CSI and that Nucor was the most likely buyer.

Nucor Goes West

“Acquiring a majority ownership stake in California Steel Industries expands our geographic reach in sheet steel and gives us a strong presence on the West Coast,” Nucor President and CEO Leon Topalian said in a statement.

“This acquisition will grow our portfolio of value-added sheet products, provide opportunities for increased internal shipments and enable us to provide our downstream businesses in the region such as Verco and Hannibal Industries with sheet steel products,” Topalian said.

CSI makes hot-rolled, hot-rolled pickled-and-oiled, cold-rolled and galvanized sheet. It also makes electric resistance welded (ERW) pipe. It has finished steel capacity of two million tons per year.

How might that capacity be put to use? Nucor closed a $370 million deal for Los Angeles-based Hannibal Industries Inc. in August. The company makes hollow structural sections (HSS) and racking. Both products use sheet as their primary raw material, and Hannibal can now source that material internally within Nucor.

Recall that Nucor’s presence along the West Coast had previously been largely confined to long products such as reinforcing bar.

Growing Relationship with JFE

“We look forward to continuing to grow with our partners at JFE,” Topalian added.

Nucor and JFE already operate a joint venture galvanizing operation in Mexico – Nucor-JFE Steel Mexico, which supplies galvanized sheet to the automotive industry.

And JFE suggested that the partnership with Nucor could be expanded further.

“The two partners will strive to grow CSI’s financial position and product footprint and to build on the values that have made CSI successful, making full use of Nucor’s local business relationships and operational expertise,” JFE said in a statement.

“Going forward, JFE Steel and Nucor expect to continue exploring potential collaborations that utilize their complementary assets and skillsets,” the Japanese steelmaker added.

Industry sources noted that the close relationship between JFE and Nucor was beginning to resemble that between ArcelorMittal and Japan’s Nippon Steel, which jointly operate flat-rolled steelmaker AM/NS Calvert in Alabama.

CSI Angling for Infrastructure?

Some also suggested that Nucor’s majority stake in CSI could lead to increased infrastructure work – not only on the sheet side but also for ERW pipe.

Nucor could, for example, send slab to CSI from its operations east of the Rocky Mountains. CSI relies primarily on imported slab but could participate in government-funded infrastructure work if it were to receive slabs melted and poured at Nucor operations in the U.S.

One example: Nucor could conceivably ship slab melted at its new plate mill in Brandenburg, Ky. – once it is up and running – along inland waterways as far west as Catoosa, Okla., and then transport it overland to California.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is managing editor for Steel Market Update. Cowden has covered the steel industry since 2007. He has since 2014 specialized in flat-rolled steel but has previously reported on steel long products, steel pipe and tube as well as aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago - where he was involved in launching AMM's daily hot-rolled coil index, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.