Final Thoughts

“I’ve dreamed of owning a steel mill for decades and looked at many opportunities. If I go to my grave without owning a steel mill, I won’t be happy. It’s been a lifelong dream of mine,” Zekelman said.

SMU Steel Summit

I’m looking forward to picking up the conversation in person at Steel Summit on Aug. 21-23 in Atlanta. (Nearly 1,200 have registered to attend. If you haven’t yet, you can do so here.)

Zekelman made that comment in part in the context of frustrations that some of you in the buying community have expressed to me as well.

Mills placing you on allocation when times are good. Mills shipping late even when the market isn’t red hot. And feeling at the mercy of extremely volatile substrate costs – ones that, especially when they explode higher – are hard to pass along to downstream customers.

Consolidation?

I don’t know whether Zekelman was venting or whether buying a steel mill is something he really intends to do. But it got me thinking to about what Timna Tanners said during a Community Chat two weeks earlier – that sheet was not quite as consolidated as some folks assume. Does that, paradoxically, leave more targets for consolidation?

That got me to wondering who else might be for sale. Evraz North America, for example, announced last summer that it was for sale. I checked in with the company today, and there were no updates. We’ll keep you posted if and when there are any. Is anyone else for sale?

Also – and I’m just throwing this out there – steel and aluminum tend to see waves of consolidation and deconsolidation. Henry Ford once owned everything from mines to mills to assembly lines. A decade ago, Cliffs owned the mines that fed AK Steel’s Dearborn, Mich., steel mill. The mill in turn fed Ford’s Dearborn assembly plant, which in 2013 still made the body of the F-150 pickup from steel.

Could we see deconsolidation, a steelmaker looking to divest its mills, for example? That might sound far-fetched in the context of the US. But we’re seeing exactly that in Europe, where German conglomerate ThyssenKrupp has been looking to hive off its steel business for some time.

Decarbonization Priced and Codified?

Another thing that’s been on my mind – because we’ve been unable to avoid it many parts of the Midwest – are the wildfires in Canada.

I often walk my dog down to the lakeshore in the evening. This is what the Chicago skyline looked like from Lake Michigan last summer:

This is what it looked when we went for a walk on Tuesday:

Notice a difference?

We’ve been seeing record heat across North America and much of the world this summer. (Some of you have noted Florida’s “hot tub ocean”.) That’s climate change getting real for all of us.

The talk about the need to decarbonize has been happening at the policy level for while now – as evidenced by acrimonious talks between the US and the EU on how best to reduce carbon emissions in steel and aluminum.

The odds of a detailed agreement by this October aren’t looking great as best as I can tell. But that hasn’t stopped the domestic steel industry from moving forward on the issue.

We’re seeing decarbonization popping up not only in the usual policy debates but also in the day-to-day steel business.

Cleveland-Cliffs, for example, said during its Q2 earnings conference call this week that it had rolled out a $40-per-ton surcharge for automotive customers that want steel made using HBI – and the lower emissions associated with that.

The issue was discussed at a high level by steelmakers, policy experts, and General Motors at Steel Summit last year. Less than 12 months later, we’re seeing a price tag put to it.

We’ve also seen steelmakers making announcements about Environmental Product Declarations, or EPDs. Big River Steel, part of U.S. Steel, was among the most recent to do so.

Some of you have told me what a headache it is to put these things together – compiling data across one mill, let alone an entire company, is no small project.

But the end result is a big deal. We’re seeing the American Society for Testing and Materials (ASTM) validating and certifying EPDs.

I was at a HARDI conference last December when an industry veteran recalled the early days of putting together specifications for galvanized product. I was surprised that such specifications, which seemed so entrenched now, were once anything but.

Perhaps we’re seeing a something similar happening now when it comes to CO2. Is that greenwashing? Or is it a market-driven approach to addressing climate change? I’d like to think it’s the latter.