Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Are We in a Steelmaking Borscht Belt?

If you were snoozing, you might have missed the announcement of yet another Russian acquisition of North American steelmaking assets. On Friday, the news popped that Russian steelmaker OAO Severstal (OTC BB: SVJTF.PK) will pay about $810 million to ArcelorMittal (NYSE: MT  ) for the Sparrows Point steel mill in Baltimore.

This deal follows an unsuccessful effort led by Chicago-based Esmark (Nasdaq: ESMK  ) to buy the plant for $1.35 billion. That transaction fell apart in December, possibly because of the buying group's inability to raise the necessary funds.

A U.S. court ordered the sale of Sparrows Point in exchange for approval of the $38 billion combination of India's Mittal Steel and Arcelor SA of Luxembourg. Severstal apparently had attempted earlier to acquire Arcelor.

Sparrows Point is the only integrated flat-rolled-steel plant with water access on the East Coast. It has the capacity to crank out 3.9 million tons a year, although last year's output was only about two-thirds of that amount.  

Through the acquisition, Severstal stands to become the fourth-largest producer of steel in the U.S., behind U.S. Steel (NYSE: X  ) , Nucor (NYSE: NUE  ) , and ArcelorMittal. Worldwide, the company ginned out about 17.5 million tons of steel last year.

Even though steel demand has fallen domestically, our soft economy is making U.S. assets attractive to overseas producers for their potential future value. Just last week, for instance, I told my Foolish friends that a pair of Russian companies, Evraz Group SA and OAO TMK, ponied up for the U.S. tubular steel assets of Sweden's SSAB Svenskt Stal AB.

I suggested last week that you might want to consider slowly building a position in U.S. Steel. Now, economic doldrums notwithstanding, I'll also say that Fools should remain attentive to the machinations of the U.S. steel industry as a whole.

For related Foolishness:

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 604782, ~/Articles/ArticleHandler.aspx, 10/25/2016 10:35:19 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,238.20 15.17 0.08%
S&P 500 2,148.94 -2.39 -0.11%
NASD 5,307.52 -2.31 -0.04%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 10:20 AM
MT $6.85 Up +0.08 +1.18%
ArcelorMittal CAPS Rating: ***
NUE $47.76 Up +0.08 +0.17%
Nucor CAPS Rating: *****
X $20.91 Up +1.29 +6.57%
United States Stee… CAPS Rating: **