Shares of steel producers rose Wednesday, a day after Nucor Corp. announced two scrap metal acquisitions, a move that will reduce the company's need to go to the open market to obtain increasingly expensive scrap.
The Charlotte, N.C.-based company said its David J. Joseph Co. unit, the country's largest scrap metal company, agreed to buy the American Compressed Steel operations of Secondary Resources Inc. American Compressed is based in Kansas City, Mo.
Also, David J. Joseph completed the acquisition of Victoria, Texas-based Victoria Recycling, Nucor said Tuesday.
Bob Richard, an analyst with Longbow Research, said Nucor had been under pressure to buy scrap yards and "I think this is just an extension of that."
News of the acquisitions comes only days after Nucor said it is expanding a U.S. facility. The company said last week it will install a $110 million plate-heat-treating facility at its plate mill in Hertford County, N.C. Heat-treated plate is used in applications where higher strength and abrasion resistance is required, the company said.
Separately, Russian steel maker OAO Severstal has completed its acquisition of U.S.-based Esmark Inc. for $775 million, plus the assumption of debt and loans, the companies said Tuesday. That puts the total value of the deal at around $1.25 billion
In morning trading, Nucor rose $1.33, or 2.6 percent, to $53.49. United States Steel Corp. gained 92 cents to $144.09, Steel Dynamics Inc. increased 83 cents, or 3 percent, to $28.63, Cleveland-Cliffs Inc. was up $2.85, or 3 percent, to $96.90 and Gerdau Ameristeel Corp. added 53 cents, or 3.8 percent, to $14.53.
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