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Industry Research

Q1 US Steel Capacity and Consolidation Update

In 2020, the most significant and long-lasting effects in the steel industry was driven by M&A and consolidation activities among major US steelmakers

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Overview

While 2020 will be remembered by most in the US steel industry for COVID-19 related shutdowns and record HRC prices, the most significant and long-lasting effects will be driven by M&A and consolidation activity among major US steelmakers.

At the beginning of 2020, 6 US steelmakers owned nearly 84% of US capacity. Following Cleveland Cliffs’ acquisitions of AK Steel and ArcelorMittal USA (save Calvert), Cliffs now holds 28% of total US capacity. Cliffs was not the only major US steelmaker making moves, with USS acquiring Big River Steel in a deal that added 3M+ ST in annual capacity. The top 6 US steelmakers now own close to 90% of total capacity. US capacity utilization remains well-below pre-pandemic levels, with recorded capacity utilization of 77% end of February 2021 down nearly 5% from the same period last year.

However, with 5.5 ST of additional annual US capacity expected to come online by the end of 2021, and 13.5M ST in annual capacity expected to come online by the end of 2023, some relief is on the way for SSC’s and buyers who continue to pay record prices for US HRC. All indications point to US domestic price relief beginning in H2 2021 – but the downturn is yet to be seen.

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