ArcelorMitall / Cliffs -- thoughts?

[DCN]

There are actually a few more integrated mills outside of the Great Lakes region. U.S. Steel, besides the aforementioned Edgar Thomson Works (part of the larger Mon Valley Works) around Pittsburgh, PA, has the Granite City Works in Granite City, IL (across the Mississippi River from St. Louis). While Cliffs through their previous purchase of AK Steel has integrated works in Middletown, OH (north of Cincinnati), and the shut down but largely intact Ashland Works in Ashland, KY. Cliffs will now also have ArcelorMittals Riverdale Works in Riverdale, IL. This is on the Little Calumet River and not accessible by lake boat. This is an interesting mill as it produces steel in basic oxygen furnaces as is done at most integrated mills, however this mill does not have its own supply of hot metal from a blast furnace, instead it imports it in railroad torpedo ladle cars from other blast furnaces in the Chicago area. Originally this mill had several cupola furnaces for melting scrap to supply the hot metal but they have been gone for decades.

DCN

[Jerry at Duluth]

The integrated steel industry is going to change but not as much as you might think. Direct reduction process of producing iron and steel is the coming thing but you will still need the mills that exist to roll the steel into the plates, bars, angles and other shapes that are required. The future holds a posibility for the shipment of steel slabs from a steel producer to a finishing mill. Case in point, one of the reasons for the large hatch openings on the new river class boat for Interlake is for the shipment of steel slabs. Basically, the biggest change is that the blast furnace and open hearth furnaces will be going away.

[Guest]

Will any other steel companies in the US outside of the lakes region object to Cliffs being able to supply their facilities with ore below market prices? This seems a strange reversal on the trend of getting away from vertical integration within the steel industry that took place over the past several decades.

The only integrated steel mill in the US that is outside the Great Lakes region is Mon Valley, formerly Edgar Thompson Works and owned by US Steel. Everything else is electric-arc furnace owned by mini-mills. Yes, the industry did move away from integration starting in the 1980s when it proved a liability as there was only so much money to go around during those lean times, and it had to be put into capitol upgrades, such as continous-casters.

But owning your source of raw materials means that you don't have to go to the open market during times of high demand and pay higher prices.

As for the integrated steel industry, the last greenfield site to be built in the US was Bethlehem Steel's Burns Harbor plant, while in Canada it's Nanticoke. Two blast furnaces were completely rebuilt in the mid-2000s, AK Steel's Dearborn blast furnace "C" and US Steel Gary blast furnace number 14.

Granite City works (US Steel) and Middletown works (now Cliffs owned) are not served directly by GL shipping. Dofasco did a complete ground up rebuild of their #2 blast furnace, completed in 2005.

[Guest]

Will any other steel companies in the US outside of the lakes region object to Cliffs being able to supply their facilities with ore below market prices? This seems a strange reversal on the trend of getting away from vertical integration within the steel industry that took place over the past several decades.

The only integrated steel mill in the US that is outside the Great Lakes region is Mon Valley, formerly Edgar Thompson Works and owned by US Steel. Everything else is electric-arc furnace owned by mini-mills. Yes, the industry did move away from integration starting in the 1980s when it proved a liability as there was only so much money to go around during those lean times, and it had to be put into capitol upgrades, such as continous-casters.

But owning your source of raw materials means that you don't have to go to the open market during times of high demand and pay higher prices.

As for the integrated steel industry, the last greenfield site to be built in the US was Bethlehem Steel's Burns Harbor plant, while in Canada it's Nanticoke. Two blast furnaces were completely rebuilt in the mid-2000s, AK Steel's Dearborn blast furnace "C" and US Steel Gary blast furnace number 14.

[garbear]

Checking the fleet page on Boatnerd, the Block, Sykes & Ryerson are listed under Arcelor Mitall, Luxemburg. The picture shows the AM logo on the stack. Clearly this is a complex arrangement. Also, Monday's news report on Boatnerd has a Reuters article about a possible deal between Cliffs and AM. One of the sentences states that AM in December sold 50% of its shipping business. Does AM have another fleet somewhere else around the world?

AM has an ocean fleet

Here's one from their ocean fleet.

https://www.marinetraffic.com/en/photos ... M%20ANNABA

[garbear]

Checking the fleet page on Boatnerd, the Block, Sykes & Ryerson are listed under Arcelor Mitall, Luxemburg. The picture shows the AM logo on the stack. Clearly this is a complex arrangement. Also, Monday's news report on Boatnerd has a Reuters article about a possible deal between Cliffs and AM. One of the sentences states that AM in December sold 50% of its shipping business. Does AM have another fleet somewhere else around the world?

AM has an ocean fleet

[BigRiver]

Despite carrying the AM logo on their stacks, the vessels are owned, as the attached images from Marine Traffic show, by Indiana Harbor Steamship Co.

[Guest]

Checking the fleet page on Boatnerd, the Block, Sykes & Ryerson are listed under Arcelor Mitall, Luxemburg. The picture shows the AM logo on the stack. Clearly this is a complex arrangement. Also, Monday's news report on Boatnerd has a Reuters article about a possible deal between Cliffs and AM. One of the sentences states that AM in December sold 50% of its shipping business. Does AM have another fleet somewhere else around the world?

[Guest]

All of this brings up another question. What does the future hold in store for integrated steel mills around the lakes? With these facilities aging has there been any word on any major renewal projects to ensure their continued existence or will they continue to be shut down? When was the last integrated steel mill supplied by Great Lakes shipping opened? I believe that was Burns Harbor in 1970 but I may be mistaken. One thing seems certain however is that the glory days of steel production in relation to Great Lakes shipping is long gone and will never return.

Stelco's Nanticoke mill is the most recent one built and served by GL shipping; completed 1980

[Guest]

All of this brings up another question. What does the future hold in store for integrated steel mills around the lakes? With these facilities aging has there been any word on any major renewal projects to ensure their continued existence or will they continue to be shut down? When was the last integrated steel mill supplied by Great Lakes shipping opened? I believe that was Burns Harbor in 1970 but I may be mistaken. One thing seems certain however is that the glory days of steel production in relation to Great Lakes shipping is long gone and will never return.

[Guest]

The statement about the email is not a false statement. I personally know one of the men who received it. What is true is that nobody knows what is going to happen yet. Central Marine was formed when Inland sold to AM. They needed to do a paper divestment of the fleet because AM was a foreign company. CM came out of Central Shipping which was the dispatcher of the fleet for Inland Steel. Who owns CM today is unknown to me but the fleet is owned by AM and the rest is a lot of paper B as in B, S as in S to show a separation of the fleet from AM that does not actually exist. The last type of this nonsense to be allowed was the Canadian National and Great Lakes Fleet transfer. I understand that this will not be allowed in the future. Down the road, the separation will have to be at arms length and complete and actual, not paper. We will have to wait and see what they do with the fleet.

The Central Marine Fleet is managed by Central Marine and owned by Indiana Harbor Steamship Company. Indiana Harbor Steamship has not ties in ownership to Arcelor Mittal. The only connection the two companies have is the cargo hauling contract that Central marine fills out for Arcelor Mittal

[Guest]

But it won't matter if a US company owns the parent company then it will be business as usual !

[Jerry at Duluth]

The statement about the email is not a false statement. I personally know one of the men who received it. What is true is that nobody knows what is going to happen yet. Central Marine was formed when Inland sold to AM. They needed to do a paper divestment of the fleet because AM was a foreign company. CM came out of Central Shipping which was the dispatcher of the fleet for Inland Steel. Who owns CM today is unknown to me but the fleet is owned by AM and the rest is a lot of paper B as in B, S as in S to show a separation of the fleet from AM that does not actually exist. The last type of this nonsense to be allowed was the Canadian National and Great Lakes Fleet transfer. I understand that this will not be allowed in the future. Down the road, the separation will have to be at arms length and complete and actual, not paper. We will have to wait and see what they do with the fleet.

[Guest]

Maybe I'm wrong but I didn't think that any US steel manufacturer had direct ownership of any fleet of ships on the lakes since Bethlehem Steel sold their ships in the early 2000s?

Will any other steel companies in the US outside of the lakes region object to Cliffs being able to supply their facilities with ore below market prices? This seems a strange reversal on the trend of getting away from vertical integration within the steel industry that took place over the past several decades.

[Guest]

This is a false statement; no such email was ever sent to employees either aboard the vessels or shoreside. CML was not sold.

[Guest]

I don't think the Central Marine Logistics fleet is owned at all by ArcelorMittal. The ships are under ownership of Indiana Harbor Steamship Co. which is completely separate from AM. The ships are under a cargo hauling contract to AM.

[Guest]

As a side note, this purchase only applies to AM's American Great Lakes facilities, they still have their operations in Canada, Mexico, and Alabama.

[Mr Link]

Agreed, the lack of Cleveland in the news doesn't bode well. I thought that facility was noted for its productivity and supply to the auto industry.

I wouldn't read too much into the fact that Cleveland wasn't mentioned in the initial article. The article was written by the Northwest Indiana Times, which obviously concentrates on news in northwest Indiana.

On the other hand, the Cleveland mill sits at the end of a long, tortuous river. The mill may be upgraded, but getting ore to it has never been easy. That may put them at a disadvantage if more consolidation occurs.

[Guest]

The deal does include Central Marine Logistics. Their manager emailed the employees telling them CML had been sold. He also indicated there had been no future notice or speculation about an impending deal.

[Guest]

Agreed, the lack of Cleveland in the news doesn't bode well. I thought that facility was noted for its productivity and supply to the auto industry.