Analyst: ArcelorMittal Sale Could Benefit Steel Mills
Cleveland-Cliffs Inc. acquired ArcelorMittal in 2020. (photo courtesy of Kale Wilk/The Times of Northwest Indiana)
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowAs ArcelorMittal nears completion of the sale of most of its U.S. operations to Ohio-based Cleveland-Cliff Inc. (NYSE: CLF), one steel industry analyst says the steelmaker is likely offloading its “worst mills.” However, Charles Bradford with New York-based Bradford Research Inc. tells our partners at The Times of Northwest Indiana Cleveland-Cliff might be better positioned to run the mills more profitably.
ArcelorMittal announced the $1.4 billion deal in September. The sale includes steel mills in Burns Harbor and Indiana Harbor and a plating facility in Gary, but a small number of North American locations are not included in the deal.
“It’s not selling Cliffs Dofasco in Canada,” Bradford tells The Times. “It’s keeping that mill and the rolling mill in Calvert, where it’s putting in an electric arc furnace. It doesn’t break out the data but its North American group has been consistently losing money. ArcelorMittal is unloading its money-losing plants to where most of their assets are not in the U.S.”
Bradford says when Cleveland-Cliffs takes control of the steel mills, it will have greater control over input costs and be in a better position to negotiate with automakers.
“There should be less competition for the automotive industry,” said Bradford. “The automotive companies are some of the worst customers because they’re so demanding and have had them over a barrel on prices. But now there are only two integrated companies left.”
When the acquisition was announced, Cleveland-Cliffs said it would become the largest flat-rolled steel producer in North America. ArcelorMittal is expected to reduce its cash needs by about $400 million and will not be responsible for $3.1 billion in pension obligations as Cleveland-Cliffs will assume that responsibility, according to the publication.