US steelmakers, flush with cash from record-setting profits in 2021 and an outsized first quarter, continue to spend to extend further into downstream assets.

In the last year, US steelmakers have spent more than $5bn on multiple downstream processors, deepening their reach further into manufacturing spaces and locking up consumption of steel from their mills.

The acquisitions help steel mills further insulate themselves from wild spot market pricing and demand swings experienced in the last two years, when the Argus US hot rolled coil (HRC) Midwest ex-works assessment jumped from a low of $450/short ton in August 2020 to a high of $1,970/st in September 2021.

Since then prices fell sharply to around $1,023/st in February before recently spiking briefly. As prices fell in the fourth quarter of 2021, service centers pulled back on their purchases, cutting mill lead times down to 2.5 weeks in February.

Most of the purchases were funded by more than $17bn in profits made in 2021 by the four largest US steelmakers - Cleveland-Cliffs, Nucor, Steel Dynamics (SDI) and US Steel.

Electric arc furnace (EAF) steelmakers were the ones who bought downstream assets, with integrated steelmakers focused primarily on buying new sources of raw materials and expanding steel production.

EAF steelmaker Nucor spent the most, including the biggest purchase at $3bn on overhead door company CHI Overhead Doors. Nucor said the overhead door market was valued at $5.1bn in 2021.

The company also bought two steel racking companies and an insulated metal panels manufacturing business.

Australian steelmaker BlueScope, which operates the North Star flat-rolled EAF steel mill in Delta, Ohio, announced in April it is buying the coil coating business of US building products firm Cornerstone Building Brands for $500mn.

In October 2021, EAF steelmaker Steel Dynamics (SDI) bought a 45pc stake in its largest steel consumer New Process Steel for an undisclosed amount of money.

The caused concern among some service centers, who saw SDI moving directly into their space with the purchase. Multiple companies said they would cease working with SDI because of the acquisition.

In addition to the downstream assets, steelmakers have also spent or plan to spend more than $1.7bn on US metals recyclers, metallics producers and production investments. SDI recently bought Mexican metal recycler Roca Acero. Last year integrated steelmaker Cleveland-Cliffs bought Ferrous Processing and Trading (FPT), while North Star BlueScope purchased scrap processor MetalX.

Austrian steelmaker Voestalpine is selling an 80pc stake in its 2.2mn short tons (st)/yr hot briquetted iron (HBI) plant located in Corpus Christi, Texas, to global steelmaker ArcelorMittal.

By Rye Druzin