Nucor does not rule out Big River takeover

US steelmaker Nucor chief executive John Ferriola has refused to say whether the company is looking to purchase competitor Big River Steel while speaking at the Steel Market Update event in Atlanta, Georgia, today.

Market participants have suggested Big River is reviewing its strategic options in light of a potential takeover by a number of interested buyers, with Nucor mooted as one of these. But neither Big River nor Nucor has confirmed this, with Ferriola choosing not to comment when asked if the firm was considering the aquisition.

Nucor, as a cash-rich company, can capitalise on opportunities as and when they become available, Ferriloa said. "We plan to spend in a way in which we will grow profitably."

The Section 232 tariffs on US steel imports have accomplished what they were set out to do by stemming the "tsunami" of illegally traded product, according to Ferriola. The tariffs are also a tool to facilitate balanced trade between the US and its trading partners, and they will remain in place until trading partners had begun to respond with freer and fairer trade, he said.

The US-Mexico agreement, which would probably involve Canada, may serve as a blueprint for other trade deals, according to Ferriola. "Trade today is terribly imbalanced against the US", he said, alluding to a trade deficit last year of $562 billion, up by $50 billion from the previous year — the deficit in goods was wider, at $800 billion, he added.

This level of deficit, combined with the US national debt of $20 trillion, could lead to a major problem if the deficit is not addressed, Ferriola said. The tariffs were a tailwind for Nucor but not the only supportive factor, with tax reform, deregulation and a strong energy sector benefiting the market. "If energy does well steel mills do well".

"Do the tariffs give us a tailwind? Absolutely. It is the tailwind that raises the kite to a higher level, but if you do not have the kite you can have all the tailwinds in the world... " Ferriola said. Nucor has invested around $8bn over the last 7-8 years to position for an upturn and is now investing $1.5bn for the improvement in the economy.

The US is the natural low-cost producer of steel, he said, citing the country's increasingly cheap energy and abundant raw materials. This, combined with the transportation costs associated with moving raw materials to mills in Asia-Pacific and the EU, plus the logistics of getting imported steel to the US, added $50-60/t to the price of imported material, according to Ferriola. In a world with fair and tree trade, without government subsidies and currency manipulation, the US would be the beneficiary, he said.

Asked why Nucor had objected to a tariff exemption request filed on slab when it does not produce any, Ferriola said: "We do not produce slab but there are many companies in the country that do and are restarting facilities to do that." Without domestically produced slab, you lose melting capacity and the ability to service the national defence sector, which is the essence of the Section 232 tariff, he suggested. Companies buying slab from elsewhere should invest in domestic melting capacity and US jobs, he said.

Ferriola dismissed claims customers were being squeezed by this year's run-up in steel prices, suggesting customers were also having record times in terms of profit, revenue and volume. "When we see we are putting our customers in a difficult position, we have to react and we will."