US Steel buys rest of Big River

US Steel has bought the remainder of Arkansas minimill Big River Steel, giving the predominately blast furnace-based steelmaker the one of the newest electric arc furnace (EAF) mills in the country.

The $774mn deal to acquire the remaining 50.1pc of Big River Steel and its newly expanded 3.3mn short tons (st)/yr of flat-rolled steel capacity is expected to close in the first quarter of 2021.

The purchase of Big River Steel is US Steel's biggest foray into scrap-based EAF steel production. The company earlier in 2020 completed its first EAF at its tubular operations in Fairfield, Alabama, which can produce 1.6mn st/yr of billets for US Steel's seamless pipe mill.

In November, Big River Steel completed a 1.65mn st/yr flat-rolled expansion at its mill in northwest Arkansas. The company had also been mulling building a new mill in Brownsville, Texas, on the southern US border with Mexico.

The deal was said to be the "number one" priority for US Steel chief executive David Burritt, who led his company to purchase nearly half of the stake in Big River Steel in October 2019 for $700mn.

The company will now focus on integrating Big River Steel before turning its sights on its next priority, a new endless casting and rolling facility at its Mon Valley Works near Pittsburgh.

The transaction comes as US hot-rolled coil (HRC) prices have rocketed higher since mid-August, when prices hit a yearly low of $450/st, to $820/st ex-works Midwest as last assessed by Argus on 1 December. Offer since then have exceeded $900/st as resurgent demand has met increasingly limited supply.

The Big River acquisition raises questions on the future of some of US Steel's existing integrated operations, particularly Granite City Works in southern Illinois.

Granite City was brought back on line in 2018 to respond to strong demand after 25pc Section 232 steel tariffs were imposed on imports by President Donald Trump in March 2018. One of the flat-rolled steel mill's two blast furnaces remains idled after being taken down earlier this year because of Covid-19-related demand destruction.

Multiple steel market sources believe that Granite City will be idled again with the purchase of Big River Steel as US Steel concentrates on its smaller footprint. The company indefinitely idled the last of its Great Lakes Works near Detroit in April.

By Rye Druzin