US steelmakers move further into scrap business to feed new mills

Nucor, Cleveland-Cliffs and other steelmakers acquire scrap collectors as new mills push up demand for recycled metal, tighten supplies.

US steelmakers are poised to take an even larger role in the US ferrous scrap market in the coming years after a wave of acquisitions in the last year. Fresh off record profits, US mills have made major acquisitions to support a rapid expansion in scrap-intensive melting capacity.

The mills’ moves further upstream into scrap have continued to transfer pricing influence from smaller independent steel mills and recyclers to larger companies.

Cleveland-Cliffs and Bluescope joined Nucor, Steel Dynamics, Commercial Metals and Gerdau as US steelmakers with extensive scrap recycling operations of their own. US Steel remains the largest steelmaker in the US without its own scrap presence.

Five of the top 11 largest ferrous scrap processors in North America are now owned by steel mills, based on 2020 estimated volumes by Recycling Today. The remainder are large-scale recyclers, many of which, such as SA Recycling, have also spent the last year rapidly expanding in order to maintain market share and pricing power.

In 2021, at least 99 scrap locations and 25 automotive shredders were bought or sold, according to data compiled and analysed by Argus Media. The wave of mergers and acquisitions activity across the US in 2021 has eclipsed all other years analysed over the last five years.

The consolidation trend is likely to extend into 2022 as US metal recyclers and steel mills have signalled that fourth quarter profits are on track to remain at or near record levels.