US flat-rolled and iron ore producer Cleveland-Cliffs has entered the scrap market – in a big way – with its $775 million buy of Ferrous Processing and Trading Company (FPT), Kallanish learns from a company statement.
FPT represents about 15% of the domestic merchant prime scrap market spread over 22 facilities, Cleveland-Cliffs says. About 90% of the company’s revenues come from its Midwest locations in Ohio and Michigan.
“Cleveland-Cliffs is entering the scrap business as a major player through the acquisition of a large scrap company,” says ceo Lourenco Goncalves. “Even more importantly, FPT has a very meaningful presence in prime scrap. With all the new flat-rolled EAF capacity coming online in our market over the next four years, prime scrap will only become more and more scarce.”
Nucor and US Steel both recently announced 3m short tons of new EAF capacity apiece.
“The acquisition of FPT will enhance our ability to buy back prime scrap directly from our clients, cutting the middlemen and improving the margin contribution from scrap for both Cleveland-Cliffs and for the manufacturing and service centre clients that will be able to sell scrap directly back to us,” Goncalves adds.
The buy is expected to close in the fourth quarter.
Dan Hilliard USA