America’s steelmakers forge a future together

America’s steelmakersusus ususs&peafus were the big-tech firms of their day, at the corporate forefront in the 19th century as industrialisation led to rocketing demand. In 1901 ten industrial firms were combined to create Steel, one of the world’s first billion-dollar corporations, and for the next 70 years business boomed for steelmakers boosted by rearmament in two world wars. Those heady days are long gone. Many firms such as Steel, which smelt steel in blast furnaces from iron ore using coking coal, have either been bought or gone bust. Indeed, on August 13th Cleveland-Cliffs, an American competitor, said it had offered $7.3bn for Steel, half in cash and half using its own shares. Shortly afterwards ArcelorMittal, the world’s second-largest steelmaker, was said to be mulling a bid. Steel, once a juggernaut of the American stockmarket, now languishes in the 400, a mid-cap index, as does Cleveland-Cliffs. Meanwhile, companies using electric-arc furnaces (s), which process scrap metal using electricity in mini-mills, now account for 75% of American production compared with 10% in 1960. Mini-mills are greener and cheaper to build and run, so generally remain profitable even during downturns. That translates into nifty margins. Mini-mill operators such as Nucor and Steel Dynamics posted operating margins of around 22% in the latest quarter, compared with 12.5% for Steel and 8% for Cleveland-Cliffs.