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U.S. Steel Leads Integrated Steel Industry Consolidation Talks

Houston, TX - U.S. Steel is leading talks with several integrated steel companies to create a single company that would be globally competitive with international steel conglomerates, especially Asian and European companies, which are able to produce steel cheaper. The plan requires significant support from the Bush Administration in the form of pension and healthcare cost subsidies. Companies involved in the talks include Bethlehem Steel Corporation and Wheeling-Pittsburgh Steel Corporation. U.S. Steel also announced it is in talks with NKK Corporation of Japan to acquire National Steel Corporation.

Both Bethlehem Steel and Wheeling-Pittsburgh Steel are among approximately 25 firms that have applied for Chapter 11 bankruptcy protection and reorganization since 1998 as the domestic integrated steel industry has lost significant market share to global producers and new technology minimills. The American Iron and Steel Institute (AISI) reports that capacity utilization is at 78.4% for the year. That's an 11.9% decrease from the same period last year. Imports are accounting for 20-25% of domestic annual steel consumption. The most recent steel industry casualty is LTV Corporation, who announced on November 20th plans to cease operations and sell its integrated steel mills.

The proposed new mega-company could supply anywhere from 25-30 percent of domestic steel capacity, depending on who joins the three companies currently involved. According to industrialinfo.com, U.S. Steel, Bethlehem Steel, and Wheeling-Pittsburgh produce close to 20 million tons annually. The merger would affect approximately 25 facilities in the U.S., including; integrated steel mills, stand-alone rolling mills, coke ovens, and related downstream plants.

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