ThyssenKrupp, a sustainable development company, announced that it is examining strategic options for manufacturing plants of Steel Americas in the U.S. and Brazil.
Dr. Heinrich Hiesinger, ThyssenKrupp’s Executive Board Chairman, stated that they want to sustainably enhance their performance and perform regular strategic reviews of all their businesses, including Steel Americas. However, the economic factors in the U.S. and Brazil have changed from their original assumptions since the plans were made for the project. Hence, they need to determine whether it will be feasible to operate the two Steel Americas’ facilities in a common integrated network.
In 2007, ThyssenKrupp developed the strategy for Steel Americas based on two basic operations: slabs will be manufactured at low cost in Brazil and they will be shipped to the U.S. with cost benefits. Brazil enjoys strong growth, while the US economy does not show any major momentum. This has corresponding effects on the demand and cost situation in both the countries. Manufacturing costs in Brazil are increasing due to various factors, such as the appreciation of the country’s currency, inflation effects and rising labor costs. Additionally, ore prices have increased abruptly and the new ore pricing model provides disadvantages to Steel Americas. Simultaneously, because of slow demand, it will be possible to reach the price premiums in the US market with particular steel varieties and in specific sectors. Hence, an integrated strategy with slab manufacturing in Brazil and marketing in the U.S. is exposed to significant risks. This led the Executive Board of ThyssenKrupp to examine strategic options for both Steel Americas plants.
Regardless of the strategic review, the company will move forward with the operational ramp-up of the two plants. The Brazilian plant produced approximately 1.7 million tons of superior slabs in the first half of 2012. The US plant delivered approximately 1.4 Mt of steel during the same period.
Source: http://www.thyssenkrupp.com/
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