Gerdau adds to US scrap assets

Brazil-based steelmaker Gerdau S.A., which operates electric arc furnace (EAF) mills and scrap processing facilities in North America, reportedly has completed its acquisition of a metals recycling company based in Tennessee.

Gerdau has added to its recycling assets with the acquisition of Milan, Tennessee-based Dale's Recycling, which operates from five locations in Tennessee and one in Kentucky. According to the 2024 Recycling Today Auto Shredder List and Map, Dale’s operates an auto shredding plant in Milan, Tennessee.

The acquisition first was announced in late September, with business information firm Argus writing that the move would help supply ferrous scrap to the Gerdau EAF mill in Jackson, Tennessee.

This week, Pittsburgh-based Steel Market Update has been among those reporting the transaction closed Nov. 1.

In September, Argus indicated Gerdau was buying Dale’s for $60 million and pointed to new or soon-to-come-online EAF capacity in North American and the pursuit of ferrous scrap to feed those furnaces as a reason.

The transaction is not mentioned in Gerdau’s third-quarter 2024 earnings presentation. Gerdau Chief Financial Officer Rafael Japur describes business conditions for its North American operations as having hit a lull in the third quarter but expresses optimism for the longer term.

“In the North America Business District, the result was impacted by a decline in steel prices, due to lower demand and higher pressure from imports, combined with a higher share of rebars in the product shipment mix,” he says.

“We understand that this is a more challenging time for the business district because of the economic volatility caused by the United States presidential election. However, we believe in the market fundamentals for the coming years. In addition, our backlog of orders remains stable at approximately 50 to 60 days.”

Gerdau reportedly shipped 976,000 metric tons of steel from its North American mills in this year’s third quarter, down 4.5 percent from the 1.02 million metric tons shipped in the same quarter in 2023.

The steelmaker's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in North America in the third quarter were down 25.7 percent compared with one year earlier. Year to date, Gerdau's EBITDA in North America is down by 27.4 percent compared with the first nine months of 2023.