Around the same time as the Nucor acquisition, Majestic Steel bought Quicken Steel LLC, a manufacturer of steel buildings and components based in Claxton, Georgia, and Mercury Transport Inc., a transportation company based in Pittsburg, California.

Quicken Steel will continue to operate independently while using Majestic resources to create synergies. With a niche in providing short lead-times and the quick installation of steel buildings, it's a downstream opportunity that aligns with Majestic's approach to growth and innovation.

The acquisition of Mercury Transport is a follow-on investment to Majestic's 2021 acquisition of Merit Steel USA, a West Coast based steel service center with locations in Pittsburg, CA, Fontana, CA, and Longview, WA.

More steel industry acquisitions

In 2021, United States Steel Corp. purchased the late John Correnti’s EAF-based Arkansas steel mill, Big River Steel, the newest U.S. flat-rolled mill. Cleveland-Cliffs also purchased AK Steel and ArcelorMittal in 2020, but the phenomenon isn’t constrained to America alone.

The Chinese government likewise encouraged mergers and acquisitions in their strategic steel industry; S&P Global’s Commodity Insights reports that the country is pursuing consolidation to reduce energy use and increase profit margins.

In 2021, Ansteel and Ben Gang Group Corp signed a deal to merge, bringing their production capacity to 63 million tons of crude steel – ranking third in the world. According to the Ministry of Industry and Information Technology, China will build a number of super-sized steel conglomerates by 2025.

Steel industry financial sustainability

Roughly half of the steel production capacity of China is state-owned, making it difficult for U.S. steelmakers to compete. But consolidation is one pathway available to the public steel companies in the U.S. to increase financial sustainability.

The recent U.S. acquisitions during the coronavirus pandemic come on the heels of the industry pivoting to control their scrap supply chain, says Becky E. Hites, president of Steel-Insights LLC.

“If you’re a large consumer of scrap, does it make strategic sense to control that supply? It is almost critical,” Hites writes in a piece for Recycling Today. “Which is why Fort Wayne, Indiana-based Steel Dynamics purchased OmniSource in 2007, Nucor purchased DJJ in 2008, Steel Dynamics purchased a Mexican scrap processing company in 2020 in preparation for the start-up of its new Sinton, Texas, mill and Cleveland-Cliffs purchased Ferrous Processing and Trading Co. in 2021.”

Steel goes green

Financial sustainability isn’t the only motivating factor for M&A, however. With automotive companies in the U.S. pivoting to electric car manufacturing, they’re looking to their key suppliers to produce emissions savings.

This has an impact on all industries that steel companies serve, including the HVAC industry. AK Steel for example owns the exclusive license for applying an antimicrobial coating of silver ions to coiled steel, one of the best options available to sheet metal contractors serving hospitals.

McKinsey's 2020 "Decarbonization challenge for steel" report notes the U.S. has already begun to phase-out coke and coal with natural gas at newer electric arc furnaces, which leads to a lower carbon footprint. They say the predominant production method in Europe is still the conventional, coal-dependent integrated blast furnace/basic oxygen furnace.

“The emissions reduction targets have been expanded from just cutting the carbon footprint of the steelmaking process to also include the upstream input processes, such as energy, and the downstream processes, such as product delivery,” Hites writes. 

With countries like Sweden committing to zero emissions by 2040, according to McKinsey, "the need to assess alternative breakthrough technologies to reduce carbon dioxide emissions is high." Between 2030 to 2040, the report estimates steel with hydrogen reductants will become cost-competitive against steel produced with fossil fuel reductants in Europe.