US Steel (NYSE:X) Interested in Severstal's Wheeling Facility

With Russian steelmaker OAO Severstal looking to sell three plants based in the U.S., they have drawn interest in some of them from US Steel (NYSE:X) and Essar Steel from India.

Reportedly there are five suitors interested in the three U.S. steel plants, and Severstal has given all interested parties until October 22 to make a binding offer.

U.S. Steel has been said to be looking into the Wheeling plant located in West Virginia, and Essar Steel may make an offer for the Sparrows Point plant in Maryland.

Other companies showing interest in acquiring all three are Aurora Capital Group and Renco Group, both based in the U.S.

Nucor (NYSE:NUE) CEO Concerned with Steel Overcapacity

The CEO of Nucor (NYSE:NUE), Dan DiMicco, said recently he has concerns over Severstal, US Steel (NYSE:X) and ArcelorMittal (AMS:MT) (NYSE:MT), as they restart blast furnances in the US which will add approximately 8 million short tons of capacity to the market.

DiMicco stated, “We have serious concerns that capacity being brought back will get ahead of the demand in the marketplace because the economy isn’t really growing, we are not creating jobs. We are not seeing a lot of commercial construction, nonresidential construction, so it’s a concern. And it should be a concern for everybody. And anybody that says it’s not an issue is kidding themselves or trying to kid you.”

The result of all this, if it happens, will be the drop in steel prices which would put pressure on earnings of steel companies.