Just as the American steel industry thought it found a new lover in the form of Russian investors, events in the global economy may threaten that affair. Overall, Russian investors have acquired almost 10% of U.S. steelmaking capacity over the last few years. But could that Russian appetite for American steel companies spoil with the recent drop in the price of oil?
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Some experts have claimed that expensive oil was fueling the demand for American steel. With oil over a $100 a barrel, it was cheaper to produce steel in the U.S. than elsewhere because of high shipping costs. Now oil is $64 a barrel, leading to lower shipping costs.
It may be too early to see if Russia's interest for American steel companies has waned because of lower oil prices. But it's interesting to note Russian steelmaker OJSC Novolipetsk completed its acquisition of Portage, Ind.-based Beta Steel Corp. on Friday, at $350 million in cash, $50 million less than the originally announced price. Did the drop in oil precipitate the lower completed price? And if it did, is it the beginning of the end of Russia's love affair with American steel? - Gerald Magpily
