Gerdau Expands North American Scrap Recycling with Dale’s Acquisition

Gerdau Strengthens Scrap Supply Network
Brazilian steelmaker Gerdau has completed the acquisition of Tennessee-based Dale’s Recycling, enhancing its scrap processing capabilities in North America. The deal, valued at $60 million, was finalized on November 1, 2024. Dale’s Recycling operates five facilities in Tennessee and Kentucky, including an auto shredding plant in Milan, Tennessee, which will now supply critical ferrous scrap to Gerdau’s Electric Arc Furnace (EAF) mill in Jackson, Tennessee. This acquisition is part of Gerdau’s broader strategy to secure a steady and sustainable supply of raw materials for its North American EAF operations.

Supporting EAF Operations Amid Economic Challenges
The move to acquire Dale’s Recycling comes as Gerdau aims to meet the rising demand for steel by securing more efficient and reliable scrap supplies. Despite the economic uncertainty stemming from factors such as the U.S. presidential election and global market conditions, the company is optimistic about long-term growth prospects. While shipments from its North American mills decreased by 4.5% in Q3 2024 compared to the same period last year, Gerdau remains committed to investing in its scrap-based steel production infrastructure.

Economic Volatility Impacts Q3 Performance
In its third-quarter report, Gerdau cited a 25.7% decline in adjusted EBITDA from its North American operations, driven by weaker steel prices, lower demand, and increased competition from imports. Despite these challenges, the company maintains a stable order backlog of 50-60 days and anticipates improved market conditions in the coming years. The deal with Dale’s Recycling will help mitigate these pressures by providing a more stable scrap supply as Gerdau adapts to shifting market dynamics.