Steelmaker nucor is spending $1.44 billion to buy scrap-metal broker and processor David J. Joseph Co.—one of the biggest metals recycling companies in the U.S. —in an attempt to shield itself from volatile iron-unit prices. With its network of electric-arc steelmaking furnaces, Charlotte, N.C.-based Nucor is the largest buyer of price-volatile scrap tonnage in the U.S. David J. Joseph brokered 20 million tons of ferrous scrap and 500 million lbs of nonferrous scrap in 2007.

Nucor purchased 22.8 million net tons of scrap and used another 1.54 million tons of iron units from its DRI (direct-reduced iron) plant in 2007 to make 22.1 million tons of steel. The acquisition will expand Nucor's internal scrap-processing capabilities to four million tons from 500,000 tons. David J. Joseph, which has been Nucor's broker of ferrous scrap metal for nearly 40 years, will be able to provide the steelmaker with additional raw materials through its brokerage operations, and provide rail services and logistics through its private fleet of some 2,000 scrap-related railcars.

David J. Joseph will operate as a Nucor subsidiary and will retain its Cincinnati headquarters. Even before the Nucor purchase is finalized, David J. Joseph Co. has agreed to buy Galamba Metals Group of Kansas City, Mo. Galamba Metals was founded in 1977 and has 16 full-service scrap-processing facilities in Kansas, Missouri and Arkansas. Galamba Metals' revenue has risen 28% in the past two years, says Reynard Brown, president. The company's fundamental operations won't change under the new ownership, he says, but it will follow an aggressive growth plan.

The scrap-steel market is erratic, with prices varying wildly throughout the world. In the U.S., shredded scrap is selling for about $385/metric ton, which is down from last year's highs of $500 but still fairly strong. A Wall Street Journal analysis suggests that demand for scrap steel will stay robust in the U.S. —and with it, prices—especially if the dollar remains relatively weak, prompting increased exports. The price in China and other overseas markets is generally $100/metric ton higher because of domestic shortages.