Long term, the separate moves by SDI’s Keith Busse and Nucor’s Dan DiMicco to purchase big-league scrap businesses could prove gutsy strokes of genius. Short-term, it’s anything but.

When ferrous scrap prices rose to stratospheric levels and availability declined, some mills decided they needed to be in the scrap business as well as steelmaking. Now, as No. 1 bundles pile up in their yards and on their accounts payable ledgers, some mini-mills may be having second thoughts about the necessity of owning scrapyards.

Finding enough cheap iron and steel scrap was not a problem for mini-mills when they started out in the 1970s and made mainly rebar. Scrap was so readily available that after the mini-mills had consumed their share, as much as 10 million tons were exported each year. That changed when mini-mills entered the flat-rolled steel market. It was then that they grew in size to the point that "mini" was no longer an apt description, and also when they learned they needed to make steels that were more pliable than rebar.

Competition for higher-quality steel scrap, like auto industry factory bundles, intensified, and prices soared to $900 a long ton, a price that seemed unimaginable a decade before. Scrap surcharges helped to offset higher costs, but did not endear the mills to many of their customers.

Some steelmakers, like Irving, Texas-based Commercial Metals Co., had owned both mills and scrapyards for decades. Those that didn't faced both a dwindling supply of quality steel scrap and the absence of cheaper alternatives as pig iron and hot-briquetted iron climbed as high as—and, in some instances, higher than—scrap prices.

In late 2007, Steel Dynamics Inc. (SDI), based in Fort Wayne, Ind., decided it had had enough. It bought OmniSource Corp., a major scrap processor that handled twice as...