German steel group Klöckner & Co is increasing its presence in North America via the acquisition of Mexican steel distributor and service center National Material of Mexico (NMM), it said.
This is the latest example of steelmakers in North America restoring supply chains to their country of origin – a trend particularly apparent in the automotive sector – to counter disruptions caused by the Covid-19 pandemic and to take advantage of government policies to stimulate domestic production.
The acquisition – costing $340 million – is a part of Klöckner & Co’s strategy to expand its product and service portfolio out to 2025, it said late on Monday December 19.
The additions to its portfolio resulting from this transaction will allow the company to supply carbon and electrical steel, aluminium and stainless steel directly in Mexico, it also said.
Subsidiary Klöckner Metals has been investing in Mexico to supply the country’s automotive industry. Last year, it started construction of its second steel processing facility in the country.
NMM is a leading steel service center in Mexico, headquartered in northeastern Monterrey city and with 10 operations in the country. It supplies automotive, home appliances, motor and transformer manufacturers. The company offers processing capabilities that include slitting, cut-to-length, leveling, multi-blanking, configured blanking and core processing.
After the acquisition is completed – the company expects to do so by summer next year, pending approval from antitrust authorities – NMM will come under the Klöckner Metals brand, it said.
The combined company will have presence in the United States and Mexico with 55 sites and around 2,600 employees. NMM, which employs around 500 people, generated sales of $610 million in fiscal 2021.
Steel prices in North America have been recovering in recent weeks, led by price increases and higher demand in the US.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $35.92 per cwt ($718.40 per ton) on Monday December 19, up by 0.64% from $35.69 per cwt on Friday December 16 and up by 4.88% from $34.25 per cwt a week earlier.
Published by: Felipe Peroni