Marcegaglia in talks to buy Evraz plate mill

Europe’s largest steel re-roller, Marcegaglia, is in advanced talks to buy Italy-based plate maker Palini e Bertoli from Russian mining and steel company Evraz, several market sources told S&P Global Platts Wednesday.

Sources said another Italian plate producer, Officine Tecnosider, has also showed interest in Palini e Bertoli, but that Marcegaglia is already close to sealing a deal. If this goes ahead, Marcegaglia will expand its existing 400,000 mt/year plate-making capacity to 900,000 mt/year. Tecnosider has an installed plate capacity of 350,000 mt/year.

Evraz has been attempting to divest Palini e Bertoli for some time as plate is no longer part of the company’s core business, according to two industry sources. “Evraz is not making big money from Palini and the market is not bright for plate, but the main reason for the sale is that plate is no longer the company’s staple product and has no place in its future plans,” said a source close to Evraz.

Evraz declined to comment when contacted by Platts. Marcegaglia and Tecnosider did not respond to e-mails and calls on the subject Wednesday.

Evraz stopped being an important player in the steel plate market after selling its Czech heavy plate mill, Vitkovice Steel, in early 2014. After the 2018 sale of Petrovsky Dnepropetrovsk Iron & Steel Works in Ukraine, also equipped with plate capacity, Palini e Bertoli remained Evraz’s only plate facility, but the company’s product range narrowed significantly.

Evraz no longer ships slabs from its Russian steelworks to its Italian reroller. The steelmaker supplies its Italian operations with slabs purchased from Ukrainian group Metinvest, which also owns a plate mill, Trametal, located in the same Italian municipality as Palini e Bertoli. It is cheaper to ship slab to Italy from Ukraine than from the Urals, let alone Siberia, where Evraz makes the semi-finished product.

In the first half, Palini made 198,000 mt of plate – utilizing roughly 80% of its 500,000 mt/year capacity – or just over 30,000 mt/month, according to Evraz’s latest trading update. Two market sources said they considered that a minimum of 40,000 mt/month is needed to generate profit in the current plate market. However, the sources understood that thanks to its simple product range and small number of employees, Palini e Bertoli has the advantage of low operating costs, although the lack of its own distribution system may be a weak point.

“From the plate price angle, the timing for the sale could not be worse,” one market source said, pointing to a surplus of rolling facilities in Italy and in that region [north-eastern Udine province] in particular. There, three mills within a radius of less than 10 km – Palini, Trametal and Tecnosider – are all striving for orders in a climate where several local plate processing manufacturers have been closed.

This source believes one of the reasons Palini e Bertoli has not yet been sold is its price tag being a little unrealistic. “Evraz was looking to get $50 million-$60 million while bids above $20 million-$30 million are not likely,” he said.

At the end of 2018, Evraz had $41 million worth of non-current [fixed] assets in Italy, the company said in its annual report for that year.

— Annalisa Villa and Katya Bouckley