Mergers present opportunities for smaller players

Representatives of some of the smaller European mills have welcomed potential mega mergers in the continent’s steel industry, suggesting there will be benefits to the sector and opportunities for their companies.

ArcelorMittal, Marcegaglia and Arvedi are involved in the final stages of the bidding process to acquire the Ilva works in Taranto, while ThyssenKrupp and Tata Steel are discussing a potential merger in moves most see as crucial to consolidating the European industry.

Speaking at the EUROMETAL World Steel Summit conference in Dusseldorf, Sebastian Bross of Salzgitter said mills like his, with around 5% market share in the strip sector, had already received increased interest as a result of the rumors surrounding competitors. “We would like to have a less fragmented market but if there are some big players there’s always a role for some smaller ones… We recognized that as soon as these rumors began going on about a joint venture between ThyssenKrupp and Tata Steel we saw customers coming to us… It’s no threat it’s actually more a chance for us,” he said.

Henrik Adam of Tata Steel Europe agreed overcapacity and a lack of consolidation was one of the structural issues facing the sector, but declined to say how many producers there should be in the flat steel market, saying: “more than one and less than ten.”

Another source from a smaller European mill agreed with Bross noting their company would benefit from the reduced number of players in the market as competition for business would decrease, while a desire of customers to create as diverse a supply chain as possible should push demand in their direction.

Peter Brennan, S&P Global Platts