Possible changes on the steel market in Europe

While China looks to create the second largest steel company in the world through the merger of Baosteel and Wuhan I & S, the market and the steel industry in Europe are on the verge of mergers that would truly transform the industry in the region.

Assuming that Tata Steel and ThyssenKrupp merge, and ArcelorMittal is successful in acquiring Ilva, what would the newly consolidated European market and steel industry?

Ilva is an interesting proposition for ArcelorMittal. As long as it can be purchased cheaply and any complications with the state aid rules of the European Union are avoided. If this transaction satisfies the Monopoly Commission. The move could mean the end of the price split between northern and southern Europe. We should know if ArcelorMittal has been successful by the end of the year.

The other major consolidation would be the potential merger between Tata Steel and ThyssenKrupp. Common sense tells us that any Tata/TK merger would involve closures: most likely the end of crude steel production in South Wales. And, eventually, the closing of a furnace in Duisburg, Germany. All of these make movement more difficult to achieve. As long as unions and governments want to prevent job losses and deindustrialization. Close sources claim that the desire of the German government is to avoid the transfer of ThyssenKrupp to foreign ownership.

Assuming that these major changes in the European landscape take place, the impact on stockholders and end users will be strong. A reduction in the number of rolling mills will further restrict the options.

Article source: http://blogs.platts.com/2016/09/23/changing-face-europes-flat-steel-industry/