International Steel Mills
Tata Steel and Thyssenkrupp in Talks on European Venture
Written by Sandy Williams
April 2, 2016
Tata Steel’s exit from the United Kingdom may be a precursor to a merger with Thyssenkrupp. Wall Street Journal reports Tata and Thyssenkrupp have been in high-level talks for more than a year about combining their European steel operations.
Whether the two companies are considering a buyout or forming a joint venture is unclear at this point. With the UK business out of the way, Tata’s major European asset would be the profitable Ijmuiden Works in the Netherlands. The steel plant has an annual crude steel production capacity of 7 million tonnes that is mainly used in automotive, construction and packaging applications.
“Given Thyssen’s interest in pursuing consolidation solely with another premium flat-steel producer, we believe this cleaning up of Tata’s portfolio may help free up the core Dutch assets for Thyssenkrupp,” said analysts at Jeffries.
Credit Suisse analysts agreed, noting Tata Steel’s exit from the UK would make a Thyssenkrupp deal more attractive. “This scenario, in turn, could lead to the creation of a 20 million tons high-quality steel producer in Europe and the eventual exit of steel for Thyssenkrupp, with arguably a strong synergy story,” said analysts at Credit Suisse as quoted by WSJ.
Tata Steel’s Dutch plant is about 124 milles from Thyssenkrupp’s Duisburg steel plant and in a good position logistically for Thyssenkrupp. Combining the 7 million tonnes of capacity at Ijmuiden Works with Thyssenkrupp’s 15 million tonnes at its Steel Europe division would make it a strong competitor to steel giant ArcelorMittal.
Sandy Williams
Read more from Sandy WilliamsLatest in International Steel Mills
SSAB adjusts output in weak Q3, readies for Q4 rebound
SSAB said lower plate prices in the US were the primary reason for reduced results in the second quarter. With a dismal Q3 outlook, the Swedish steelmaker is adjusting production across its facilities. That includes moving up its annual US mill outage in anticipation of a better Q4. SSAB Americas Revenues in the Americas segment […]
Global steel production dipped in June
Global steel output eased 2% in June following May’s 14-month high, according to World Steel Association’s (worldsteel) latest release.
Union rejects proposal to end strike at ArcelorMittal Mexico
The local mining union has rejected a proposal to end the labor strike at ArcelorMittal Mexico’s Lazaro Cardenas mill and Las Truchas mine in Michoacán, Mexico.
NLMK mill targeted in Ukrainian drone attack
Novolipetsk Steel’s (NLMK) mill in Lipetsk, Russia, was the target of a raid by Ukrainian drones on Sunday, according to a Reuters report.
USS and Nippon clarify position on US trade case participation
U.S. Steel and Nippon Steel explained their position on USS’ participation in US trade cases should their proposed nearly $15-billion merger deal go through. The companies hope to close the deal by the end of the year.