Steel

US heralds a protectionist 2010

4 Jan 2010

Political and policy concerns make a White House protrade push unlikely. Instead, expect more duties on foreign goods like the newly imposed ones on imported steel pipe stalled trade negotiations and increased friction with China. It all amounts to a restrained recovery.

ArcelorMittal set to get mid-crisis $3bn

29 Apr 2009

Demand looks strong for the giant steelmaker s share and convertible bond offer. It needs the money after the first quarter left it burning cash. The steel industry is in bad shape, but investors trust the Mittals optimism, despite the family taking only 10% of the new shares.

Investors right to doubt industrials’ optimism

23 Oct 2008

Large orders are falling and expansion plans under review. Yet Swiss engineer ABB and French electrical group Schneider are clinging to their optimistic forecasts. Rapid share price declines show shareholders don t believe them. They know what global recessions do to profits.

Mittal shows faith in customer power

30 Jun 2008

The Indian magnate s steel firm has built a 20% stake in Australia s Macarthur Coal. That looks wise. Even without a full takeover, holding sway at firms where you re a big customer has value. That might also explain Mittal s new board seat at trusted advisor, Goldman Sachs.

ArcelorMittal’s move on Macarthur is expensive but smart

21 May 2008

The steelmaker paid a high price for its 15% stake in the Australian coal producer, valuing the group at $4bn. But with coal prices spiking and ArcelorMittal intent on securing supply, a full takeover could be a smart insurance policy.

Steel futures will face real test in tougher times

29 Apr 2008

The London Metal Exchange fully launched two new steel futures contracts on Tuesday into soaring world steel prices. The LME has staked a lot on succeeding in a fragmented market. But the contracts' fate may depend on how they cope with a falling market.

BHP faces don’t-ask-don’t-tell dilemma

14 Feb 2008

The mining giant s $150bn bid for rival Rio Tinto will destroy value if BHP s synergy targets are to be believed. But since the real spoils should be higher, BHP could arguably offer more. Snag is, talking too loudly about excess profits could backfire on both sides.

Mittal goes to India with Sarko

25 Jan 2008

Just two years ago the French establishment fought a bitter campaign to stop the steel tycoon acquiring Arcelor. Now he s not just accompanying France s president on a mission to India; he s on the board of Eads, a strategicallyvital company for France. Vive la réalisme.

Potanin’s Norilsk defeat won’t end oligarch war

20 Dec 2007

Vladimir Potanin hasn t found the $16bn he needed to buy out Mikhail Prokhorov, his former friend and partner, at Norilsk Nickel. The stake is likely to go to Rusal s Deripaska. But the bitter fight between the two billionaires is far from over.

Rio has most to lose from Chinese intervention

4 Dec 2007

It s easy to see why China's Baosteel might want to block a deal between Rio Tinto and fellow miner BHP Billiton. But a full bid would cost $200bn and be politically risky. Buying a blocking stake makes more sense and would be bad news for Rio.

Credit wobbles aren’t just private equity’s problem

9 Aug 2007

It looks that way after Tata Steel ran into trouble financing its £6.7bn acquisition of UK rival Corus. The Indian company had to push up the interest rate on some of the debt. At least it was able to make the banks take some of the pain.

Another BRIC steelmaker destroys value

11 Jul 2007

Brazil s Gerdau Ameristeel is snatching up US producer Chaparral for $4.22bn. This makes Gerdau a much bigger fish. But the premium it s paying is unjustifiable. It joins a club occupied by India s Hindalco, Tata Steel and Russia s Evraz.

Arcelor hedge funds protest too much

17 May 2007

When Mittal bought the company, shareholders got 11 shares for every 7 they held. Those who didn t tender are now being forced to take 8. That s not as unfair as it looks. At the time of the takeover, Mittal was pretty clear what it would do with the rump.

Winner’s curse haunts SSAB’s $8bn Ipsco deal

3 May 2007

The Swedish specialty steelmaker unnerved investors by buying a business almost its own size. Its shares dropped 6%. The deal makes industrial sense, but leaves SSAB with a good dose of debt. The key question how long will steel s good times last?

Investors strike fool’s gold in Gold Fields hoax

12 Apr 2007

A threepage email and a gullible journalist were enough to push the South African miner s share price up by 11%. There was supposed to be a $12.5bn bid from a highly secretive financier, Edward Pastorini. So secretive that he doesn t exist.

Vallourec could find private-equity home

2 Apr 2007

The French steel tube maker s shares have been on a roll for three years. Without a major shareholder, it is a natural takeover target. Arcelor Mittal has denied interest for the moment . But a privateequity buyer might be willing to come in, even at the top of the cycle.

Voestalpine saves Boehler from CVC with E4bn bid

29 Mar 2007

The Austrian specialty steelmaker has found a local white knight to fend off an unwanted approach from private equity. The 11% premium looks modest. But shareholders may never know what they missed, since CVC wasn t allowed to make a bid.

Xstrata spends $4bn on nickel boom

26 Mar 2007

The UKlisted miner will pay C$18.50 per share for LionOre. Six months ago, the Canadian nickel miner was selling at C$6.70. But nickel prices have increased 50% since then, from an already highly profitable level. Xstrata is betting on a slow fall back to normal.

Arcelor Mittal gains moral victory in Brazil fight

23 Mar 2007

But the steel giant still could end up paying more than it wants for the minority interest in its Brazilian subsidiary. The regulator accepted Arcelor s valuation methodology, but came up with a price that was 38% higher. So the battle isn t quite over

CVC spreads out with possible E4bn steel deal

20 Mar 2007

Steel has traditionally been highly cyclical and capitalintensive. That sounds like a nogo for private equity. BoehlerUddeholm is in the more stable specialty sector, but CVC would still be taking its chances on profitability staying high.