Steel

Tata Steel deal crystallises overseas M&A pain

20 Sep 2017

The Indian group’s deal with ThyssenKrupp will shore up the ailing business it bought in 2007. But the joint venture will assume just a quarter of the European unit’s 9.5 bln euros of liabilities. That’s bad for Tata Steel shareholders. At least its rich parent is supportive.

Tata Steel JV pays ThyssenKrupp four dividends

20 Sep 2017

A historic joint venture with India's Tata will unshackle the German group from the fickle, capital-intensive steel industry. Lower pension liabilities, a share of synergies worth 3 bln euros and a more robust balance sheet are further benefits. Workers will fare better too.

U.S. Steel forges best argument against trade war

26 Jul 2017

Rising demand and restrained imports led to blowout earnings at the $4.7 bln steelmaker. While management's hopes for tariffs on bogus national-security grounds are receding, investors are better served by a focus on upgrading high-cost production over protectionist lobbying.

U.S. steel war invites needless collateral damage

30 Jun 2017

With overcapacity on the upcoming G20 agenda, the White House is mulling a 20 pct tariff on imports. That'd be risky for the auto and construction industries. A similar 2002 levy under President Bush led to 200,000 job losses. There are smarter ways to address market distortions.

Air Products finds China M&A has unstable element

27 Mar 2017

The U.S. firm is giving up on a $1.5 bln play for Yingde Gases. A profit warning from the target provides cover for a retreat but Air Products underestimated a messy boardroom spat, and its months-long trauma highlights the difficulties faced by foreign suitors in China.

Stinky Chinese M&A leaves investors flush

8 Mar 2017

Two directors at Yingde Gases want a police probe into the chairman. All three plan to sell their shares to a buyout firm touting a $1.5 bln takeover. U.S. rival Air Products may offer more. It is a bizarre example of bad governance working out well for independent shareholders.

ThyssenKrupp stumble strengthens case for breakup

24 Nov 2016

The German engineer's recovery is fizzling. Falling earnings reveal the weak case for combining elevators, car parts and submarines. CEO Heinrich Hiesinger wants to hive off steel but defends his eclectic collection of capital goods. It’s time for more radical ideas.

ArcelorMittal self-help plan can resist corrosion

8 Nov 2016

Fourth-quarter profit will be hit by a combination of lower prices for U.S. steel and dearer ones for coal. But the world’s largest steel producer is cutting debt and costs, while its mining unit is on the mend. There’s scope for its dented share price to forge new gains.

ThyssenKrupp balance sheet looks less than tensile

11 Aug 2016

Despite raising capital three years ago and cutting costs successfully, the German engineering group is making little headway in repairing a flimsy balance sheet. Meeting a key credit covenant is again becoming a stretch, leaving it ill-prepared for potential future headwinds.

China’s bondholders won’t go down without a fight

25 Jul 2016

Investors are confronting the Chinese province of Liaoning over the latest default by Dongbei, a troubled steelmaker. With defaults by state-backed firms escalating, expect more bitter rows like this – especially if debt holders can successfully take on Liaoning in court.

Steel deal will test China’s reform mettle

28 Jun 2016

Combining Baosteel and Wuhan Steel would create a global giant. If cost and capacity cuts followed, that would underline how serious China is about industrial reform, and suggest a flood of cheap exports could recede. For now, though, it’s easy to be sceptical.

Europe exit dulls Britain’s appeal to Asia Inc

27 Jun 2016

Asian companies have typically viewed the United Kingdom as a stable and open market. Now they must grapple with a weak sterling, political chaos, and likely recession. Until they have more clarity on the terms of future trade with the European Union, investment will suffer.

Rio Tinto goes Genghis on the copper market

6 May 2016

By expanding its $5.3 bln Oyu Tolgoi mine in Mongolia, the miner hopes to ride an upswing in demand. Under-investment in new mines and declining quality could see the market in deficit by 2020. But there’s a risk that copper goes the way of iron ore, into a damaging supply war.

U.S. Steel’s China hacking gripe clever but risky

29 Apr 2016

The giant producer claims cyber thefts breach trade laws and has asked a federal commission to block offending firms’ imports. It’s a novel way to fight a thorny problem but one unlikely to attract imitators. The Middle Kingdom may be too lucrative a market to tempt retaliation.

Steel woes may dent Tata’s credit aura

26 Apr 2016

Lenders long assumed the unlisted Indian group would ride to the rescue of subsidiaries. Troubles at its European steel unit, which owes $6 bln, are testing that faith. If Tata forces banks to share its pain, other group companies may have to pay more for their $11 bln of debt.

Anglo American’s pay mess is self-inflicted wound

22 Apr 2016

Over two-fifths of the mining group’s investors rejected Mark Cutifani’s pay in a non-binding vote. Anglo should be in investors’ good books: its CEO’s turnaround is working. But by offering a pay package that hedged the risk of it failing, the group shot itself in the foot.

Tata Steel faces European debt conundrum

13 Apr 2016

Two thirds of the steel giant’s $9.7 bln of net debt is attached to its ailing European business. That is complicating its efforts to extract itself from the disastrous purchase. Even if Tata can offload the assets, it’s hard to see how creditors will avoid sharing the pain.

Steel deal can pay double dividend for Thyssen

12 Apr 2016

The German engineer may pool its European steel assets with Tata’s Dutch unit. ThyssenKrupp’s share of the synergies could be worth almost 1 bln euros. Halving its conglomerate discount would double the benefits. So far, the market is pricing in only half of the potential.

ThyssenKrupp could break steel’s first-mover issue

1 Apr 2016

The German engineer and Tata Steel are talking about pooling European steel assets, says a German press report. Closing plants would be politically fraught – look at the row over Tata’s UK operations. But it’s necessary, and Thyssen has shown restructuring mettle before.

Tata Steel is wise to play to its home advantage

30 Mar 2016

The Indian steelmaker may sell all of its UK business. Weak local demand and a flood of cheap Chinese imports make Tata’s European arm much less attractive than its domestic operations. M&A at home may also prove more profitable than the ill-fated 2007 takeover of Corus.