The report examines current drivers for consolidation in the Metals industry which are expected to sustain deal flow through the coming quarters:
Scrap transactions have been dominated by steel mills trying to vertically integrate to secure feedstock for existing and new mills under construction, while large recyclers also pursue acquisitions to shore up scale in anticipation of near-term capacity expansions. Steel Dynamics is the latest steel mill to announce a deal to further its raw material sourcing strategy with the acquisition of Mexico-based ROCA ACERO S.A. de C.V.
Downstream purchasing is occurring at a frenzied pace. Steel mills continue to be active buyers with increased furnace efficiency, closeness to the end user, margin enhancement, and growth among the benefits sought through acquisitions. Service centers are looking to acquire companies with more value-added processing to increase margin and help offset volatility in steel and other metal cost. Still other metals companies are seeking downstream acquisitions of fabricators to participate in market growth and increase margin, with end-markets such as solar, truck trailer, and warehouse and distribution seeing substantial growth. Gibraltar Industries (TerraSmart), Nucor Corporation (Hannibal Industries), and Commercial Metals Company (Tensar Corporation) are some strategics looking downstream to establish new growth platforms.
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