PwC Metals Deals 2010 reviews the deals activity in the metals industry. The report analyses the rationale behind the overall deal trends and provides insight on key individual deals that took place in the year.
The key findings of the report are as follows:
- Raw material integration became a focal point in 2010 as commodity prices moved upwards and miners dominated the contract negotiations. Such event resulted in marked increase in cross border deals as steel companies scurried to secure raw material captivity. Hence, proportion of ‘other metals’ category - namely iron ore in the total metals deal value rose to 57% in 2010 from 49% in 2009.
- In the overall metal deals space, it was the developed markets such as Japanese, North American, West Europe and Australia that were involved in big ticket deals. China, on the other hand, remained largely focused on consolidation of its highly fragmented domestic metals sector. Africa is gradually featuring as a key player in the metals deal market as it is seen as a probable source of raw material supply.
- India is emerging as a potential growth avenue for the automotive steel segment. JFE Steel’s investment in JSW Steel will not only provide the company capital for expansion in India but also access to technology for auto grade steel production. Similarly, other Japanese-Indian alliances in the steel sector catering to the production of automotive steel in India were Nippon Steel and Tata Steel and Sumitomo and Bhushan Steel.