A consolidation in the Brazilian steel segment is likely to be limited to the longs steel business, industry experts told local newspaper Valor this week.
Analysts said there isn’t much space for consolidation within the flats segment, since most of the local steelmakers, including top three producers Usiminas, Companhia Siderurgica Nacional (CSN) and ArcelorMittal, have already established their competitive market share.
A source told Valor smaller longs producers, including Simec, AVB and Silat, are more likely to merge or acquire each other, since they have “very weak” profitability margins in current market conditions.
“What I see is the potential for a consolidation within these smaller players, which expected to be in a much better position when they first invested years ago,” the source said.
Brazil’s Gerdau recently said that consolidation in the steel segment is a global trend; however, the company maintains that China is still the most important topic for local steelmakers to worry about.
Francois Santos, consultant at global management consulting firm A.T. Kearney in Brazil said steelmaking is less valuable today in terms of merger and acquisitions because it isn’t seen as strategic anymore.