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Steel mergers ‘definitely’ on the way, says analyst

Steel mergers ‘definitely’ on the way, says analyst
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First Published: Thu, Jul 19 2007. 01 02 AM IST
Updated: Thu, Jul 19 2007. 01 02 AM IST
Edited excerpts:
On prospects for mergers and acquisitions:
Consolidation will definitely take place. I would look at a global company to have at least 50-60 million tonnes (mt) of steel capacity today, or steel production—roughly 5% of global production.
If we look ahead, at 2020 or so, I would look for global steel production to rise to over 2,000mt. That means I’d look at a global company to have capacity over 100mt. This is the driver of mergers and acquisitions. If you look at Posco, with about 30mt of steel capacity, it’s too small to become a real global player.
On the outlook for steel price increases:
Not immediately. I’m expecting prices to rise from September-October, considering that the global economy is not too bad and somehow the demand side will remain fairly strong.
I’m a little worried about expansion in China, which will ultimately pull down prices. Whatever the government does over there, they will have to release a lot more of their steel onto the international market, which will keep prices under pressure for a longer time.
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First Published: Thu, Jul 19 2007. 01 02 AM IST
More Topics: steel | mergers | Money Matters | Global Markets |