Steel

CEO exit is game changer for ThyssenKrupp

6 July 2018

Heinrich Hiesinger offered to quit the German conglomerate days after clinching an underwhelming steel JV with Tata. His long tenure and advocacy of the group’s conglomerate structure made him ill-suited to the action ThyssenKrupp needs. His replacement should be more radical.

Steel pact lets Thyssen/Tata tackle wider problems

2 July 2018

Tweaking the terms of their September joint venture gives the German steelmaker a bigger share of a future IPO. It could have driven a harder bargain, but Tata had limited wiggle room. Besides, ThyssenKrupp needed a deal to kickstart its own much-needed overhaul.

ThyssenKrupp can forge better steel deal with Tata

14 June 2018

The German group has outperformed its Indian rival since they agreed a European steel joint venture last year, and now produces more than twice as much EBITDA. Tata could pay cash or give up dividends to close the gap. Walking away from the hefty synergies would be too painful.

Italy and ArcelorMittal can unpick steel knot

13 June 2018

The government’s largest party has campaigned for shutting Europe’s top smelter, now being sold to the Indian steel group. At the very least, Italy will demand more environmental and labour pledges. Yet the fact Arcelor doesn’t look to be overpaying suggests room for compromise.

Election shake-ups will make NAFTA more elusive

5 June 2018

Doug Ford, a Canada-first candidate, has a shot at becoming the next premier of Ontario – the province that will be hardest hit by U.S. steel tariffs. Voters also go to the polls this year in Mexico and the U.S. New political faces will make sealing a trade deal even harder.

ArcelorMittal paying an odd bid “premium” in India

21 May 2018

The world's largest steelmaker is ready to cover $1 bln of debt in a tiny rival it no longer backs so it can buy bankrupt Essar. A quirky rule bans owners of defaulting companies from acquiring distressed assets. It's a sign of how India’s bankruptcy law is a work in progress.

Electrolux buffeted by perfect Trump tariff storm

27 April 2018

The Swedish fridge maker lost a tenth of its value after operating profit almost halved in the first quarter. A rejig of its freezer factories in the U.S. was one culprit. But investors are dubious that cost cuts will enable such a global business to offset higher steel prices.

ArcelorMittal’s India homecoming may be scrappy

14 March 2018

The world’s largest steelmaker is back on the acquisition trail with a $6 bln bid for bankrupt Essar. It paves the way for the family to go back to its roots. The Mittals would face an inhospitable environment, but it's probably manageable for a company spawned by a hostile deal.

M&A rebound is good sign for Indo-Japanese ties

9 March 2018

Nippon Steel is part of a bid for bankrupt rival Essar. That would mark a revival of Japanese deals in India after flops with Docomo and Daiichi Sankyo. Healthy financial relations are a prerequisite for creating the harmonious "Indo-Pacific” that Tokyo and Washington both want.

Revamped ENRC should set its sights low

8 March 2018

The colourful Kazakh miner, renamed ERG after it delisted under a cloud in 2013, is testing a recovering commodities market. A fresh IPO sounds a non-starter, but selling a stake in one of its operations could fly. If so, it would help the group trim almost $6 bln of debt.

India’s bankruptcy regime requires pragmatic touch

6 March 2018

Essar Steel could fetch $6 bln, with bids from groups led by ArcelorMittal and Russia's VTB. Both suitors sit awkwardly with tough rules barring defaulters from buying stressed assets. However, it is better to get good proceeds for creditors than to be purist and fail.

Trump’s incoherent strategy dooms tariff crusade

2 March 2018

The U.S. president defended his steel and aluminum duties, arguing trade wars are “easy to win.” But his tax cuts increase the budget deficit and the country’s reliance on foreign capital, almost guaranteeing a worsening trade balance. The conflicting tactics are self-defeating.

Trump tariff chaos shoots America in its own foot

1 March 2018

The president is to impose sweeping import duties on steel and aluminum, citing national-security concerns – though details are scant. It’ll help domestic steelmakers. But the move ignored some U.S. agencies and could deliver a blow to vital allies like Canada and South Korea.

ThyssenKrupp takes second step to redemption

19 January 2018

Having pooled its steel assets with rival Tata, the German industrial group plans a further strategy shift. Just as well: margins even in the non-steel bits lag peers. The question is how far CEO Heinrich Hiesinger can follow the vogue for dismantling big, unwieldy conglomerates.

Japan is developing a quality-control problem

10 October 2017

Kobe Steel admits it sold substandard metals to hundreds of clients. After Takata’s lethal airbags and testing scandals at various carmakers, this is yet another blemish on Japan’s reputation for product quality. Something is going badly wrong with corporate cultures.

Trump’s new Democrat friends put China on notice

26 September 2017

The U.S. president touted his common ground with congressional minority leaders Chuck Schumer and Nancy Pelosi when it comes to Beijing. They talk tougher on currency manipulation and trade than some in the White House. Their chumminess could put more economic pressure on China.

Tata Steel deal crystallises overseas M&A pain

20 September 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 September 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 July 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 June 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.