Lakshmi Mittal, chief executive officer of ArcelorMittal (MT), said rival ThyssenKrupp AG (TKA)’s plans to split off its stainless-steel operations are a “positive step” toward merging companies in the industry.
“Consolidation is always good and the industry has always needed it,” Mittal said today in an interview in Luxembourg, where ArcelorMittal held its annual shareholder meeting. “This is a positive step from ThyssenKrupp, in line with what ArcelorMittal has done.”
ThyssenKrupp said last week it plans to sell or spin off its stainless-steel division to focus on engineering and curb debt. The announcement followed a similar move by ArcelorMittal, the world’s biggest steelmaker, which separated its Aperam unit in January after years of talks with European peers failed to bring about a merger of their stainless operations. The Mittal family owns about 41 percent of Aperam.
“The spinoff of ThyssenKrupp’s stainless unit not only affirms the structural challenges in this industry but hopefully accelerates the needed consolidation of the European stainless industry,” Jeffrey Largey, a London-based analyst at Nomura Holdings Inc., wrote in a note last week.
European stainless-steel producers have struggled to cope with overcapacity and higher raw-material costs as prices of the metal declined 13 percent in the past year, according to Metal Bulletin data. Nickel, an ingredient in the alloy, has risen 7.8 percent on the London Metal Exchange in the period.
ThyssenKrupp abandoned plans to tackle surplus capacity in 2009 after failing to achieve the price it wanted for several units. Aperam CEO Bernard Fontana said in February that the Luxembourg-based company was “open to change” in the industry and would consider a merger.
Aperam posted a 48 percent decline in first-quarter profit today after prices fell. Net income dropped to $25 million in the period from $48 million a year earlier, the company said in a statement.
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