Editorial

Looking back at the major industry news events of 2006, the headlines clearly were dominated by announcements of more mergers among mills and service centers alike. Virtually no market segment was left untouched by a change in ownership and investment. Some companies are in a much better competitive position today as a result, others find themselves at a decided disadvantage.

Mill mergers were particularly impactful in 2006. After purchasing Canada’s Dofasco, Europe’s Arcelor was subsequently acquired by Mittal Steel, forming Arcelor Mittal, now the world’s largest steel producer. India’s Tata Steel agreed to acquire Corus Group, a transaction that would create the world’s fifth-largest steel producer. Most recently, Russia’s Evraz Group agreed to buy Oregon Steel Mills.

Esmark claimed victory in its battle to acquire Wheeling-Pittsburgh Steel. Shareholders voted last month to support Esmark’s slate of directors, replacing a board that had favored a merger with Brazilian steelmaker CSN.

Nucor Steel purchased Connecticut Steel’s Wallingford bar mill, and announced plans to build a new SBQ mill in Memphis. Steel Dynamics completed its acquisition of Roanoke Electric Steel and announced it will add production capacity at its Columbia City, Ind., rail and bar mill. Also in the bar market, Gerdau Ameristeel U.S. acquired Sheffield Steel Corp.

In the pipe and tube sector, the competitive landscape was tilted by Tenaris’ acquisition of Maverick Tube and IPSCO’s purchase of the NS Group.

Similarly, in the aluminum market, Russia’s Rusal and SUAL Group, and Switzerland’s Glencore International, agreed to merge into United Company Rusal, a deal that would create the world’s largest aluminum and alumina producer. Closer to home, Texas Pacific Group acquired aluminum maker Aleris International.

After a three-way mega-merger between Phelps Dodge, Inco and Falconbridge fell through earlier in the year, Phelps Dodge agreed to merge with Freeport-McMoRan, creating a giant in copper, gold and molybdenum.

While not always on the level of the billion-dollar deals between metals producers, M&A activity was fast and furious among service centers as well. Notable service center mergers in 2006 included: Reliance Steel & Aluminum’s acquisitions of Earle M. Jorgensen Co., Yarde Metals and Crest Steel Corp.; ThyssenKrupp’s foray into Canada where it picked up VPK Metals and The Hearn Group; Esmark’s consolidation of North American Steel and Premier Resource Group into its fast-growing holdings; O’Neal Steel’s purchase of Timberline Steel, Ferguson Metals and AIM/Supply Dynamics; Platinum Equity’s purchase of Metals Supply Co. and the PNA Group, which included Feralloy, Delta Steel and Infra-Metals; Steel Technologies’ acquisition of Kasle Steel; A.M. Castle’s purchase of Transtar Metals; and Ryerson’s purchase of Lancaster Steel, among others.

Is your company in a better position today than it was a year ago or has the competition already captured the high ground? Perhaps it’s not too late to act on an alliance of your own. Experts report that the economy will slow down in 2007, and perhaps the M&A activity along with it. But then, that’s what they said at this time last year.