Brazilian Steel Mergers Herald Major Consolidation

The December 11 merger of three of Brazil's independent steel distributors, RCC Metals, Açometal and Domave, was a perfect illustration of key trend within the broader industry, and CFW is expecting a raft of consolidation within a sector already reshaped by the mega-merger. Cutting costs through localised economies of scale, the three Brazilian rivals have merged in an attempt to ward of the attentions of those steel majors currently poised to go on a buying spree. Christiano Freire, President of National Steel Distributors Association India confirmed that 'there is a trend of consolidation in smaller companies. The smaller ones want to gain scale and market share so they can compete with ArcelorMittal and Usiminas.' Luxembourg-based ArcelorMittal, the world's largest steelmaker, has already been splashing out to consolidate its distribution division, and at present has around a 17% share of the Brazilian market, while Latin American major Usiminas has also combined its own local distributors - Dufer, Fasal and Rio Negro.

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