ArcelorMittal, the world's largest steel company has said it expects the pace of M&A activity in the Indian steel sector to remain slow during 2015 given the overall demand slowdown in emerging economies.
"Merger and acquisition activity is expected to remain relatively active in the Indian steel and mining industry though at a slower pace considering the current economic slowdown. The country has become the world's third largest steel consumer after China and the United States and is the world's third largest steel producer after China and Japan," the company said in its Interim Financial Report for the Half Year ended June 30, 2015.
While steel and mining industries experienced a wave of consolidation prior to the economic meltdown in 2008, M&A activity had subsequently shot up among steel companies including those in China and India. However, current economic uncertainties in developed economies, combined with a slowdown in emerging regions such as China and India, consolidation transactions decreased significantly in terms of number and value after 2012. This is expected to continue in 2015, unless and until prices stabilize and supply and demand balance out in the context of worldwide structural overcapacity, ArcelorMittal added.
The company also said it is excited about the growth potential of the Indian automotive market. Commenting on its agreement with Steel Authority of India Limited (SAIL) signed in May this year, ArcelorMittal said it is excited about the growth potential of the Indian automotive market."We have taken a further step this year in executing our global automotive strategy, signing a Memorandum of Understanding with SAIL for a potential automotive steel focused joint venture in India," the report said.
Souece: ET
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