Service centers expect to see continued consolidation

Mar 31, 2012 | 07:00 PM | AMM staff

Tags  service centerm&a, service center outlook, MSCI, Michael H. Hoffman, Klöckner USA Holdings, James D. Hoffman, Reliance Steel & Aluminum

While monthly factors might continue to fluctuate and force a variety of strategies and approaches during 2012, overall market conditions continue to make merger and acquisition (M&A) activity attractive for the service center sector.

A steadily improving economy, the easing of credit and renewed strength in the energy and transportation sectors are expected to contribute to an environment that will favor more M&As this year and for the foreseeable future, service center executives said. Furthermore, U.S. companies could begin to follow a European-style model in which mills adopt a strategy of acquiring service centers.

Those messages came though especially loud and clear during the Metals Service Center Institute (MSCI) Carbon Products Conference in Carlsbad, Calif., in February. The global carbon steel sector is expected to undergo another wave of consolidation as players of all sizes find themselves with more cash on hand and a desire to drive out fragmentation, industry leaders said.....