That transaction is currently under review by the tribunal of Brazil’s competition regulator, Cade, which is composed of six commissioners and a chairman, ArcelorMittal said on Wednesday January 31.
“The tribunal will issue the final decision in the case... in February 2018,” the steelmaker said. “Until [the deal is closed], ArcelorMittal Brasil and Votorantim Siderurgia will remain fully separate and independent companies.”
Under the deal, Votorantim’s long steel business in Brazil would become a subsidiary of ArcelorMittal Brasil.
The combination of the firms’ assets would result in a long steel producer with crude steel capacity for 5.60 million tonnes per year and rolling capacity for 5.40 million tpy.
But it is precisely the size of the proposed new operation that has caught Cade’s attention, due to the potential for market competition issues.
The economic studies department at Cade is mostly concerned about the effect that the proposed merger would have on the local wire rod market
The companies have been in discussions with Cade’s technical team to propose solutions to avoid market concentration, which might include the transfer of assets to other companies. But the remedies proposed would have no effect on the wire rod market, nor on the market for steel frames, according to Cade.
On January 5, Metal Bulletin’s monthly price assessment for Brazilian rebar was stable month on month, at 2,200-2,400 Reais ($694-758) per tonne delivered.
Long steel producers ArcelorMittal, Votorantim and Gerdau are said to be considering a price increase in February, following uptrends in the global market, as well as improving demand in the local market, according to domestic sources.
But an official announcement in terms of price adjustments has yet to be made, they added.