The chief executive officers of two US steel companies say they have no plans to diversify their mainly North American operations through cross-border mergers and acquisitions in light of tariffs against foreign competitors, mainly Chinese, imposed by President Donald Trump.
Roger Newport, CEO of Ohio-based AK Steel, and John Ferriola, chief executive of North Carolina-based Nucor, said they saw no pressing reason to seek foreign acquisitions in markets such as Ukraine, Uzbekistan and Asia and would remain focused on the domestic US market.
Trump imposed 25% global tariffs on steel imports a year ago to protect the industry from imports, citing national-security grounds under a Cold War-era trade law.
While foreign groups such as Italian-Brazilian Tenaris, India’s ArcelorMittal and the Evraz group part-owned by Russian oligarch Roman Abramovich have been acquiring US steel assets, US steel groups such as AK Steel and Nucor remain US-centric and lack a global footprint.
In fact, one of the last major US acquisitions of a foreign-based steel group was Pittsburgh-based US Steel’s acquisition of the Kosice, Slovakia-based VZV steelmaker in 2000. US Steel is reportedly in talks to sell its Kosice steel works to China’s HE Steel Group for US$1.4 billion.
US Commerce Secretary Wilbur Ross, who turned around major US steel groups in the early 2000s as the the head of his WL Ross & Co private equity concern, has said the US government is not in the business of mandating companies to make foreign M&As.
However, when answering a question during the SelectUSA Investment Summit held this week in Washington, Ross seemed to take a swipe at AK Steel and Nucor, saying that American steel company ArcelorMittal is a global company.
Ross is very much aware that in fact, ArcelorMittal is owned by India’s Lakshmi Mittal and has its corporate headquarters in Luxembourg.
The lack of M&A appetite by US steel companies such as AK Steel and Nucor, seemingly content on protectionist trade measures under Trump’s tariffs, now makes US-owned steel companies appetizing M&A prey for global and regional steel companies in Asia and Europe.