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A Call for Consolidation in South East Asia
Source: SEAISI
When steel giants are consolidating in both friendly and hostile means, there is no major sign of movements in
Steelmakers have long realised their vulnerability when dealing with iron miners like CVRD and BHP. They have a similar feeling when working under the strict requirements of the big auto companies. They have a weak bargaining power because they are relatively small. And the South East Asian steelmakers are among the smallest smalls. The industry leaders in the region are Lion of Malaysia, Krakatau Steel of Indonesia, and Sahaviriya of Thailand. The crude steel capacities of Lion and
It is almost a consensus that consolidation in steel business is good from a management perspective: companies consolidate in a hope to lower their overall cost structure, more sound capital investment, and ultimately better in serving customers. However, in
The first problem of starting a consolidation process in
The second problem is leadership. It is arguable that there is no steelmaker in the region has a solid overall capability to become a leader in a consolidation process. The region needs a real value creator with sound financial, management, and technology capabilities. Will the region open their mind that they may become a part of a global player's portfolio? Or there will be mergers among the region's steelmakers instead of takeovers?