M&A activity for North American based target companies in the metal fabrication sector for Q4 2016 included 46 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $62.8 million.
On a global scale, M&A activity in the metal fab sector was stronger in Q4 than Q3, but still lower than in 2015. Total deal value surged by 12% to $12.9 billion in Q4, bringing the total deal value in 2016 to $40.2 billion, still 40% lower than in the year prior.
Global demand for steel is expected to rise 0.5% in 2017 compared to 2016, according to a recent report by The World Steel Association. Key challenges include uncertainties related to the UK’s vote to exit the EU, along with China’s efforts to shift its economy toward services and consumption, with less investment in manufacturing, exports, and construction. Demand in China is forecast to drop 2% in 2017. However, some emerging markets should experience robust growth in steel demand. Amid government investments in infrastructure, India’s steel demand is forecast to increase 5.7% in 2017. Other key pockets of steel demand growth include Turkey (with 4.2% growth expected), Brazil (3.8%), and Mexico (3.2%). In developed markets, steel demand is forecast to rise 1.1% in 2017, led by the US, which should see demand grow by 3%. The EU and Japan are each expected to experience a 1.4% increase in steel demand.
Industry Indicators
- US durable goods manufacturers’ shipments of primary metals, an indicator of primary metal production, fell 7.8% year-to-date in November 2016 compared to the same period in 2015.
- US steel mill product prices, which impacts profitability for primary metal manufacturers, rose 8.7% in December 2016 compared to the same month in 2015.
Posted by Bob Contaldo.
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