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Tata, Thyssenkrupp in steel tie-up talks

Friday, April 01, 2016 - 01:25

India's Tata Steel is reportedly in talks with Thyssenkrupp over a possible tie-up of their European steel operations. Despite denials of the discussions by the German company, expectations of consolidation are high after Tata's plans to sell their UK business. Ivor Bennett reports.

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It's been an icon of the local landscape for over a hundred years. But there'll be no long goodbyes from Port Talbot steelworks' owners. India's Tata is reportedly in talks with Germany's ThyssenKrupp over a tie-up of their European operations. That coming just days after putting its loss-making UK plants up for sale. SOUNDBITE (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK ANALYSIS, JAN RANDOLPH, SAYING: "There is a certain amount of asset-stripping and reorganising of assets within the steel industry. That may be part of the strategy. But it is quite clear that there is still overcapacity and steel will only survive if it's scaled down, if it becomes much more specialised and focused on particular markets." If not, this is what it has to compete with. Cheap Chinese steel that has flooded the market and driven down prices. A denial from ThyssenKrupp that talks had started pared early gains on the market. But shares were still up over 3 percent on expectation of a deal. Such consolidation, though, comes at a cost. SOUNDBITE (English) ADMIRAL MARKETS, MARKET COMMENTATOR, DARREN SINDEN, SAYING: "I don't think there's anything to be achieved through further consolidation because all that would mean is that there'd be further job cuts. So I think the relevant parties will be looking on and hoping that they're not next in line to have to make these very difficult decisions." 15,000 jobs are at stake across Tata's UK plants. But it may be a price businesses are willing to pay. Sources telling Reuters that all of Europe's steel producers are now talking to each other.

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Tata, Thyssenkrupp in steel tie-up talks

Friday, April 01, 2016 - 01:25