Netherland based ArcellorMittal acquired ISG, which acquired the failing Bethelem steel.US Steel the #1 Steel producer for USA acquired Stelco CanadaJapanese Nippon of course acquired ran a JV with US Corporation inland Steel way back in 1990.Nucor recently acquired Harris Steel group of Canada in 2007 to gain access to Canada market, however they had to shut some of the failing mills because of low demand during recession.In 2007, Steel Dynamics acquired Omni Source Corporation – one of the country’s largest ferrous scrap processors. Mitsui is a supplier of iron and steel products and raw materials.2. Early in March’ 2010 – Nucor announced a JV with Japanese Mitsui with 50% interest in a newly created Company NuMit. Secondly, there are only few suppliers.Thirdly, most of the raw materials are imported from China and European countries.So Companies strive for cost leadership strategy to earn economies of scale and as such are in lookout for JV, M&A with suppliers.For example – 1. Bargaining power of suppliers is also high.Firstly due to scarcity of raw materials especially scrap metals whereby suppliers are raising the price.Moreover, Buyers buying in large scale posses strong negotiating power.Thus it’s a Buyer’s market!!!! Third, there is a cyclical demand for steel, and as such there tend to be (sometimes) oversupply and this gives additional bargaining power to buyers. Thus providing lot of options for Buyer’s as these battle out the Price war.Second, there is low level of product differentiation and switching cost for buyers is also very low. First, there is intense battle in the domestic market with more than 20 players with US Steel, Nucor,Gerdau leading from the front…. The bargaining power of buyers is high due to various factors.
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