ArcelorMittal Giving up on Stainless Steel Merger

After years of seeking a cost-cutting merger in stainless steel, ArcelorMittal is giving up the fight and says it wants to spin off its activities instead.

Analysts see no reason to regard the move as the precursor to long-awaited combinations in the competitive European sector, which remains burdened by overcapacity in the durable metal whose biggest use is in kitchen pots, pans and cutlery.

ArcelorMittal, the world's biggest steel maker, said its stainless division could be a separately listed company in the next six to 18 months, subject to regulatory approval.

The new firm, present in Europe and Brazil, would be free to pursue its own growth strategy and focus more on its specialty products. But Chief Financial Officer Aditya Mittal conceded ArcelorMittal had tried to consolidate the business in the past few years without success.

ThyssenKrupp AG), Germany's largest steelmaker, said late last year it was committed to developing its stainless business alone, having found tie-up options would not create value for investors.

That would leave global leader Acerinox SA of Spain and Finland-based Outokumpu as possible consolidation players. AlrcelorMittal, Acerinox and Outokumpu are all rolling mills of stainless steel coil, these products rely on distributors, processors and manufacturers like BS Stainless who would convert the raw product into something that and end user or contractor could use in a finished application such as products on a petrochemical plant.