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Metals deals insights: 2021 midyear outlook

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What's driving deals in 2021

PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for the rest of 2021.

Metals industry sees steady recovery in M&A

2020 was a challenge to individuals and businesses alike, as both contended with disruptions and hardships ushered in by COVID-19. As companies focused on addressing immediate concerns of the pandemic, deals took a back seat. But while the M&A market softened in the first half of 2020, the second half experienced a strong bounceback. This uptick in activity carried into the first half of 2021 as the appetite for dealmaking remained strong. Although the future remains uncertain, we expect M&A activity to continue along this recent trajectory as companies continue to emerge from crisis mode during the pandemic and turn their focus to growth.

Metals deals outlook

The metals industry continues to see a recovery in M&A activity from lows experienced at the onset of the pandemic. Both deal volume and value in the first half of 2021 exceeded the same period in 2020, and matched or exceeded the second half of 2020. In the US, the future appears more promising as the rollout of vaccines continues and pandemic-related social restrictions loosen. We expect M&A activity to continue its positive course through 2021 with the metals sector following suit. The adoption of new legislation and foreign trade policies, growth in consumer confidence and the overall recovery of the global economy could be particularly impactful on the metals industry and associated deals activity.

Key deal drivers

Innovation and transformation

While the metals industry may not be conventionally known for innovation and technology, businesses involved in the procurement, production and sale of metals are not exempt from the need to innovate and transform. The increasing speed of the global economy coupled with shifting customer and investor demands place increased importance on a metal company’s ability to pivot and adapt. One such challenge the metals industry must address is the increasing focus on environmental, social and corporate governance (ESG) measures and initiatives. As ESG standards become increasingly important to investors, consumers and government regulators, metals companies will continue to need to innovate and transform to meet ESG demands. This could lead to an increase in M&A activity within the industry as companies look to add new technology, products and processes through acquisitions to address ESG-related standards and expectations or risk being left behind by competitors.

Geopolitical and regulatory shifts

Geopolitical and regulatory shifts are nothing new to the metals industry. Indeed, the past several years have been marked by evolving foreign trade policies and tariffs. It appears this trend will persist for the foreseeable future, as the US and EU have recently announced in May 2021 the beginning of talks aimed at addressing current steel and aluminum tariffs. Domestically, bipartisan work continues on an infrastructure bill which could be a boost for domestic steel producers and other metals manufacturers. However, the timing of its passing and its final details remain unknown. A global economic recovery as well as geopolitical and policy developments could increase metals demand and production and result in more attractive investment opportunities and, therefore, increased M&A volume.     

“While 2020 was a tumultuous year, M&A activity was resilient and growth has continued into 2021. As the world progresses toward a post-pandemic life, a sustained and robust M&A market looks to remain on the horizon.”

-Brian Kelly, US metals deals leader

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Brian Kelly

Metals Deals Leader, PwC US

Michael Tomera

US TAS Market Leader, Midwest Market, PwC US

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