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Jun 08, 2012

Steel merchant expands through acquisition

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Construction|Johannesburg|Richards Bay|Africa|Bell Equipment|Brown McFarlane Africa|BSI Steel|BSi Steel KZN|GM|KZN|System|Water|Africa|Automotive|Capital Equipment Manufacturer|Mining|Steel|Steel Merchant|Steel Plate Profiling Service Centre|Steel Plate Range|Steel Plates|Steel Users|Brown McFarlane|Lee Daff|Ross Teichmann|Water
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AltX-listed steel merchant BSi Steel is acquir- ing Richards Bay-based steel plate profiling service centre and steel merchant Brown McFarlane Africa, says BSi Steel South African Stockists CE Ross Teichmann.

Negotiations to acquire Brown McFarlane began this year and were finalised in April; however, the deal still needs to be approved by the Competition Commission, with a final ruling expected shortly.

The acquisition is expected to increase BSi’s product offering to specifically include Brown McFarlane’s quench and tempered steel plates, which will add to the company’s newly opened BSi Steel Service Centre division in Johannesburg, Gauteng.

The steel plate range is a high-strength, hard-wearing product range used in the mining and construction sectors, besides others.

The acquisition allows BSi to penetrate this niche market instantly, as opposed to slow organic growth, says Teichmann.

The acquisition will also benefit the KZN branch, as Richards Bay-based McFarlane is suitably placed to service one of BSi’s biggest clients – capital equipment manufacturer Bell Equipment.

The acquisition will also raise the steel merchant’s ability to service all steel users in the Richards Bay area.

BSi Steel KZN executive GM Lee Daff reports that, although it performed well last year, it aims to further position itself as a major steel merchant and enter new markets in the KZN region in future.

He adds that steel demand in the region has remained stable in recent times.

“The first quarter of this year has been quieter, in line with the usual cyclical consumption for the industry.

“January and February are quiet months but demand starts increasing in May. The demand pattern indicates a steady increase until September, reaching its peak in October,” he explains.

Teichmann says that the steel industry has experienced relative price stability in the last 12 months, unlike the period between 2008 and 2010. While price volatility appears to have stabilised, steel buyers are still aware of the risk of price volatility and are more inclined to take a conservative approach when buying steel.

KZN supplies mainly to the yellow goods sector – construction and earthmoving equipment – but it also supplies product to the manufacturing, metalwork, automotive and water utility sectors.

The KZN branch, being a stockholding branch, has a holistic approach in terms of its product range, says Daff.

“BSi Steel KZN stocks a range of products, in line with customer requirements, and adopts a just-in-time stock control system to save warehouse space and costs.

“The branch is an intermediary between the steel mill and the end-user. “Steel mills have very strict minimum order criteria and end-users generally require break-bulk quantities, which the merchant is able to provide.”

Edited by: Chanel de Bruyn
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