ThyssenKrupp and Tata JV may need HDG divestments

The European Commission might ask ThyssenKrupp and Tata Steel to divest some automotive galvanised steel capacity to enable their joint venture to proceed.

It has long been anticipated that the companies would have to divest electrical steels and tinplate capacity.

But not as many were expecting remedial action in the galvanised sector, despite the companies influence in the automotive segment. Some participants suggest the firms are below the 40pc market share level by which the commission is typically guided, although their total combined share is unclear.

ThyssenKrupp has a particularly big presence, with a number of galvanised lines, most of which have automotive capabilities. Tata has three galvanised lines in Ijmuiden in the Netherlands, all of which are capable to some extent of producing automotive grades. It also has a line at Liege in Belgium.

The commission is expected to send its statement of objections to the parties in the next week or so, including its concerns about their automotive galvanised share. Neither ThyssenKrupp nor Tata Steel proposed potential divestments to the commission when they notified it of their planned joint venture.

ThyssenKrupp did not respond to Argus' request for comment, while the commission refused to comment.

"Tata Steel and ThyssenKrupp are committed to working closely with all relevant regulators to ensure the success of this transaction. It is not appropriate to comment on, or speculate on, the specifics of the regulatory approval process," a Tata Steel spokesman said.