NatSteel – Forging a competitive advantage

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    16 February 2022

    The pandemic has resulted in supply bottlenecks for raw materials, while the reopening of the global economy has simultaneously sparked a demand surge, rocketing costs as a result. Steel is one such commodity, with Southeast Asia reporting a 20 per cent increase in steel exports in the first half of 2021 when economies began to recover. The spotlight on supply chain resilience and sustainability has prompted shifts in manufacturing for diversification in the steel industry.

    For Toptip Holding, an international trader specialising in iron ore and steel products, acquiring NatSteel—a leading steel producer and the largest metal recycler in Singapore—made perfect sense.

    Supported by UOB's strategic expertise in the steel and construction industry, as well as our experience in financing mergers and acquisitions, Toptip was able to integrate its trading expertise with NatSteel's energy-efficient steel production capabilities, tapping on Singapore's role as a distribution hub for ASEAN.

    Watch on to see how UOB's regional network and deep industry expertise connects clients across value chains to capture opportunities and facilitate trade flows in ASEAN and beyond.

     

     

    Liu Bin (Director, Toptip and NatSteel):

    Established in 1961, NatSteel is a company with a long history and the only local steel mill in Singapore.

    The company is mainly engaged in metal waste handling, steel making, steel rolling and rebar processing, making it a fully integrated steel enterprise.

    NatSteel is the largest metal recycler in Singapore with its own scrap recycling and processing capabilities.

    So what was once scrap, becomes steel products for local construction projects such as public flats, public train infrastructure and even Changi International Airport.

    The COVID-19 pandemic has led to a global supply chain bottleneck, causing raw material costs to rocket.

    Toptip saw the need to reassess our supply chain strategy.

    Therefore, we acquired NatSteel in September last year with the belief that it will give Toptip an immediate competitive advantage in steel production in the region.

    Lim Chen Chen (Head, Group Structured Trade and Commodity Finance, UOB):

    Driven by shifts in demand and supply, many commodity clients have started to move beyond their traditional trading activities.

    As China's largest trading partner, ASEAN is a natural base for opportunities. It is also a region where UOB has deep roots and capabilities to support our clients through advisory and customised financial solutions.

    This acquisition brings together two highly complementary players.

    Liu Bin:

    UOB has a deep understanding of both the steel and construction industry. Over the past decade, they have tapped on their industrial expertise to support both Toptip and NatSteel with a full range of financial services.

    Therefore, we took the initiative and looked to UOB in financing this acquisition.

    Simply put, without the involvement of UOB, we would not have completed this merger so smoothly.

    Lim Chen Chen:

    When we connected Toptip and NatSteel, we saw potential for an acquisition deal that would be mutually beneficial for them.

    This strategic acquisition enabled Toptip to diversify its production base within Singapore, produce steel more sustainably and use Singapore as a distribution hub for ASEAN.

    On the other hand, NatSteel will be able to benefit from Toptip's deep steel-making capabilities to scale up efficiently to cater to demand.

    UOB's strategic expertise lies in our familiarity with the local steel and construction market, as well as our experience in financing such M&A deals, connecting various client profiles and players across the entire value chain.

    Liu Bin:

    We hope to fully leverage the business synergy generated between the two companies and definitely hope to strengthen our cooperation with UOB to receive their support to ensure our finances will keep pace with our growth plans.

    About this series

    Building Asia is a collection of business stories on CNA that examines the financial forces driving Asia's position as an economic powerhouse.

    NatSteel – Forging a competitive advantage is the 23rd episode in the Building Asia with UOB series and was first aired on 14 February 2022. It looks at how UOB connects and supports commodity clients like NatSteel and Toptip across value chains to capture opportunities and facilitate trade flows in ASEAN and beyond.

     

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