“Overall we expect 2021 to be a very active M&A market,” he said.

Pappalardo believes that M&A activity in the metals market is ready to rebound from the Covid-19 pandemic.

“One of the things that we are seeing a lot of is people looking for niches, places where they can expand... Obviously, the public companies are not seeing growth; they want to show their shareholders growth, and one of the ways to do that is acquisitions. So they’re beginning to look, but what I will say is there’s a clear difference between what private companies are doing and what public companies are doing,” he said.

“We see the larger, private companies definitely looking to make acquisitions, but the public companies have shareholder issues [with] making acquisitions right now,” Pappalardo added. ”There's still a little bit of a desire to conserve cash and be ready for the future.”

As far as which sectors are expected to see the most M&A activity, Pappalardo pointed to automotive stampers, scrap, and distributors and service centers, partly because they are the most fragmented of the metals markets.

Additionally, many automotive stampers are privately owned and looking to sell, he noted. 

The M&A outlook for the fabrication segment is "active," Pappalardo said, noting that it is dominated by small, family owned businesses.

The service center sector has targeted this area to increase margins, he added.

On the other hand, M&A activity among pipe and tube manufacturers - as well as steel mills - should be muted. Pipe and tube producers are a “fairly consolidated group with several small participants” with a “limited number of large actionable targets,” Pappalardo said.

Pappalardo had a similarly muted M&A outook for the steel mill sector, noting that steel mills “have already consolidated and there is little room for horizontal acquisitions.”

Moves in this area will likely be “dominated by product line consolidations,” he added.

Andrew Pappas, managing director at BMO Harris Bank, cautiously agreed.

“There’s definitely capital available to finance growth, and banks are looking to grow and lend more,” he said. “However, I would caution that many lenders in the metals space are overly cautious due to Covid" and the possibility of a third wave.