China steel industry (SWOT analysis of chineese steel industry

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China steel industry (SWOT analysis of chineese steel industry

  1. 1. INDIAN AND CHINESE STEEL INDUSTRY AT A GLANCE
  2. 2. STEEL INDUSTRY-CHINA  China's crude steel output grew 3.1 percent to 716.54 million tons in 2012, down 5.8 percentage points from a year earlier.  The steel industry faced an extremely difficult situation in 2012, as an economic slowdown in China and the rest of the world curtailed market demand and resulted in flagging steel prices. SLOW DOWN IN STEEL INDUSTRY  Slowing economic growth has decreased steel demand from downstream industries, such as the railway construction, property development and shipbuilding sectors.  China's steel sector still has excessive production capacity, which has caused steel output to greatly exceed market demand.  As a result, steel producers competed fiercely to boost their sales, which in turn resulted in steel price decreases. 1 September 20132 Indian and Chinese Steel Industry at a Glance FIIB
  3. 3. OVER SUPPLY OF STEEL • China's steel demand will rise 3.1 % in 2013-14 as the Govt. measures to stabilize growth pick up steam, the China Iron and Steel Association, or CISA. • Iron and steel demand this year will be better than last year but prices will not improve significantly due to overcapacity and oversupply. • Steel prices climbed for three consecutive weeks in January. By the thir d week of January, steel prices had reached its peak since the second half of 2012. • China's crude steel output in 2012 was 720 million tons, up 3.1 percent year-on-year, according to the National Bureau of Statistics said. 1 September 20133 Indian and Chinese Steel Industry at a Glance FIIB
  4. 4. TOP FIVE STEEL COMPANIES OF THE WORLD & CHINA Sl.no Across the world China 1 Arcelor Mittal ( Luxembourg) --97.2 MT Habei Iron and Steel - -44.4 MT 2 Habei Iron and Steel ( China)--44.4 MT Baosteel Group --43.3MT 3 Baosteel Group ( China) --43.3MT Wuhan Iron and Steel -- 37.7 MT 4 POSCO (South Korea) --39.1 MT Jiangsu Shagang – 31.9 MT 5 Wuhan Iron and Steel ( China)--37.7 MT Shougang – 30.0 MT 1 September 20134 Indian and Chinese Steel Industry at a Glance FIIB
  5. 5. Comparison Between Indian and Chinese Steel Industry Indian Steel Industry Chinese Steel Industry  Availability of Iron ore and Coal  Low labor wage Rates  Abundance of quality manpower  Availability of the raw material  Abundance of manpower  Continuous flow of F.D.I’s  More mature and efficient production base compared to India STRENGTHS 1 September 20135 Indian and Chinese Steel Industry at a Glance FIIB
  6. 6. WEAKNESS Indian Steel Industry Chinese Steel Industry  Unscientific mining  Low productivity  Coking coal import dependence  Low R & D investments  High cost of Debt  Inadequate Infrastructure  Short supply of domestic steel products  China is restricted by the factors like resources, energy and environment  High end products having weak international competitive strength ( because of using obsolete technology) 1 September 20136 Indian and Chinese Steel Industry at a Glance FIIB
  7. 7. OPPORTUNITIES Indian Steel Industry Chinese Steel Industry  Unexplored Rural Market (65-70% of Indian population resides over here)  Growing Domestic Demand  Growing Exports  Mergers and Acquisitions  Strong inflow and outflow of FDI’s  Infrastructure Development  Modernization of its steel plants would give a boost to its steel industry and economy as whole 1 September 20137 Indian and Chinese Steel Industry at a Glance FIIB
  8. 8. THREATS Indian steel Industry Chinese Steel Industry  China becoming net exporter  Threat of substitutes and technological change  Slow industrial growth  Dumping of steel by developed countries  Price sensitivity and demand volatility  Growing worker shortage threaten china’s low-cost advantage  Increasing iron-ore prices  Shortage of coal in the future 1 September 20138 Indian and Chinese Steel Industry at a Glance FIIB
  9. 9. STEEL PRODUCTION APRIL-MARCH 2011- 12 1 September 20139 Indian and Chinese Steel Industry at a Glance FIIB
  10. 10. PORTER OF CHINA STEEL INDUSTRY Threat of new Entrant Bargaining power of Buyer Threat of Substitu te Bargaining power of Supplier Rivalry among existing competitor s 1 September 201310 Indian and Chinese Steel Industry at a Glance FIIB
  11. 11. Bargaining Power of Buyer:-  Increase in domestic competition and over capacity has enabled more options for buyer.  Product differentiation is low. Thus buyer can opt for cheapest cost, but Chinese govt. will not allow unbridled competition.  Also buyer buying in bulk have greater negotiating power.  Also they are exporting steel at cheaper rate suggest that buyer have an upper edge. Bargaining Power of Supplier:-  China has abundance of iron ore and coke but the demand in industry exceeds country ability to meet it.  Thus supplier has an edge over here but importing on high scale cut down the price plus the economies of scale on production line helps to compensate.  Technology is not a big issue over here as they are quite capable and leaders in the industry.  Rising energy cost is one such problem effecting the output cost.1 September 201311 Indian and Chinese Steel Industry at a Glance FIIB
  12. 12. Threat of New Entrant:-  Huge capital industry. Also product is not differentiated.  Low access to raw material for every new player.  Difficult to achieve economies of scale in short duration.  Also industry is overcapacity thus govt. will not allow new player to enter. Threat of Substitutes:-  No primary substitute. Some of important industry like armor, shipbuilding, automotive, construction.  Few of other substitutes may be in form of plastic, wood, and some other indigenous product.  As China is growing steel production and usage also seems to grow. Its utility can not be marginalized it is just one can switch to other manufacturer but the overall usage still remains intact. 1 September 201312 Indian and Chinese Steel Industry at a Glance FIIB
  13. 13. Internal Rivalry:-  High competition in domestic market.  The product is also same across thus increases the competition.  Also coupled with the near commodity nature of the output, firms are forced to focus on efficiency and cost minimization. Thus overall:-  Buyer Power- Medium-High.  Supplier Power- Low – Medium.  Internal Rivalry- High.  Threat from Substitutes- Low.  Threat from New Entrants- Low. 1 September 201313 Indian and Chinese Steel Industry at a Glance FIIB
  14. 14. CONCLUSION  The Chinese steel industry is largest in world.  It has large domestic competition market is governed by the Govt. where both PSU and Private companies exist.  Wide geographic dispersion although concentrated towards northeastern part near the iron ore mines.  Concentration towards sea coast and river to minimize pollution, ease for logistic cost and increase efficiency.  Issues relating to the content of iron in the ore, thus high iron ore content are being imported.  Energy cost issue is global issue and will affect all the steel manufacturers.  Chinese steel market is the largest and even seems to grow in near by future. 1 September 201314 Indian and Chinese Steel Industry at a Glance FIIB
  15. 15. 1 September 2013 Indian and Chinese Steel Industry at a Glance FIIB15 Presented By, Dasari Pradeep Harshit Arya Manish Pawar Rajesh For more details; go to:- https://sites.google.com/site/steellearn er/

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