[Asian Steel Watch] Vol.1(2016.1)
Overcapacity has long been blamed as the main cause of the recession in the steel industry (especially the price decline), but this claim has not yet been backed by enough systematic analysis.
For this reason, the exact amount of overcapacity continues to be a controversial topic, and a consensus on realistic measurement of capacity is nonexistent. Therefore, one is hard-pressed to provide an insightful answer to the question of whether the current overcapacity level is more serious than the past.
In this article, we will first examine how serious global steel overcapacity is in terms of nominal amount. Reliable annual historical data for China and other countries are derived mainly from OECD data on nominal crude steel capacity, and are compared to annual crude steel consumption data. Next, we will try to measure the genuine steel overcapacity by introducing the concept of effective capacity, and investigate whether the steel industry’s recession after the financial crisis was triggered by overcapacity....
[Asian Steel Watch] Vol.2 (2016.10)
Interview - Ask the Guru: Roads Ahead for the Steel Industry
Edwin Basson, Director General of worldsteel talked to Asian Steel Watch about major issues and future of the steel industry: 1) Causes of sluggish global steel demand and forecast for 2017, 2) China’s peak steel and long-term forecast for China’s steel demand, 3) solutions to overcapacity, 4) future of the Asian steel industry, and 5) influence of the Fourth Industrial Revolution on the steel industry.
Paper-2 Global steel scenario and future of refractory technology.docxAshish Chaudhary
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise stimulates the production of endorphins in the brain which elevate mood and reduce stress levels.
[Asian Steel Watch] Vol.3 (2017.6)
On the Cover
The Steel Industry over the Next Two Decades
Global steel demand will rise by around 1% for the next 20 years, reaching 1.69 billion tonnes by 2025 and 1.86 billion tonnes by 2035. Despite some concerns, global steel demand has not yet peaked and will not do so within the next two decades. Steel-consuming industries’ requirements for steel products will become stricter and more diverse under the influence of evolving megatrends. Their needs will become more sophisticated mainly in three areas: high strength and high toughness, high corrosion resistance, and high performance. The rising megatrend of global climate action will compel steelmaking processes to become more eco-friendly. For the long term, the steel industry is gearing up to develop carbon-free technologies such as the hydrogen reduction process. Under the other emerging megatrend of the Fourth Industrial Revolution, the steel industry will seek a smart transformation using IoT, Big Data and AI.
Global steel production forecast sampleArtem Segen
The document forecasts global steel production levels through 2024. It considers 3 scenarios: 1) steel production grows steadily worldwide led by China; 2) China's production decreases over 5 years as urbanization slows; 3) the main scenario predicts China's growth slowing but not decreasing, while other countries increase production 3.1-3.6% annually on average to replace some Chinese supply globally. Overall, global production is forecast to reach 2.03 billion tons by 2024 under the main scenario.
Global steel industry and in particular China: future outlookMining On Top
Mining On Top: Stockholm 2013
26-27 Nov 2013
Global steel industry and in particular China: future outlook – Dr Nae Hee Han, World Steel Association; Chief Economist
This document provides an overview of the Indian steel industry. It states that India is the 4th largest producer of crude steel globally, producing around 89 million tonnes in 2011-2012. It also discusses the major players in the industry, reasons for the industry's growth including abundant resources and a strong global presence. The document analyzes the industry using PEST and Porter's Five Forces frameworks and outlines challenges, opportunities and future prospects for further development of the Indian steel sector.
A Comprehensive Survey of Steel Demand Forecasting Methodologies and their Pr...POSCO Research Institute
This article classifies and compiles the methodologies through a comprehensive review of the literature, and then finds clues to enhance the accuracy of steel demand forecasting.
The approaches for forecasting steel demand can broadly be classified into the econometric and intensity of use (IU) approaches.
Econometric approaches are divided into the econometric demand model and vector autoregression (VAR). The econometric approach widely uses a simple single equation or a simultaneous equation to forecast steel consumption, considering that steel demand is affected by macroeconomic variables including GDP, industrial production, trade structure, and economic volatility. The VAR methodology has the merit of avoiding the weakness of econometric demand model that requires forecasts of exogenous variables since VAR assumes all variables in a model are endogenous.
The intensity of use (IU) approaches rose to prominence in the early 1970s when some OECD member countries observed their steel demand fall while macroeconomic indicators grew. The IU approach is a useful concept that attempts to link steel consumption to the technological and structural changes in an economy.
Mathematical methodologies and computational approaches
Hybrid mathematical methodologies seek to enhance predictability based on the grey model, algorithm, and fuzzy ARIMA model. The steel weighted industrial production (SWIP) index is broadly used by worldsteel and other steel associations.
To complement the weakness of top-down macro methodologies which directly predict total steel demand, POSRI is concurrently applying a bottom-up micro methodology to predict demand for 16 steel products and summing them to forecast total demand.
[Asian Steel Watch] Vol.2 (2016.10)
Interview - Ask the Guru: Roads Ahead for the Steel Industry
Edwin Basson, Director General of worldsteel talked to Asian Steel Watch about major issues and future of the steel industry: 1) Causes of sluggish global steel demand and forecast for 2017, 2) China’s peak steel and long-term forecast for China’s steel demand, 3) solutions to overcapacity, 4) future of the Asian steel industry, and 5) influence of the Fourth Industrial Revolution on the steel industry.
Paper-2 Global steel scenario and future of refractory technology.docxAshish Chaudhary
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise stimulates the production of endorphins in the brain which elevate mood and reduce stress levels.
[Asian Steel Watch] Vol.3 (2017.6)
On the Cover
The Steel Industry over the Next Two Decades
Global steel demand will rise by around 1% for the next 20 years, reaching 1.69 billion tonnes by 2025 and 1.86 billion tonnes by 2035. Despite some concerns, global steel demand has not yet peaked and will not do so within the next two decades. Steel-consuming industries’ requirements for steel products will become stricter and more diverse under the influence of evolving megatrends. Their needs will become more sophisticated mainly in three areas: high strength and high toughness, high corrosion resistance, and high performance. The rising megatrend of global climate action will compel steelmaking processes to become more eco-friendly. For the long term, the steel industry is gearing up to develop carbon-free technologies such as the hydrogen reduction process. Under the other emerging megatrend of the Fourth Industrial Revolution, the steel industry will seek a smart transformation using IoT, Big Data and AI.
Global steel production forecast sampleArtem Segen
The document forecasts global steel production levels through 2024. It considers 3 scenarios: 1) steel production grows steadily worldwide led by China; 2) China's production decreases over 5 years as urbanization slows; 3) the main scenario predicts China's growth slowing but not decreasing, while other countries increase production 3.1-3.6% annually on average to replace some Chinese supply globally. Overall, global production is forecast to reach 2.03 billion tons by 2024 under the main scenario.
Global steel industry and in particular China: future outlookMining On Top
Mining On Top: Stockholm 2013
26-27 Nov 2013
Global steel industry and in particular China: future outlook – Dr Nae Hee Han, World Steel Association; Chief Economist
This document provides an overview of the Indian steel industry. It states that India is the 4th largest producer of crude steel globally, producing around 89 million tonnes in 2011-2012. It also discusses the major players in the industry, reasons for the industry's growth including abundant resources and a strong global presence. The document analyzes the industry using PEST and Porter's Five Forces frameworks and outlines challenges, opportunities and future prospects for further development of the Indian steel sector.
A Comprehensive Survey of Steel Demand Forecasting Methodologies and their Pr...POSCO Research Institute
This article classifies and compiles the methodologies through a comprehensive review of the literature, and then finds clues to enhance the accuracy of steel demand forecasting.
The approaches for forecasting steel demand can broadly be classified into the econometric and intensity of use (IU) approaches.
Econometric approaches are divided into the econometric demand model and vector autoregression (VAR). The econometric approach widely uses a simple single equation or a simultaneous equation to forecast steel consumption, considering that steel demand is affected by macroeconomic variables including GDP, industrial production, trade structure, and economic volatility. The VAR methodology has the merit of avoiding the weakness of econometric demand model that requires forecasts of exogenous variables since VAR assumes all variables in a model are endogenous.
The intensity of use (IU) approaches rose to prominence in the early 1970s when some OECD member countries observed their steel demand fall while macroeconomic indicators grew. The IU approach is a useful concept that attempts to link steel consumption to the technological and structural changes in an economy.
Mathematical methodologies and computational approaches
Hybrid mathematical methodologies seek to enhance predictability based on the grey model, algorithm, and fuzzy ARIMA model. The steel weighted industrial production (SWIP) index is broadly used by worldsteel and other steel associations.
To complement the weakness of top-down macro methodologies which directly predict total steel demand, POSRI is concurrently applying a bottom-up micro methodology to predict demand for 16 steel products and summing them to forecast total demand.
The Indian steel industry has experienced steady growth since the country's independence. It is now one of the top ten steel producers globally, though its share of global production remains low at around 3%. The industry has largely been dominated by a few major public and private sector companies. While domestic demand for steel has grown significantly, fueled by India's growing economy, domestic production has still not been sufficient to meet this demand. Moving forward, continued investment in infrastructure and developing new technologies are seen as important to further advancing the Indian steel industry.
Challenges & future scenario of steel industry 1GS Dhir
Power point copy of Presentation made by me on "Challenges & Future Scenario of Steel "Industry in Reliance General Insurance (RGICL's) National Conference on "Latest Trends & Practices in Steel Sector" held at Mumbai on 17-18 Jan 2014
The document analyzes the major steel industry in India. It provides an overview of the economic environment and demand for steel in India driven by infrastructure and automobiles. It then discusses the production and consumption of steel in India. It analyzes the performance and research & development efforts of major Indian steel companies like SAIL, TATA Steel, JSW Steel, Jindal Steel, and Ispat Industries. It highlights the key investment rationales and concerns for these companies. Finally, it discusses the challenges faced by the Indian steel industry.
Steel Industry continues to go through a transformation as part of making sustainable product as well as ways to reduce cost.
The new president that is putting more emphasis on US jobs could also lead to more and more business investment in sector like Steel.
The document discusses the major players in India's steel industry. It notes that Steel Authority of India Limited (SAIL) is the leading steel producer and is fully integrated across the steelmaking process. SAIL operates multiple steel plants across India. Other major Indian steel producers mentioned include Tata Steel, Essar Steel, Jindal Steel, and SAIL has established various joint ventures to support its operations.
China's steel industry has grown rapidly in recent decades, making China the third largest steel producer in the world behind the CIS and Japan. While China has significantly increased domestic steel production, demand has outpaced supply, resulting in China becoming an importer of steel, accounting for up to 30% of its consumption. China's role in global iron ore and steel markets has expanded as its industry has integrated further into world trade. As China's steel production continues to rise, its imports of iron ore are projected to increase substantially to meet growing demand, presenting opportunities for major iron ore exporters like Australia. Future trade will depend on China's economic growth and development of a liberal policy environment.
Iron and Steel Industry in India ( Seminar Presentation)DineshKumar4749
This file is all about understanding about Iron and Steel Industry in India. This file can directly be used for seminar presentations about India and the steel industry in India.
The document summarizes the Indian steel industry. It discusses that India is the 3rd largest producer of raw steel globally. It outlines the history and establishment of major steel plants in India such as Tata Steel and Steel Authority of India Limited (SAIL). Current major steel producers in India like Tata Steel, Essar Steel, and JSW Steel are also summarized. The role of the steel industry in the Indian economy and employment opportunities are highlighted. Issues faced by the industry such as capital, technology, productivity, and shortage of raw materials are briefly mentioned.
The document summarizes the history and development of the steel industry. It discusses how steel was first produced in ancient China and India, but was very expensive. In the 1850s, Henry Bessemer developed the Bessemer process, which allowed for mass production of steel in an inexpensive way. Global steel production then grew enormously in the 20th century. In India, Visakhapatnam Steel Plant was established in 1971 to be an integrated steel producer, using German and Soviet technology. The document also analyzes some of the divisions in Tata Steel based on the BCG matrix and lists the top steel producing companies in India.
The document discusses the steel industry in India. It provides an introduction to the steel industry, noting that India is the 8th largest producer of crude steel globally. It then discusses the market scenario for steel in India, highlighting increasing consumption. The document also discusses the global steel scenario, major players in the Indian steel industry like SAIL and Tata Steel, pricing strategies, and opportunities for growth in the industry.
The steel industry in India is affected by macroeconomic factors like GDP growth and inflation. Higher GDP growth leads to increased steel consumption for infrastructure and other sectors, fueling steel industry growth. However, high inflation has negatively impacted the steel industry by slowing growth in key customer industries like automobiles and construction. Rising inflation has also reduced consumer demand for housing and vehicles. The Reserve Bank of India's interest rate hikes to combat inflation have further raised borrowing costs, negatively impacting steel-intensive industries.
The document summarizes the Indian steel industry. It states that India is the 5th largest steel producer globally and is projected to become the 2nd largest by 2015-2016. The key players in the industry are Tata Steel, Jindal Steel & Power, Jindal Iron & Steel, Essar Steel, and Steel Authority of India. The industry faces challenges such as delays in land acquisition and lack of infrastructure. The government aims to support the industry through infrastructure development and policies promoting foreign investment and SEZs.
This document provides an overview of the global iron ore market including production, consumption, trade, and pricing. It discusses key producing and consuming countries as well as India's role as a major producer and exporter. The document outlines factors influencing iron ore prices and provides a price index from 2011. It also summarizes the relationship between iron ore, iron, and steel and examines demand and supply dynamics in the market.
Indian steel demand is expected to be muted over the next two years due to economic slowdown affecting end user demand. Global flat steel prices are set to decline in 2012-2013 as global prices for iron ore and coking coal decline due to weak demand and oversupply. Profitability for players across the steel value chain will come under pressure due to demand side concerns and potential shortages of iron ore and coal in the domestic market. Indian steel demand is projected to pick up from 2013-2014 as infrastructure project execution gains traction.
Global steel production is dominated by China, which produces over half of the world's steel. Other major producers include Japan, the United States, India, Russia, South Korea, Germany, Ukraine, Brazil, and Turkey. Steel production is expected to continue growing in developing countries like India, Brazil, and China. The steel industry faces challenges from availability and costs of raw materials like iron ore and coal.
This reports gives reader an overview of India steel industry. It will explain India position from world prospective, its working and dominant players.
This document contains notes from two chapters. Chapter 1 discusses differences in import values between 1997-1998 and focuses on trade practices of four countries. It also references several reports and analyses on global steel overcapacity. Chapter 2 discusses declines in domestic shipments, capacity utilization, and jobs in the US steel industry during the Asian financial crisis from 1998-1999. It analyzes import penetration levels and prices. The document provides context on the impact of rising steel imports on the US market during this period.
India has become the world’s fourth-largest producer of crude steel. The country is slated to become the second-largest steel producer by 2015 as large public and private sector players strengthen steel production capacity in view of the rising demand.
The total market value of the steel sector in India stood at US$ 57.8 billion in 2011 and is expected to touch US$ 95.3 billion by 2016. Total crude and finished steel production grew at a compound annual growth rate (CAGR) of 6.6 per cent and 4.2 per cent over FY08-11 to reach 69.6 million tonnes (MT) and 66 MT respectively.
Steel consumption is expected to grow at an average rate of 6.8 per cent to reach 104 MT by 2017 driven by rising infrastructure development and growing demand for automotives. The infrastructure sector is India’s largest steel consumer, accounting for 63 per cent of total consumption in FY11. Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market. The Government of India (GOI) has allowed 100 per cent foreign direct investment (FDI) in the sector through automatic route in order to attract foreign investments.
The decoupling of gdp and steel demand cyclical or structural (Author: Cheol...POSCO Research Institute
In the 2000s, global steel demand growth consistently surpassed global GDP growth. The dip in global steel demand after 2012 can be mostly explained by the slowdown in global investment and exports. China shifted its growth strategy from investment and exports to consumption as President Xi Jinping took power in November 2012.
∙ The decoupling of GDP and steel demand will last for the time being on several aspects: global investment and exports, raw materials prices forecast, mega trend (aging populations, the sharing economy and the Fourth Industrial Revolution), and major forecast institutions’ prospects. Just as the decoupling of global GDP and steel demand persisted until China emerged as a new growth engine for steel demand after the early 2000s, there is a possibility that the decoupling will repeat. The global steel industry should prepare for this.
The document provides an overview of the global steel industry and Steel Authority of India Limited (SAIL). It discusses that steel production has grown rapidly worldwide over the past century and India's steel industry has also expanded significantly since the 1990s. SAIL is India's largest steel producer with a turnover of around Rs. 16,500 crores. It aims to increase its global presence through exports, joint ventures, and alliances. SAIL is focusing on cost reduction, improving quality and environmental protection to remain competitive.
The Indian steel industry has experienced steady growth since the country's independence. It is now one of the top ten steel producers globally, though its share of global production remains low at around 3%. The industry has largely been dominated by a few major public and private sector companies. While domestic demand for steel has grown significantly, fueled by India's growing economy, domestic production has still not been sufficient to meet this demand. Moving forward, continued investment in infrastructure and developing new technologies are seen as important to further advancing the Indian steel industry.
Challenges & future scenario of steel industry 1GS Dhir
Power point copy of Presentation made by me on "Challenges & Future Scenario of Steel "Industry in Reliance General Insurance (RGICL's) National Conference on "Latest Trends & Practices in Steel Sector" held at Mumbai on 17-18 Jan 2014
The document analyzes the major steel industry in India. It provides an overview of the economic environment and demand for steel in India driven by infrastructure and automobiles. It then discusses the production and consumption of steel in India. It analyzes the performance and research & development efforts of major Indian steel companies like SAIL, TATA Steel, JSW Steel, Jindal Steel, and Ispat Industries. It highlights the key investment rationales and concerns for these companies. Finally, it discusses the challenges faced by the Indian steel industry.
Steel Industry continues to go through a transformation as part of making sustainable product as well as ways to reduce cost.
The new president that is putting more emphasis on US jobs could also lead to more and more business investment in sector like Steel.
The document discusses the major players in India's steel industry. It notes that Steel Authority of India Limited (SAIL) is the leading steel producer and is fully integrated across the steelmaking process. SAIL operates multiple steel plants across India. Other major Indian steel producers mentioned include Tata Steel, Essar Steel, Jindal Steel, and SAIL has established various joint ventures to support its operations.
China's steel industry has grown rapidly in recent decades, making China the third largest steel producer in the world behind the CIS and Japan. While China has significantly increased domestic steel production, demand has outpaced supply, resulting in China becoming an importer of steel, accounting for up to 30% of its consumption. China's role in global iron ore and steel markets has expanded as its industry has integrated further into world trade. As China's steel production continues to rise, its imports of iron ore are projected to increase substantially to meet growing demand, presenting opportunities for major iron ore exporters like Australia. Future trade will depend on China's economic growth and development of a liberal policy environment.
Iron and Steel Industry in India ( Seminar Presentation)DineshKumar4749
This file is all about understanding about Iron and Steel Industry in India. This file can directly be used for seminar presentations about India and the steel industry in India.
The document summarizes the Indian steel industry. It discusses that India is the 3rd largest producer of raw steel globally. It outlines the history and establishment of major steel plants in India such as Tata Steel and Steel Authority of India Limited (SAIL). Current major steel producers in India like Tata Steel, Essar Steel, and JSW Steel are also summarized. The role of the steel industry in the Indian economy and employment opportunities are highlighted. Issues faced by the industry such as capital, technology, productivity, and shortage of raw materials are briefly mentioned.
The document summarizes the history and development of the steel industry. It discusses how steel was first produced in ancient China and India, but was very expensive. In the 1850s, Henry Bessemer developed the Bessemer process, which allowed for mass production of steel in an inexpensive way. Global steel production then grew enormously in the 20th century. In India, Visakhapatnam Steel Plant was established in 1971 to be an integrated steel producer, using German and Soviet technology. The document also analyzes some of the divisions in Tata Steel based on the BCG matrix and lists the top steel producing companies in India.
The document discusses the steel industry in India. It provides an introduction to the steel industry, noting that India is the 8th largest producer of crude steel globally. It then discusses the market scenario for steel in India, highlighting increasing consumption. The document also discusses the global steel scenario, major players in the Indian steel industry like SAIL and Tata Steel, pricing strategies, and opportunities for growth in the industry.
The steel industry in India is affected by macroeconomic factors like GDP growth and inflation. Higher GDP growth leads to increased steel consumption for infrastructure and other sectors, fueling steel industry growth. However, high inflation has negatively impacted the steel industry by slowing growth in key customer industries like automobiles and construction. Rising inflation has also reduced consumer demand for housing and vehicles. The Reserve Bank of India's interest rate hikes to combat inflation have further raised borrowing costs, negatively impacting steel-intensive industries.
The document summarizes the Indian steel industry. It states that India is the 5th largest steel producer globally and is projected to become the 2nd largest by 2015-2016. The key players in the industry are Tata Steel, Jindal Steel & Power, Jindal Iron & Steel, Essar Steel, and Steel Authority of India. The industry faces challenges such as delays in land acquisition and lack of infrastructure. The government aims to support the industry through infrastructure development and policies promoting foreign investment and SEZs.
This document provides an overview of the global iron ore market including production, consumption, trade, and pricing. It discusses key producing and consuming countries as well as India's role as a major producer and exporter. The document outlines factors influencing iron ore prices and provides a price index from 2011. It also summarizes the relationship between iron ore, iron, and steel and examines demand and supply dynamics in the market.
Indian steel demand is expected to be muted over the next two years due to economic slowdown affecting end user demand. Global flat steel prices are set to decline in 2012-2013 as global prices for iron ore and coking coal decline due to weak demand and oversupply. Profitability for players across the steel value chain will come under pressure due to demand side concerns and potential shortages of iron ore and coal in the domestic market. Indian steel demand is projected to pick up from 2013-2014 as infrastructure project execution gains traction.
Global steel production is dominated by China, which produces over half of the world's steel. Other major producers include Japan, the United States, India, Russia, South Korea, Germany, Ukraine, Brazil, and Turkey. Steel production is expected to continue growing in developing countries like India, Brazil, and China. The steel industry faces challenges from availability and costs of raw materials like iron ore and coal.
This reports gives reader an overview of India steel industry. It will explain India position from world prospective, its working and dominant players.
This document contains notes from two chapters. Chapter 1 discusses differences in import values between 1997-1998 and focuses on trade practices of four countries. It also references several reports and analyses on global steel overcapacity. Chapter 2 discusses declines in domestic shipments, capacity utilization, and jobs in the US steel industry during the Asian financial crisis from 1998-1999. It analyzes import penetration levels and prices. The document provides context on the impact of rising steel imports on the US market during this period.
India has become the world’s fourth-largest producer of crude steel. The country is slated to become the second-largest steel producer by 2015 as large public and private sector players strengthen steel production capacity in view of the rising demand.
The total market value of the steel sector in India stood at US$ 57.8 billion in 2011 and is expected to touch US$ 95.3 billion by 2016. Total crude and finished steel production grew at a compound annual growth rate (CAGR) of 6.6 per cent and 4.2 per cent over FY08-11 to reach 69.6 million tonnes (MT) and 66 MT respectively.
Steel consumption is expected to grow at an average rate of 6.8 per cent to reach 104 MT by 2017 driven by rising infrastructure development and growing demand for automotives. The infrastructure sector is India’s largest steel consumer, accounting for 63 per cent of total consumption in FY11. Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market. The Government of India (GOI) has allowed 100 per cent foreign direct investment (FDI) in the sector through automatic route in order to attract foreign investments.
The decoupling of gdp and steel demand cyclical or structural (Author: Cheol...POSCO Research Institute
In the 2000s, global steel demand growth consistently surpassed global GDP growth. The dip in global steel demand after 2012 can be mostly explained by the slowdown in global investment and exports. China shifted its growth strategy from investment and exports to consumption as President Xi Jinping took power in November 2012.
∙ The decoupling of GDP and steel demand will last for the time being on several aspects: global investment and exports, raw materials prices forecast, mega trend (aging populations, the sharing economy and the Fourth Industrial Revolution), and major forecast institutions’ prospects. Just as the decoupling of global GDP and steel demand persisted until China emerged as a new growth engine for steel demand after the early 2000s, there is a possibility that the decoupling will repeat. The global steel industry should prepare for this.
The document provides an overview of the global steel industry and Steel Authority of India Limited (SAIL). It discusses that steel production has grown rapidly worldwide over the past century and India's steel industry has also expanded significantly since the 1990s. SAIL is India's largest steel producer with a turnover of around Rs. 16,500 crores. It aims to increase its global presence through exports, joint ventures, and alliances. SAIL is focusing on cost reduction, improving quality and environmental protection to remain competitive.
The korean steel industry in retrospect : lessons for developing countries(D...POSCO Research Institute
[Asian Steel Watch] Vol.4 (2017.12)
Featured Articles
The Korean Steel Industry in Retrospect : Lessons for Developing Countries
Rising from the ashes of war, Korea has joined the ranks of advanced countries. The rapid development of the Korean steel industry offers lessons to developing countries. The development patterns differ before and after the financial crisis of 1998. Examining the changes that took place around the crisis of 1998 based on factors related to steel use, there are some distinctive items: a significant slowing in the urbanization rate after 1996, gross capital formation as percentage of GDP declining after peaking in 1996, and the Korean economy being shifted from government-driven to market-driven. The author adopted various theories to re-examine the success factors and offer implications for developing nations—catch-up theory, infant industry argument, fourth factor of production, Lewis turning point, and endogenous growth theory.
Based on its analysis on the development and success factors of the Korean steel industry, this article offers several policy implications for developing countries. The first is the importance of the government’s role and strategic decisions. The second implication is entrepreneurial leadership and a “can-do” attitude. The third is the importance of industrial policy based on medium- to long-term outlook for supply and demand. Finally, there is the importance of determined drive of technological development and R&D investment.
China steel industry (SWOT analysis of chineese steel industryHarshit Arya
The document discusses the steel industries of China and India. It provides the following key points:
- China is the world's largest producer and consumer of steel, but production growth slowed in 2012 due to declining demand. Excess capacity has led to falling steel prices.
- Both countries have abundant raw materials and labor as strengths, but India struggles with low productivity and China faces constraints on resources.
- Opportunities for growth include increasing domestic demand, exports, and infrastructure development. Threats include rising prices of iron ore and coal, and China potentially dumping excess steel.
- The five largest steel producers globally are all Chinese companies, demonstrating China's dominance of the industry. Internal competition is high within
Continuous Casting: Get more from your CasterRakesh Niranjan
“Even
the best can be bettered.” It perfectly applies
to Continuous casting. Industry leaders always work on this concept of “there is a better way” and don’t settle for less. One of the
thought processes is how to get more from the investments on continuous casters
by optimization of the operations. This thought process is vital in the current tough
market conditions. Evolution of manufacturing processes through perfect application
of technology provides the
right platform to optimized manufacturing operations.
As of early 2016, rare earth element prices have mean reverted and though many questions surround the sustainability of China’s economic growth model, the supply chain is only slightly less dominant than it was a few years
ago. As an example, the sole source of dysprosium ore is effectively the South China Clays with no other significant source globally. The price of dysprosium oxide has fallen by over 90% from peak to trough though still remains above its pre-crisis low.
This raises several questions. First, how have recent events altered rare earth supply chains? Second, in this low price environment, is there a need for a non-Chinese focused supply chain? Third, if so, what might it look like?
This paper aims to answer these questions through examining the current supply chain situation and projecting what a non-Chinese supply chain might look like.
Author: Chris Berry
This document summarizes a report by RNCOS on the US steel industry. It provides an overview of the size and growth rate of the US steel market, segmentation by sector and product type, as well as opportunities and challenges. The US is the 3rd largest crude steel producer globally. Key points include:
- Crude steel production grew 2.5% to 88.6 million tons in 2012 and is forecast to grow at 4.5% annually to 2017.
- Apparent steel consumption grew 10.7% in 2011 and is forecast to grow 4.3% annually to 130 million tons by 2017.
- Flat products account for 58% of apparent steel consumption, followed by long products.
- Growth
Executive summary for Rethink Energy's Green Steel market forecastSimon Thompson
Here's the executive summary and a few snippets from "Renewables set to unlock $2.2 trillion Green Steel Monster", which is the report and forecast about the opportunities presented to the Energy Industry in the age of decarbonization.
It’s part of the "Rethink Energy" series and outlines how soaring margins, in the wake of Covid-19, will drive an imminent wave of investment into a new generation of ‘Green Steel.’
It will be powered by a surge in scrap availability, 4,500 TWh of renewable power, and 60 million tons of green hydrogen per year.
Yet as the world’s top five steel-making countries make their net-zero carbon emissions commitments, there is no other way other than radical transition in to the production of ‘Green Steel’.
It all adds up to a 20-fold increase in the Steel’s demand for clean power over the next 30 years.
So, with the necessary supply of renewables, what is needed for the Energy Industry to work with steel manufacturers? And how come recycled steel can only provide half the answer to a net zero future? How quickly will hydrogen-based DRI (Direct Reduced Iron) displace bio-fuel/CCUS (carbon capture & storage) innovation? Why is Sweden set to lay the foundations for an Indian revolution? And what is needed for steelmaking to set itself on course for a zero emissions future?
The answers to these questions and more can be found in "Renewables set to unlock $2.2 trillion Green Steel Monster". Over 64 pages and accompanied by forecast data spreadsheet, it consists of:
1) A study of the global demand for steel from now to 2050 including a detailed breakdown of volume by country;
2) A description of steel production processes by primary (using iron ore) and secondary (scrap);
3) A breakdown of decarbonized steel-making including examples of pilot schemes, setting out a pathway for an 82% reduction in CO2 output by the 2050;
4) A forecast of green steel production by country, region and use (to 2050).
More information and other executive summaries at
https://rethinkresearch.biz/reports-category/rethink-energy-research/
This document compares the strategies of ArcelorMittal and Tata Steel, two major steel companies. It analyzes their corporate strategies, including geographical presence, acquisitions vs organic growth, vertical integration, and portfolio management. It also examines the macro environment of the steel industry using PESTLE analysis and discusses factors like cyclical demand, capacity utilization, costs, trade, and regulations that influence industry strategies. Finally, it provides a SWOT analysis and compares the key strategies of the two companies, such as ArcelorMittal's focus on acquisitions and mining and Tata Steel's emphasis on branding and new product development.
Ежегодный отчет PwC «Сделки слияния и поглощения в металлургической отрасли: ...PwC Russia
По последним данным ежегодного отчета PwC «Сделки слияния и поглощения в металлургической отрасли: взгляд в будущее», активность в области сделок в глобальном масштабе устанавливает новые рекорды, однако в металлургической отрасли рост сделок практически остановился.
Общая стоимость завершенных сделок в металлургической отрасли за последний год упала до самого низкого уровня, когда-либо отмеченного в серии ежегодных отчетов PwC. По сравнению с прошлым годом общая стоимость сделок снизилась на 32 % – с 16,8 млрд долл. США в 2014 году до 11,4 млрд долл. США в 2015 году. Это на 3,7 млрд долл. США меньше, чем в 2009 году, сразу после кредитного кризиса, и на 4,7 млрд долл. США ниже уровня 2003 года, когда был опубликован первый выпуск из этой серии отчетов с данными о сделках в металлургической отрасли.
Однако, несмотря на рекордно низкую общую стоимость сделок, их объем в целом сопоставим с уровнем многих прошлых лет, хотя и не дотягивает до пиков, которые мы наблюдали на рубеже десятилетия.
The aluminum industry ceo agenda 2013 - by BCGJPStrategy
The aluminum industry crisis was caused primarily by oversupply driven by China's rapid expansion of aluminum production capacity. Between 2000-2012, Chinese aluminum demand grew at nearly 16% annually, accounting for 45% of global demand, while demand outside China grew just over 1% annually. However, the industry failed to predict the scale of China's production increases, which led to a global oversupply. As Chinese aluminum remained self-sufficient and inventories grew, prices remained low despite strong overall demand growth. The crisis reflects a long-term structural change of China's dominance in production that has depressed prices industry-wide.
Current Situation in the Steel Industry and Development Trends Mechel (ОАО «Мечел»)
The steel industry in Russia faces challenges of stagnating domestic demand, growing overcapacity, and decreasing competitiveness in international markets. Major Russian steelmakers have invested in new projects to expand production, but this risks further overcapacity as demand is expected to grow slowly. State support is needed to stimulate infrastructure projects and import substitution to boost domestic consumption. Steelmakers must also cut costs, develop new products, and move up the value chain to improve competitiveness. The future of the industry depends on balancing capacity growth with demand as well as implementing policies to support investment and regulate natural monopoly tariffs.
The Indian steel industry has grown significantly in recent years. India is now the third largest producer of crude steel globally. Production of total finished steel has increased from 68 million tonnes in 2010-11 to over 91 million tonnes in 2014-15. Consumption is also rising rapidly in India, though per capita consumption remains below the world average due to India's large population. The government has taken several initiatives to support growth of the private steel sector. While the industry was previously regulated, prices are now determined by market forces. The future remains positive for further expansion of the Indian steel industry.
The document discusses the long-term outlook for steelmaking coal demand. It states that while overall steelmaking coal demand is expected to decline slightly by 2050, demand for high-quality seaborne hard coking coal used in blast furnace steelmaking is forecast to remain strong due to expected steel demand growth in regions like India and Southeast Asia that rely on imports. It also notes that technologies like carbon capture and storage will be needed to significantly reduce steelmaking emissions and help meet climate targets, and that blast furnace steelmaking using high-quality coal will continue to play an important role during the transition to lower-carbon steel production methods.
The document provides an overview of India's steel tubes and pipes industry. Key points include:
1) The industry has experienced slow growth in recent years but sees promising prospects from growing domestic and international demand, especially from the oil and gas sector.
2) Major growth drivers are increasing infrastructure development in India as well as rising global energy demand and pipeline projects in regions like Asia and North America.
3) Key domestic demand sectors include power, oil and gas, ports, airports, and water projects, as the Indian government invests heavily in developing these industries.
4) While leading players face issues like high debt, emerging mid-sized players may see more growth opportunities from expanding demand.
The document discusses the long-term outlook for steelmaking coal demand. It states that global steel production emits 7-10% of greenhouse gases and meeting climate targets will require various abatement technologies. Demand for high-quality seaborne hard coking coal used in blast furnace steelmaking is forecast to remain strong to support demand in India and Southeast Asia. By 2050, steel demand is forecast to remain robust under different growth scenarios from the IEA. Supply of seaborne steelmaking coal is expected to have a gap compared to demand between 2025-2030 without new projects. Overall, long-term demand for seaborne hard coking coal is expected to remain resilient due to steel demand growth in key importing
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There is an increasing focus on making products last longer, reusing or mending them, or even remanufacturing them. This new concept has been branded a circular economy where the focus is on reduce, reuse, remanufacture and recycle (4Rs). The steel industry is well placed to contribute to a circular economy and is part of the solution in addressing environmental concerns for many products and services. Key properties of steel (strength, durability, magnetic properties) make steel a key enabler of a circular economy. This article outlines how the steel industry is addressing current environmental issues as well as how regulations can be utilized to generate an overall environmental improvement of products and services.
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AHSS applied to gasoline vehicles reduces vehicle body weight, improving fuel efficiency and reducing greenhouse gas emissions. Motor cores with Hyper NO minimize core losses, thereby improving the power efficiency of home appliances and cut greenhouse gas emissions. In terms of PosMAC and Giga Steel, POSCO is preparing for a low-carbon circular economy through a full life cycle database and third-party certification. Developing “PosMent” with a higher slag content, POSCO is strengthening the circular industry ecosystem and reduce greenhouse gas emissions.
Restructuring Scenario of the Indian Steel lndustry to Enhance Its Global Com...POSCO Research Institute
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Restructuring Scenario of the Indian Steel lndustry to Enhance Its Global Competitiveness
The Indian government has recently released the“National Steel Policy (NSP) 2017,”which declares the aim of increasing steel production capacity from 122 Mt in 2015 to 300 Mt in 2030 in order to attain self-sufficiency. However, the insolvency issue recently looming large in the Indian steel industry makes this goal appear somewhat hollow. As of March 2016, the Indian steel industry’s debt surpassed INR 3 trillion, and between INR 1.15 to 2 trillion within it is categorized as non-performing assets. However, steel imports are not the only culprit in the insolvency of the Indian steel industry. There are other fundamental reasons underlying the insolvency. The first relates to policies based on the ripple effect from the NSP 2005. The second cause of insolvency is investment fervor among Indian steelmakers, which left huge aftermath within the industry. Restructuring of the Indian steel industry will be mainly led by Tata and JSW.
Now is the right time for the Indian government to seek not only quantitative growth, but also qualitative improvement to enhance the global competitiveness of the domestic steel industry.
[Asian Steel Watch] Vol.3 (2017.6)
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Chinese Steel Moves along the One Belt, One Road
After President Xi unveiled the concept of a“New Silk Road”in September, the Chinese government began to actualize the“New Silk Road”and announced One Belt, One Road (OBOR) in March 2015. China has contributed USD 40 billion to a Silk Road Fund to finance OBOR and established the Asian Infrastructure Investment Bank (AIIB). China also held a major OBOR summit in May 2017. The Chinese steel industry has begun to search for a way forward through OBOR for the following reasons: falling steel consumption; prolonged oversupply with declining steel prices; and the spike in financial, environmental, and labor costs. The OBOR project is positive in that it boosts steel demand and address overcapacity; however, it needs adjustment and balance to prevent any dispute and side effect.
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In the mid-2000s, Sino-Indian trade and investment began to expand. In light of India’s strategic culture, the economic cooperation between India and China will continue. India exports iron ore to China, while it imports steel products from China. India’s trade deficit with China is surging, dragging India down into chronic steel deficits with China. In early this year, the Indian government released draft National Steel Policy of 2017 (NSP) with an aim to boost its crude steel capacity to 64 Mt by 2030 to satisfy the continuously rising domestic steel demand and to export some steel products.
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The shipbuilding industry will be recovered in the long term backed by global economic growth and highly influenced by environmental issues and technological advances. Under strict environmental regulations, demand for eco-friendly ships will rise. Ships will be required to use low-sulfur fuel oil. A wide range of technologies will bring about differentiated and innovative types of ships. Under the influence of the Fourth Industrial Revolution, remotely controlled or fully autonomous ships will become available in the future. Emerging technology will not only change ships, but also shipyards and the shipping and port industries. The changing steel industry will result in qualitative changes of steel products. As vessels become larger and lighter, the steel intensity of ship’s tonnage will fall continuously, and then decline even further following the rise of electric propulsion, unmanned, and autonomous ships.
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1) China has already reached its peak steel demand of 766 million tons in 2013 according to POSCO Research Institute forecasts. Demand is expected to gradually decline to 670 million tons by 2020 and 650 million tons by 2025.
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The Demographic Cliff: How It Will Impact Asia’s Steel Demand
Changes in working-age population determine economic fundamentals. They are directly related to steel demand, because the working-age population is the main consumer group of houses and vehicles, the key sources of steel demand. Therefore, the acceleration of decline in working-age population will have a negative impact on economic growth and steel consumption.
Learning lessons from advanced countries about the experience of population aging, there are some characteristics in common: the share of manufacturing shrinks in the economic structure, while the share of service increases; and steel consumption declines after a peak. Particularly in the case of Japan, which is the world’s most aged society, changes in working-age population has a strong correlation with changes in the steel-consuming industries and steel consumption.
The decrease in working-age population in Korea, China, and Japan, which have led growth of the global steel industry until now, will have a negative impact on global steel demand in the medium to long term. It is unlikely that India and the ASEAN’s demand will grow fast enough to offset the decline in steel demand in the three East Asian countries.
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In the face of the great paradigm shift brought on by the Fourth Industrial Revolution, many Asian steelmakers are taking preemptive measures to maintain competitiveness and contribute to the advancement of manufacturing. POSCO is also one of the leading global steelmakers in this arena. POSCO is building the world’s first continuous-process steel plant model in its Gwangyang Steelworks plate factory that houses integrated processes for steelmaking, continuous casting, and rolling. POSCO has achieved major outcomes in the realization of a smart factory, such as the development of the “digital genome map” to tackle challenges of smart factory initiatives and the construction of PosFrame—POSCO’s smart factory platform for continuous process industries. It also has conducted various smart factory projects, including material to final product defect tracking, minimizing unnecessary scarfing in the continuous casting process, and new product development simulation in cyberspace.
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Xin chang tai (新常态) is the term that most accurately characterizes China’s economy today. It is a literal translation of the English term new normal, meaning “a new state of normality.”After reform and opening up, China’s economy maintained a double-digit annual growth rate for decades, then slowed to around 7% in 2012. Chinese authorities have described this as the “new normal” state, to which they intend to adjust China’s economic policy.
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48 Dilemmas in Restructuring China’s Steel Industry (Dr. Li Wan-Yong)
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The myth and reality of global steel overcapacity (Jun H. Goh, Moon-Kee Kong)
1. Vol.01 January 2016 6362 Asian Steel Watch
Overcapacity has long been blamed as the main
cause of the recession in the steel industry (es-
pecially the price decline), but this claim has not
yet been backed by enough systematic analysis.
For this reason, the exact amount of overcapac-
ity continues to be a controversial topic, and a
consensus on realistic measurement of capacity
is nonexistent. Therefore, one is hard-pressed to
provide an insightful answer to the question of
whether the current overcapacity level is more
serious than the past.
In this article, we will first examine how
serious global steel overcapacity is in terms of
nominal amount. Reliable annual historical data
for China and other countries are derived mainly
from OECD data on nominal crude steel capacity,
and are compared to annual crude steel consump-
tion data. Next, we will try to measure the genu-
ine steel overcapacity by introducing the concept
of effective capacity, and investigate whether the
steel industry’s recession after the financial crisis
was triggered by overcapacity.
Is the thought of global steel overcapacity
causing plummeting steel prices and economic
recession a sheer myth? Is overcapacity after the
financial crisis a grave reality facing global steel
companies? Is global steel oversupply manageable
without immense concerted effort from the steel
community and government intervention?
Recently, the global steel
industry is falling deeper
into a slump, and the
claim that the industry
is sinking once again
into a swamp of long-
term market recession is gaining ground. Overca-
pacity is frequently blamed for the recession.
In light of the early arrival of China’s peak
steel, as evidenced by the drop in China’s crude
steel demand in 2014 and 2015, people claim
that the steel industry cannot avoid a long-term
recession without resolving the issue of global
steel overcapacity.
As shown in <Figure 1>, global overcapacity
relative to crude steel demand gradually decreased
Is steel industry
oversupply real?
from mid 30% in the middle of 1990s until right
before the global financial crisis of 2008, when it
began a sharp incline. China’s nominal overcapac-
ity increased dramatically from 2005, while global
nominal overcapacity excluding China stayed just
above 30% after the onset of the 2008 financial
crisis. The recent hike in China’s nominal overca-
pacity is aggravating worries that the steel indus-
try recession will be prolonged due to oversupply.
Will excessive capacity drive the steel industry
into a deeper recession? Rod Beddows, author of
Steel 2050, published in 2014, writes that similar
steel overcapacity issues existed in the period
from 1975 to 1999. He suggests from the his-
tory that overcapacity of 15-20% is normal for
the steel industry. Dr. Beddows also claims that
the possibility of relief from China’s overcapacity
exists, based on future economic growth and an
increase in steel demand. However, the sudden
growth in magnitude of China’s capacity, and per-
sisting massive capacity among other countries
around the globe, cast serious doubt over the
possibility of relief from steel overcapacity.
In order to calculate the
extent of overcapacity,
an accurate measure of
capacity is necessary.
The common method of
calculating overcapac-
ity by using nominal capacity is highly likely to
yield exaggerated figures. This is because it is
physically impossible for plants to operate year-
round at 100% nominal capacity, due to various
issues such as raw materials supply, facilities
maintenance, and the existence of outdated
facilities. How can real, meaningful capacity (at
highest possible operation rate) be estimated?
In theory, this measurement, known as effec-
tive capacity, can be derived by way of thorough
investigation of every single steel plant around
the world. But in practice, such an investigation
is nearly impossible. Until now, efforts to esti-
mate effective capacity were largely based on a
macro approach. Key examples are the methods
used by the OECD and WSD (World Steel Dy-
namics). WSD provides definitions for various
The Myth and Reality of
Global Steel Overcapacity
Dr. Jun H. Goh
Managing Director
POSCO Research Institute
jgoh@posri.re.kr
Dr. Moon-Kee Kong
Senior Principal Researcher
POSCO Research Institute
mkkong@posri.re.kr
How can
overcapacity
be measured?
Figure 1. Nominal Overcapacity Rate Relative to Steel Demand
-10
-
10
20
30
40
50
60
Except China Global China
(%)
Note: Nominal overcapacity rate = overcapacity/crude steel demand (overcapacity = capacity – crude steel demand)
Source: OECD, WSD, POSCO Research Institute
Featured Articles
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
The Myth and Reality of Global Steel Overcapacity
2. Vol.01 January 2016 6362 Asian Steel Watch
Overcapacity has long been blamed as the main
cause of the recession in the steel industry (es-
pecially the price decline), but this claim has not
yet been backed by enough systematic analysis.
For this reason, the exact amount of overcapac-
ity continues to be a controversial topic, and a
consensus on realistic measurement of capacity
is nonexistent. Therefore, one is hard-pressed to
provide an insightful answer to the question of
whether the current overcapacity level is more
serious than the past.
In this article, we will first examine how
serious global steel overcapacity is in terms of
nominal amount. Reliable annual historical data
for China and other countries are derived mainly
from OECD data on nominal crude steel capacity,
and are compared to annual crude steel consump-
tion data. Next, we will try to measure the genu-
ine steel overcapacity by introducing the concept
of effective capacity, and investigate whether the
steel industry’s recession after the financial crisis
was triggered by overcapacity.
Is the thought of global steel overcapacity
causing plummeting steel prices and economic
recession a sheer myth? Is overcapacity after the
financial crisis a grave reality facing global steel
companies? Is global steel oversupply manageable
without immense concerted effort from the steel
community and government intervention?
Recently, the global steel
industry is falling deeper
into a slump, and the
claim that the industry
is sinking once again
into a swamp of long-
term market recession is gaining ground. Overca-
pacity is frequently blamed for the recession.
In light of the early arrival of China’s peak
steel, as evidenced by the drop in China’s crude
steel demand in 2014 and 2015, people claim
that the steel industry cannot avoid a long-term
recession without resolving the issue of global
steel overcapacity.
As shown in <Figure 1>, global overcapacity
relative to crude steel demand gradually decreased
Is steel industry
oversupply real?
from mid 30% in the middle of 1990s until right
before the global financial crisis of 2008, when it
began a sharp incline. China’s nominal overcapac-
ity increased dramatically from 2005, while global
nominal overcapacity excluding China stayed just
above 30% after the onset of the 2008 financial
crisis. The recent hike in China’s nominal overca-
pacity is aggravating worries that the steel indus-
try recession will be prolonged due to oversupply.
Will excessive capacity drive the steel industry
into a deeper recession? Rod Beddows, author of
Steel 2050, published in 2014, writes that similar
steel overcapacity issues existed in the period
from 1975 to 1999. He suggests from the his-
tory that overcapacity of 15-20% is normal for
the steel industry. Dr. Beddows also claims that
the possibility of relief from China’s overcapacity
exists, based on future economic growth and an
increase in steel demand. However, the sudden
growth in magnitude of China’s capacity, and per-
sisting massive capacity among other countries
around the globe, cast serious doubt over the
possibility of relief from steel overcapacity.
In order to calculate the
extent of overcapacity,
an accurate measure of
capacity is necessary.
The common method of
calculating overcapac-
ity by using nominal capacity is highly likely to
yield exaggerated figures. This is because it is
physically impossible for plants to operate year-
round at 100% nominal capacity, due to various
issues such as raw materials supply, facilities
maintenance, and the existence of outdated
facilities. How can real, meaningful capacity (at
highest possible operation rate) be estimated?
In theory, this measurement, known as effec-
tive capacity, can be derived by way of thorough
investigation of every single steel plant around
the world. But in practice, such an investigation
is nearly impossible. Until now, efforts to esti-
mate effective capacity were largely based on a
macro approach. Key examples are the methods
used by the OECD and WSD (World Steel Dy-
namics). WSD provides definitions for various
The Myth and Reality of
Global Steel Overcapacity
Dr. Jun H. Goh
Managing Director
POSCO Research Institute
jgoh@posri.re.kr
Dr. Moon-Kee Kong
Senior Principal Researcher
POSCO Research Institute
mkkong@posri.re.kr
How can
overcapacity
be measured?
Figure 1. Nominal Overcapacity Rate Relative to Steel Demand
-10
-
10
20
30
40
50
60
Except China Global China
(%)
Note: Nominal overcapacity rate = overcapacity/crude steel demand (overcapacity = capacity – crude steel demand)
Source: OECD, WSD, POSCO Research Institute
Featured Articles
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
The Myth and Reality of Global Steel Overcapacity
3. Vol.01 January 2016 6564 Asian Steel Watch
types of capacity.1 In recent years, the OECD
has been making efforts to share its method of
quantifying effective capacity of member states.
The OECD’s definition of effective capacity dif-
fers more or less from WSD’s. The OECD bases
maximum production on peak market condition
during a period, and the market condition is
estimated with consideration to factors such as
steel production, price, and profitability.
In addition, a number of methods
exist for technical estimation of maxi-
mum potential output even without
assumption of steel market conditions.
Some key examples are Peak-to-Peak2,
DEA (Data Envelopment Analysis), and
SPF (Stochastic Production Frontier).
We used the DEA method, because
it does not require an assumed shape of
the production frontier and allows cal-
culation of potential capacity through
nonparametric estimation.Whichever
method is used, the benefits of estimat-
ing effective capacity are clear. Using
effective capacity to estimate the maximum pos-
sible production of steelmakers yields a smaller
magnitude of overcapacity. If this is the case, can
introduction of effective capacity measurement
dispel worries about overcapacity causing stagna-
tion or recession in the steel market?
At some point, the myth
that “overcapacity is the
main cause of the reces-
sion (especially the price
decline) in the steel in-
dustry, and recovery will
be difficult without relieving overcapacity” started
to be accepted as a fact within the steel industry.
The reason we call it a myth is that we have yet to
learn the exact magnitude of overcapacity, and the
actual impact of overcapacity on the recession in
the steel industry has not been clearly revealed.
<Figure 2> shows that when using nominal
capacity in the estimation, a close correlation
between overcapacity and steel prices is observed
from as early as 2008. From 2008 to 2014, steel
prices and the reciprocal of the nominal over-
capacity rate of steel mills moved in nearly the
same direction. In other words, global hot-rolled
steel prices fluctuated with the steel overcapacity
rate. During this period, global nominal overca-
pacity increased steadily in size, but demand also
grew. The degree of nominal overcapacity relative
to demand size (overcapacity rate) fluctuated, fol-
lowing the peaks and valleys of steel prices.
From the steel industry’s perspective, however,
these results are, in fact, an “inconvenient truth”
that is difficult to accept. These findings support
the argument that stresses the importance of ef-
fective capacity and disregards nominal capacity
as a meaningless figure. We used the DEA method
to estimate effective capacity.3 Estimated overca-
pacity rate was around 20%, far below the figure
derived from nominal capacity, but the resulting
trend was essentially the same as that of nominal
overcapacity rate. After 2012, however, compared
to the increase in effective overcapacity rate, the
decrease in steel prices became rather steep.4 In
other words, the results of the overcapacity esti-
mation using effective capacity seem to
negate the claim that the recent drop
in steel prices was caused entirely by
overcapacity. In particular, the sudden
price drop in 2015 cannot be explained
simply by overcapacity. Even after al-
lowing room for errors in estimating
effective capacity, these results weaken
faith in the myth of overcapacity.
Meanwhile, <Figure 2> presents an-
other question: why were steel prices
so low before 2007, when global over-
capacity was low, with nominal overcapacity rate
below 20% and effective overcapacity rate below
10%? As the reader probably knows already, the
issue is raw materials prices. From 2005 to 2007,
even with low overcapacity, steel prices remained
low because raw materials prices were low. Look-
ing at <Figure 3>, the main cause of the recent
drop in steel prices is undeniably raw materials
prices, not overcapacity. Of course, this does not
cancel out the influence of the existence of over-
capacity, but the evidence is sufficient to under-
Is steel market
recession caused
by overcapacity?
1
WSD classifies capacity into
three types: ①Gross capacity:
Engineered capacity ②Effective
capacity: Amount of steel
production that may occur about
a year after steel prices take off
③ECO capacity: Level of steel
production that can be achieved
before there's a sizable rise in the
cost to produce the last tonne.
2
Peak-to-Peak is a method that
simply assumes full utilization
at data value peaks, and uses
parametric estimation to calculate
the potential capacity between
peaks.
3
Nominal capacity and crude steel
production data from 1995-2015
were used respectively as input
and output (forecast value used
for 2015), and effective capacity
was assumed to be the maximum
potential output, as calculated
from the given input (nominal
capacity) through DEA analysis.
4
Using effective capacity as
estimated by WSD also shows
a widening gap with the recent
price trend.
Recently, the global steel industry is falling deeper into a slump, and the
claim that the industry is sinking once again into a swamp of long-term
market recession is gaining ground. Overcapacity is frequently blamed for
the recession.
Featured Articles
Figure 2. Steel Prices and Overcapacity Rate
400
500
600
700
800
900
40
30
20
10
0
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15(e)
($/t) (%)
World HR Export Price (L)
Nominal Overcapacity Rate (R)
Effective Overcapacity Rate (R)
Note: The right axis is reversed in order for the overcapacity rate to be easily compared with HR price.
Source: OECD, WSD, POSCO Research Institute
The Myth and Reality of Global Steel Overcapacity
4. Vol.01 January 2016 6564 Asian Steel Watch
types of capacity.1 In recent years, the OECD
has been making efforts to share its method of
quantifying effective capacity of member states.
The OECD’s definition of effective capacity dif-
fers more or less from WSD’s. The OECD bases
maximum production on peak market condition
during a period, and the market condition is
estimated with consideration to factors such as
steel production, price, and profitability.
In addition, a number of methods
exist for technical estimation of maxi-
mum potential output even without
assumption of steel market conditions.
Some key examples are Peak-to-Peak2,
DEA (Data Envelopment Analysis), and
SPF (Stochastic Production Frontier).
We used the DEA method, because
it does not require an assumed shape of
the production frontier and allows cal-
culation of potential capacity through
nonparametric estimation.Whichever
method is used, the benefits of estimat-
ing effective capacity are clear. Using
effective capacity to estimate the maximum pos-
sible production of steelmakers yields a smaller
magnitude of overcapacity. If this is the case, can
introduction of effective capacity measurement
dispel worries about overcapacity causing stagna-
tion or recession in the steel market?
At some point, the myth
that “overcapacity is the
main cause of the reces-
sion (especially the price
decline) in the steel in-
dustry, and recovery will
be difficult without relieving overcapacity” started
to be accepted as a fact within the steel industry.
The reason we call it a myth is that we have yet to
learn the exact magnitude of overcapacity, and the
actual impact of overcapacity on the recession in
the steel industry has not been clearly revealed.
Figure 2 shows that when using nominal
capacity in the estimation, a close correlation
between overcapacity and steel prices is observed
from as early as 2008. From 2008 to 2014, steel
prices and the reciprocal of the nominal over-
capacity rate of steel mills moved in nearly the
same direction. In other words, global hot-rolled
steel prices fluctuated with the steel overcapacity
rate. During this period, global nominal overca-
pacity increased steadily in size, but demand also
grew. The degree of nominal overcapacity relative
to demand size (overcapacity rate) fluctuated, fol-
lowing the peaks and valleys of steel prices.
From the steel industry’s perspective, however,
these results are, in fact, an “inconvenient truth”
that is difficult to accept. These findings support
the argument that stresses the importance of ef-
fective capacity and disregards nominal capacity
as a meaningless figure. We used the DEA method
to estimate effective capacity.3 Estimated overca-
pacity rate was around 20%, far below the figure
derived from nominal capacity, but the resulting
trend was essentially the same as that of nominal
overcapacity rate. After 2012, however, compared
to the increase in effective overcapacity rate, the
decrease in steel prices became rather steep.4 In
other words, the results of the overcapacity esti-
mation using effective capacity seem to
negate the claim that the recent drop
in steel prices was caused entirely by
overcapacity. In particular, the sudden
price drop in 2015 cannot be explained
simply by overcapacity. Even after al-
lowing room for errors in estimating
effective capacity, these results weaken
faith in the myth of overcapacity.
Meanwhile, Figure 2 presents an-
other question: why were steel prices
so low before 2007, when global over-
capacity was low, with nominal overcapacity rate
below 20% and effective overcapacity rate below
10%? As the reader probably knows already, the
issue is raw materials prices. From 2005 to 2007,
even with low overcapacity, steel prices remained
low because raw materials prices were low. Look-
ing at Figure 3, the main cause of the recent
drop in steel prices is undeniably raw materials
prices, not overcapacity. Of course, this does not
cancel out the influence of the existence of over-
capacity, but the evidence is sufficient to under-
Is steel market
recession caused
by overcapacity?
1
WSD classifies capacity into
three types: ①Gross capacity:
Engineered capacity ②Effective
capacity: Amount of steel
production that may occur about
a year after steel prices take off
③ECO capacity: Level of steel
production that can be achieved
before there's a sizable rise in the
cost to produce the last tonne.
2
Peak-to-Peak is a method that
simply assumes full utilization
at data value peaks, and uses
parametric estimation to calculate
the potential capacity between
peaks.
3
Nominal capacity and crude steel
production data from 1995-2015
were used respectively as input
and output (forecast value used
for 2015), and effective capacity
was assumed to be the maximum
potential output, as calculated
from the given input (nominal
capacity) through DEA analysis.
4
Using effective capacity as
estimated by WSD also shows
a widening gap with the recent
price trend.
Recently, the global steel industry is falling deeper into a slump, and the
claim that the industry is sinking once again into a swamp of long-term
market recession is gaining ground. Overcapacity is frequently blamed for
the recession.
Featured Articles
Figure 2. Steel Prices and Overcapacity Rate
400
500
600
700
800
900
40
30
20
10
0
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15(e)
($/t) (%)
World HR Export Price (L)
Nominal Overcapacity Rate (R)
Effective Overcapacity Rate (R)
Note: The right axis is reversed in order for the overcapacity rate to be easily compared with HR price.
Source: OECD, WSD, POSCO Research Institute
The Myth and Reality of Global Steel Overcapacity
5. Vol.01 January 2016 6766 Asian Steel Watch
mine blind faith in the myth.
Analysis so far leads to an obvious conclusion.
While overcapacity is certainly the most chal-
lenging issue for today’s global steel industry,
its impact on steel market conditions has been
somewhat exaggerated. Of course, this is not to
say that the steel industry’s efforts to minimize
overcapacity are unnecessary. We mean only to
say that we must escape from the preconception
as we call the myth of overcapacity. In any indus-
try, realistic judgment is necessary on whether
overcapacity is the source of all problems.5
The question asked at the beginning of this
article—can the introduction of effective capacity
measurement dispel worries about overcapacity
causing stagnation or recession in the
steel market?—has been answered for
the most part. Blaming the steel market
recession entirely on overcapacity is at
least somewhat unfair, and accepting
the effective capacity measurement can
potentially provide significant relief
from that responsibility. Though there
is still room for controversy regarding the accuracy
of the measurement process used to estimate ef-
fective capacity, the magnitude of overcapacity has
certainly been exaggerated to some extent.
The new outlook does
not diminish the seri-
ousness of the overca-
pacity issue for the steel
industry. Relieving over-
capacity still remains the
most urgent issue, and requires the attention and
efforts of the global steel industry.
As seen in Figure 1, based on nominal
capacity, global overcapacity has been worsen-
ing steadily since the financial crisis, and the
overcapacity rate has recently begun increasing
rapidly with the sharp decline in steel demand.
Using OECD projection of global steel capacity,
and our forecasts for crude steel demand for the
next two years, yielded a nominal overcapacity
rate of around 40%.6 In particular, the year 2013
will likely end up being the peak of China’s steel
demand, so massive relative overcapacity is in-
evitable. Reassessing overcapacity using effective
capacity measurements still shows that global
overcapacity rate will near 30%, and China’s over-
capacity rate will reach around 50% within 2-3
years. This means that overcapacity can no longer
be considered a myth. It is becoming a reality.
While efforts to reduce capacity are impor-
tant, the continuous growth of steel demand is
essential in lowering overcapacity rates, as Dr.
Beddows pointed out. Investment in infrastruc-
ture and the growth of the manufacturing sectors
in emerging countries such as India, the ASEAN,
and the Middle East is important in creating steel
demand, and might offset China’s declining steel
demand in the future. China’s plans for develop-
ment and financial support in Asia—the One
Belt, One Road initiative, which seeks to connect
Western China, Southeast Asia, and Europe, and
infrastructure investment in Asia through the
Asian Infrastructure Investment Bank (AIIB)—
present new opportunities to unleash the poten-
tial of China’s steel demand.
However, the global economy has
not shown clear momentum for recov-
ery since the financial crisis, and con-
cerns are mounting over a significant
slowdown of China’s economy with
fluctuations in the Chinese stock mar-
ket and the shock from the contraction
of the real estate bubble. Under these
circumstances, worries about steel
overcapacity are snowballing.
The vague notion that overcapacity
is to blame entirely for the steel market recession
does not offer much help in eliciting specific re-
sponses from the global steel community and in-
dependent steelmakers. Each country must pro-
actively reduce unnecessary excess capacity and
quantify effective overcapacity. To these ends,
the OECD Steel Committee’s current efforts to
provide capacity measurement are praiseworthy.
The situation at present demands that we per-
ceive the reality clearly and seek lessons from the
history of the steel industry in order to overcome
the challenge of overcapacity.
Can the issue of
steel overcapacity
be overcome?
5
For example, the oil industry is
an industry in which overcapacity
is a major issue. The recent drop
in oil prices was determined to
have been caused by excessive
market share competition rather
than overcapacity. (Kibsgaard,
Presentation at Scotia Howard
Weil 2015 Energy Conference)
6
For projected capacity until 2017,
see the following resources.
“Future investment projects
in the global steel industry,”
Directorate for Science and
Industry, DSTI/SU/SC (2014),
“Excess Capacity in the
Global Steel Industry and the
Implications of New Investment
Projects,” OECD Science,
Technology and Industry Policy
Papers, No. 18, OECD Publishing
(2015).
The situation at present demands that we perceive the reality clearly
and seek lessons from the history of the steel industry in order to
overcome the challenge of overcapacity.
Featured Articles The Myth and Reality of Global Steel Overcapacity
Figure 3. Steel Prices and Raw Materials Prices
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
($/t) ($/t)
World HR Export Price (L)
Iron Ore Price (R)
Source: CRU, WSD
500
600
700
800
900
400
80
100
120
140
180
160
60
6. Vol.01 January 2016 6766 Asian Steel Watch
mine blind faith in the myth.
Analysis so far leads to an obvious conclusion.
While overcapacity is certainly the most chal-
lenging issue for today’s global steel industry,
its impact on steel market conditions has been
somewhat exaggerated. Of course, this is not to
say that the steel industry’s efforts to minimize
overcapacity are unnecessary. We mean only to
say that we must escape from the preconception
as we call the myth of overcapacity. In any indus-
try, realistic judgment is necessary on whether
overcapacity is the source of all problems.5
The question asked at the beginning of this
article—can the introduction of effective capacity
measurement dispel worries about overcapacity
causing stagnation or recession in the
steel market?—has been answered for
the most part. Blaming the steel market
recession entirely on overcapacity is at
least somewhat unfair, and accepting
the effective capacity measurement can
potentially provide significant relief
from that responsibility. Though there
is still room for controversy regarding the accuracy
of the measurement process used to estimate ef-
fective capacity, the magnitude of overcapacity has
certainly been exaggerated to some extent.
The new outlook does
not diminish the seri-
ousness of the overca-
pacity issue for the steel
industry. Relieving over-
capacity still remains the
most urgent issue, and requires the attention and
efforts of the global steel industry.
As seen in Figure 1, based on nominal
capacity, global overcapacity has been worsen-
ing steadily since the financial crisis, and the
overcapacity rate has recently begun increasing
rapidly with the sharp decline in steel demand.
Using OECD projection of global steel capacity,
and our forecasts for crude steel demand for the
next two years, yielded a nominal overcapacity
rate of around 40%.6 In particular, the year 2013
will likely end up being the peak of China’s steel
demand, so massive relative overcapacity is in-
evitable. Reassessing overcapacity using effective
capacity measurements still shows that global
overcapacity rate will near 30%, and China’s over-
capacity rate will reach around 50% within 2-3
years. This means that overcapacity can no longer
be considered a myth. It is becoming a reality.
While efforts to reduce capacity are impor-
tant, the continuous growth of steel demand is
essential in lowering overcapacity rates, as Dr.
Beddows pointed out. Investment in infrastruc-
ture and the growth of the manufacturing sectors
in emerging countries such as India, the ASEAN,
and the Middle East is important in creating steel
demand, and might offset China’s declining steel
demand in the future. China’s plans for develop-
ment and financial support in Asia—the One
Belt, One Road initiative, which seeks to connect
Western China, Southeast Asia, and Europe, and
infrastructure investment in Asia through the
Asian Infrastructure Investment Bank (AIIB)—
present new opportunities to unleash the poten-
tial of China’s steel demand.
However, the global economy has
not shown clear momentum for recov-
ery since the financial crisis, and con-
cerns are mounting over a significant
slowdown of China’s economy with
fluctuations in the Chinese stock mar-
ket and the shock from the contraction
of the real estate bubble. Under these
circumstances, worries about steel
overcapacity are snowballing.
The vague notion that overcapacity
is to blame entirely for the steel market recession
does not offer much help in eliciting specific re-
sponses from the global steel community and in-
dependent steelmakers. Each country must pro-
actively reduce unnecessary excess capacity and
quantify effective overcapacity. To these ends,
the OECD Steel Committee’s current efforts to
provide capacity measurement are praiseworthy.
The situation at present demands that we per-
ceive the reality clearly and seek lessons from the
history of the steel industry in order to overcome
the challenge of overcapacity.
Can the issue of
steel overcapacity
be overcome?
5
For example, the oil industry is
an industry in which overcapacity
is a major issue. The recent drop
in oil prices was determined to
have been caused by excessive
market share competition rather
than overcapacity. (Kibsgaard,
Presentation at Scotia Howard
Weil 2015 Energy Conference)
6
For projected capacity until 2017,
see the following resources.
“Future investment projects
in the global steel industry,”
Directorate for Science and
Industry, DSTI/SU/SC (2014),
“Excess Capacity in the
Global Steel Industry and the
Implications of New Investment
Projects,” OECD Science,
Technology and Industry Policy
Papers, No. 18, OECD Publishing
(2015).
The situation at present demands that we perceive the reality clearly
and seek lessons from the history of the steel industry in order to
overcome the challenge of overcapacity.
Featured Articles The Myth and Reality of Global Steel Overcapacity
Figure 3. Steel Prices and Raw Materials Prices
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
($/t) ($/t)
World HR Export Price (L)
Iron Ore Price (R)
Source: CRU, WSD
500
600
700
800
900
400
80
100
120
140
180
160
60