Global Steel Dynamics shifts due to Chinese Structural Changes

NEW DELHI (Scrap Monster): During a meeting with shareholder on Thursday, Tata group chairman Cyrus Mistry said that there would be a shift in demand-supply in the global steel industry due to the structural changes happened in china, the largest steel producer in the world. The steel sector anticipates a lower price level for raw materials. 

Mistry said in the company’s annual report for fiscal 2013-14 that the growth in China has tempered as the nation has moved its gears to attain a sustainable model of economic development.

He added that the path deviations in the growth of China would affect the steel demand-supply and pricing dynamic globally. According to him, the change in the growth path would affect the susceptible geographies like USA and Europe and also the prices of raw materials.

China produces more than 700 million tonnes of steel, in which most of the steel is used for the development of domestic infrastructure. The nation produces approximately half of the world’s supply. They also export some part of the steel produced at competitive prices and this became a factor of pressure for steel producers all over the world.

China also the major consumer of iron ore and this also affects the prices of raw material. Mistry added that the structural weaknesses in the global steel industry continue to be major threat in the medium term even if 2013-14 saw mild trends of macroeconomic recovery in many prime economies which includes both the US and Europe.

The company is planning to focus on the market differentiation and cost competitiveness in Europe through their overseas division Tata steel Europe. In Indian, the company has already planned to start a steel plant of capacity 6mt in Kalinganagar, Odisha. It will start by the end of 2014-15 FY. They also attained around one million tonnes of extra production and sales in 2013-14 after the 2.9 mt per year expansion program in Jamshedpur.