Steel industry feels hot on cooling global economic scenario
Columns | 2011-11-03 07:41:26 | By Paul Ploumis
Through the times when global economy is almost taking a walk down on the looming uncertainty over euro zone debt crises, distress in the MENA region and policy tightening by the emerging economies, the so called hot commodity 'steel' too is having a tough time
By Truemon Thottathil
Through the times when global economy is almost taking a walk down on the looming uncertainty over euro zone debt crises, distress in the MENA region and policy tightening by the emerging economies, the so called hot commodity ‘steel’ too is having a tough time.
Some analysts are of the view that oversupply has been created in the global market as steel makers and governments wanted to capture more market share in the boom period.
The global steel industry continues to be plagued by structural overcapacity. Many countries, including those experiencing high growth rates, produce far more steel than they consume. The problem is often rooted not with individual companies, but rather with governments striving to develop a steel industry to serve both internal needs and also export to open markets elsewhere, according to Canada Steel Producers Association.
The German steel market is losing momentum and steelmakers are likely to review their operations in the country over coming months, with the likelihood of temporary blast furnace closures and reduced output, according to this latest Germany Metals Report from BMI.
Meanwhile, the French steel industry also looks set for a disappointing performance in H211, leading to a contraction in the sector as it struggled to compete and key consuming industries were met with economic headwinds, according to the report.
Japan’s steel use is expected to decline by 2.7% to 61.8 mmt in 2011 due mainly to the disruptions caused by the earthquake. And steel demand in MENA region is expected to fall by 0.9% in 2011, mainly due to downward revisions from North African countries, according to the data of World Steel Association.
Developing economies play the more important role in most elements of steel industry than the developed economies. However, developing economies are on the threshold of having to face their own set of difficulties.
India, one of the major producers of iron ore has limited it’s export of the raw material to secure the domestic supply of home steel companies, giving way to further rise in steel raw material prices.
As an industry it need to work hard to improve the margin on steel as a versatile product, rather than to just add a convertor’s margin to raw materials, in the words of Director General of World Steel Association.
Meanwhile the the steel industry indicates that it is destined to live within very narrow producer margins and such will need to focus on the efficiency of its operations.
However, World Steel Association recently has given a very positive outlook for steel in 2011 and 2012 citing the demand is surging from year to year.
Some analysts are of the view that oversupply has been created in the global market as steel makers and governments wanted to capture more market share in the boom period.
The global steel industry continues to be plagued by structural overcapacity. Many countries, including those experiencing high growth rates, produce far more steel than they consume. The problem is often rooted not with individual companies, but rather with governments striving to develop a steel industry to serve both internal needs and also export to open markets elsewhere, according to Canada Steel Producers Association.
The German steel market is losing momentum and steelmakers are likely to review their operations in the country over coming months, with the likelihood of temporary blast furnace closures and reduced output, according to this latest Germany Metals Report from BMI.
Meanwhile, the French steel industry also looks set for a disappointing performance in H211, leading to a contraction in the sector as it struggled to compete and key consuming industries were met with economic headwinds, according to the report.
Japan’s steel use is expected to decline by 2.7% to 61.8 mmt in 2011 due mainly to the disruptions caused by the earthquake. And steel demand in MENA region is expected to fall by 0.9% in 2011, mainly due to downward revisions from North African countries, according to the data of World Steel Association.
Developing economies play the more important role in most elements of steel industry than the developed economies. However, developing economies are on the threshold of having to face their own set of difficulties.
India, one of the major producers of iron ore has limited it’s export of the raw material to secure the domestic supply of home steel companies, giving way to further rise in steel raw material prices.
As an industry it need to work hard to improve the margin on steel as a versatile product, rather than to just add a convertor’s margin to raw materials, in the words of Director General of World Steel Association.
Meanwhile the the steel industry indicates that it is destined to live within very narrow producer margins and such will need to focus on the efficiency of its operations.
However, World Steel Association recently has given a very positive outlook for steel in 2011 and 2012 citing the demand is surging from year to year.