Wednesday, November 28, 2012

Global Steel Glut

This year, steel mills around the world have a production capacity of 1.8 billion tons but will take orders for only 1.5 billion tons. By 2016, an estimated 100 new mills, with total estimated supply capacity of 350 million tons, are expected to come on stream. Companies in Vietnam, Argentina, Ecuador, Peru and Bolivia, all backed in some way by their governments, are building or planning new mills.

[image]
Stainless steel coil in China, Xinhua/Zuma Press
Getting a definite count on the number of steel mills in the world and actual production capacity is difficult in large part, say industry officials and analysts, because there are hundreds of small, uncounted mills in China, which accounts for 46% of world steel output. Estimates for the number of steel mills in China range from 600 to 800 mills.

The trillion-dollar-a-year global steel industry is expected to remain, for the foreseeable future, the most fractured of major industries. The world's top five steel companies control only 18.2% of global steel supply. By contrast, the world's top five car companies control 50.6% of the global market. And the world's top five sellers of seaborne iron ore— iron ore that is exported by ocean trade routes—account for 66.1% of that market.

In China, where thousands of small mills have sprung up to make the steel bars, beams and other construction materials for new cities and skyscrapers, the government wants the top 10 producers to account for 60% of the country's steel output by 2015 and 70% by 2020, up from around 50% today.  The government wants to get rid of old unproductive and polluting facilities and give the remaining steelmakers "more clout in dealing with the foreign raw-material suppliers. (WSJ, 11/27/2012)

No comments:

Post a Comment