The tables have turned in the steel industry - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

The tables have turned in the steel industry

Aug 25, 2010

The steel industry is closely linked to the overall economy. Hence, it comes as no surprise that it witnessed an unprecedented downturn in 2009 in the aftermath of the global financial meltdown. In this article we shall look at the recent production and consumption patterns in this important industry.

Asia, the hub of steel production
Source: worldsteel

World crude steel production declined 8% YoY from 1,329 m tonnes in 2008 to 1,223 m tonnes for the year of 2009. In 2009, steel production declined in nearly all the major steel producing countries and regions including the European Union, North America and the CIS, countries forming the erstwhile USSR. However, it was different in Asia. China, India and the Middle East showed positive growth during the year. Asia produced 799 m tonnes of crude steel during they year, a 4% YoY increase. Its share of world steel production increased to 65% in 2009 from 58% in 2008. Much of the incremental production within Asia came from China which continues to dominate the industry by a large margin.

Source: worldsteel

Emerging markets out-consume the West
Source: worldsteel

The global economic slowdown also affected steel consumption. Demand declined 7% YoY from 1,202 m tonnes in 2008 to 1,121 m tonnes in 2009. There are two major categories of steel products - flat products (demand led largely by consumption of auto and consumer durables) and long products (demand led largely by infrastructure creation). Of the consumption during 2009, 50% was flats and 50% was long products. Steel consumption of the leading emerging countries - Brazil, Russia, India and China (Brics) - grew by 18% YoY during the year. It was largely led by the massive consumption from China whose domestic demand responded to the government's economic stimulus package. If we exclude the Brics, world steel demand fell by a whopping 27% in 2009.

Source: worldsteel

Clearly Asia and especially China is now the epicenter of the steel industry. The emerging countries are looking more and more towards domestic consumption of steel instead of depending on demand from the developed nations. In fact, during 2009 Chinese and Indian demand took over a large part of the market space vacated by the Western nations. Little wonder then, global steel trade declined by nearly 30% during 2009.

Equitymaster requests your view! Post a comment on "The tables have turned in the steel industry". Click here!


More Views on News

SAIL's Stellar Quarter Four Performance Puts Stock in Focus (Views On News)

Jun 11, 2021

Shares of Steel Authority of India (SAIL) surged over 5% on the BSE today after the company reported robust March quarter numbers.

Godawari Power and Ispat Shares Surge 9% on Massive Jump in Profit (Views On News)

May 26, 2021

Key takeaways from Godawari Power and Ispat Q4FY21 results.

JSW Steel Reports Highest Ever Quarterly Profit; Announces Dividend of Rs 6.5 Per Share (Views On News)

May 22, 2021

JSW's profits jumped to the highest in at least 12 quarters amid rising domestic demand, supplemented by exports and improved steel prices.

Shyam Metalics IPO: Key Points to Consider (Views On News)

Jun 12, 2021

Shyam Metalics is commanding a strong grey market premium ahead of its IPO next week.

Jindal Steel & Power Back in Action; Posts Rs 19 bn Profit in Q4 (Views On News)

May 13, 2021

Key takeaways from Jindal Steel and Power Q4FY21 results.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

Don't Break These 5 Intraday Trading Rules (Fast Profits Daily)

Jun 1, 2021

To become a better intraday trader, follow these rules religiously.

Is the RBI's 'Bubble Talk' Signalling a Market Crash? (Profit Hunter)

May 31, 2021

Is the Indian central bank correct in warning you about a market crash?

Rs 2 Trillion Stimulus Coming to a Stock Market Near You (Profit Hunter)

Jun 2, 2021

Get ready to profit from a massive stimulus that you've never seen before.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jun 11, 2021 (Close)