Steel Industry Report

Steel Industry Assignm
ent
Table of Contents
Steel Industry........................................................................................................ 3
Introduction........................................................................................................... 3
An Overview.......................................................................................................... 3
Apparent steel use.............................................................................................. 4
Apparent per capita use..................................................................................... 5
CHINA.................................................................................................................... 7
Exports Imports by China.................................................................................9
BRAZIL................................................................................................................. 10
Exports and imports by Brazil...........................................................................11
INDIA.................................................................................................................... 12
Exports and imports by India............................................................................14
References........................................................................................................... 15
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Steel Industry
Introduction
The Steel Industry is a key driver of the worlds economy. The industry
directly employs over two million peoples worldwide along with two million
contractors and about four million people in the supporting industries.
Considering the fact that steel is a key product supply to industries such as
automotive, construction, transport, power and machine goods. Thus steel
industry is a source of employment for many peoples. Moreover, steel is the
main material used in delivering renewable energy: solar, tidal and wind.
An Overview
The World Crude Steel production has increased from 770 million tonnes in
1990 to 1448 million tonne till November 2013 i.e. in two decades the production
has almost doubled. The 5 year CAGR for steel production has remained around
3 to 7 %, which has been a very good sign. The following graph shows the World
Crude Steel production.
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World Crude Steel production
CAGR of
World
production
Year
Rate
199095
0.59%
199500
3.08%
200005
7.81%
200510
5.70%
201013
3.94%
1600
1400
1200
1000
In Million Tonnes
800
600
400
World Crude Steel production
Source: WSA
Note: For year 2013 data till November is taken
China has remained the worlds largest producer in 2013 (712

million tonne), followed by Japan (101 million Tonne), the USA (79 million tonne)
and the India (72 million tonne). China has increased its share in total world
production from 15% in 2000 to 49% in 2013. The region wise share is
represented in following charts. With the increase in steel production by China
the other countries percentage in world steel production has fallen greatly for
example Japan percentage has decreased from 12.52% in 2000 to 6.99% in
2013.
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Crude Steel Production, 2013 Crude Steel Production, 2003
NAFTA; 8%
CIS; 7%
Other Europe; 2%
EU-27; 11%
NAFTA; 13%
China; 23%
CIS; 11%
China; 49%
Other Europe; 2%
Others; 6%
Japan; 11%
EU-27; 20% Other Asia; 11%
Other Asia; 11%

Japan; 7%
Others; 9%
World Total: 1448 million tonnes (till Nov)

tonnes
World Total: 971 million
There are various measures of measuring steel demand. One of the most
often used measures is apparent steel use (ASU), which is expressed in
volume terms as deliveries minus net exports of steel industry goods. Another
method follows ASU calculations but takes into account changes in stock levels
and measures real steel use (RSU), defined as ASU minus net accumulation of
stocks. Another measure used is total steel use (TSU); TSU is obtained by
deducting net indirect exports of steel from ASU.
Apparent steel use

Apparent steel use is the use of finished steel product. The worlds total
apparent use of steel is growing at a CAGR of 3.7% since 2006. It is forecasted
that worlds steel demand will grow at 4.5% it increased from 1139.4 million
tonne in 2006 to 1412.6 million tonne in 2012. China is the major apparent user
of steel with its apparent usage reaching up to 646.2 million tonne in the year
2012. Chinas apparent usage of steel is almost about 50% of worlds total
apparent use. Moreover the growth in apparent steel use by China is more than
that of developed economies. The following graph shows the apparent steel use
by China, Developing economies excluding China and Developed economies.
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Apparent Steel Use

Developed Economies
Developing
Economies excluding
China
China
%Growth-Developed
economies
In Million Tonnes
%Growth-China
Source: WSA
Asias apparent steel usage in the year 2012 stood at around 65% of worlds total
apparent steel use which has increased from 49% in the year 2003. Following charts
gives region wise apparent steel use.
Apparent Steel Use, 2012 Apparent Steel Use,2003
NAFTA; 10%
CIS; 4%
Other Europe; 2%
EU-27; 10%
China; 45%
NAFTA; 15%
CIS; 4%
Other Europe; 2%
Others; 9%
EU-27; 19%
China; 27%
Japan; 8%
Others; 9% Other Asia; 16%
Other Asia; 15% Japan; 4%
Apparent per capita use

In the year 2012 worlds average steel use per capita was 216.9 kg
slightly up from the 216.4 kg in 2011. Average per capita steel consumption in
Asia stood at 243.5 kg in 2012, rising from 241.4 kg in 2011. Meanwhile, in the
EU the 2012 average was down from 307.7kg in 2011, amounting to 278.5 kg. In
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the CIS countries, the average was 218.4 kg up from 211.4 kg in 2011. Per capita
steel consumption in 2012 was 281.1 kg in the NAFTA region up from 243.7 kg in
the previous year, while it was 229.9 kg in the Middle East up from 221.9 kg in
2011.
Top 10 countries with the highest apparent steel use per capita in 2012 are:
Apparent steel use per capita
Countries
2012
Qatar
1275.5
South Korea
1159.2
United Arab Emirates
1089.4
Taiwan
923.7
Singapore
903.7
Lebanon
713.7
Czech Republic
638.6
Austria
567
Japan
544.2
China
508
(In Kg)
2011
900.4
1213.9
954.3
933.5
944.5
656.9
663.1
536.6
550.2
495.7
Source: Crisil research
Coming to companies following are the top ten steel producing worldsteel
member companies in 2012:
Steel: Largest companies in the world
(million tonnes of crude steel
production)
2008
2009
2010
2011
2012
Arcelor Mittal
103.3
77.5
98.2
97.2
93.6
Nippon Steel1
36.9
26.5
35.0
33.4
47.9
Baosteel
35.4
31.3
37.0
43.3
42.7
POSCO
34.7
31.1
35.4
39.1
39.9
JFE
33.8
25.8
31.1
29.9
30.4
27.7
13.7
16.6
37.7
36.4
24.4
20.5
23.2
23.8
23.0
Shagang Group
23.3
20.5
23.2
31.9
32.3
US Steel
23.2
15.2
22.3
22.0
21.4
Gerdau
19.6
14.2
18.7
20.5
19.8
Wuhan2
Tata Steel (incl Corus)
Source: WSA
The three BRICS nation i.e. China, Brazil and India has been studied as part of
this report. The next part of this report will study the basic steel industry
statistics of these nations and will analyse the same.
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CHINA
According to Peter Markey The largest and most influential market in the
steel sector is China it is the market that moves both global steel demand and
supply. But The Chinese steel sector faced strong challenges in 2012 as it
grappled with lower steel Demand, overcapacity, a fragmented industry and
weak profit.
The Chinese government aims to address these issues, and others such as
increased energy cuts, increased labour costs to stimulate domestic production
and decreased raw material availability, through its 12th Five Year Plan. China
announced a target plan of 7% GDP growth during the 12th Five Year Plan period
and is aiming to develop stable economic growth alongside a structural change
in the economy. In terms of steel, the plan focuses on promoting the use of
modern technology, energy efficiency and improvement in product quality.
The steel production by China has grown at a CAGR of 13.91 % which is far
greater than the worlds steel production CAGR of 5.29%. In the year 2003 China
produced 22.90% of the total world steel production while in the year 2013 it
produced around 49.40% of the total world steel production. The following graph
shows the monthly production by China in the year 2013.
China's Steel Production in 2013

68
140
135
65
130
125
62
120
59
115
1
China's Production
10
11
World's production
Source: WSA
The above graph shows us how china impacts the worlds production of
steel as we can see from the graph that the world production has followed the
same rise and fall trend as followed by the China.
The demand and production of steel in China has increased constantly over last
decade. The following table gives us the demand and supply balance of China in
last 10 years.
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China demand-supply balance
(In Million Tonne)
200
3
222
259
-37
Production
Consumption
Oversupply
200
4
273
287
-14
200
5
356
362
-6
200
6
421
393
28
200
7
490
436
54
200
8
512
466
46
200
9
577
574
3
201
0
638
612
26
201
1
702
668
34
201
2
717
688
29
Overcapacity remains a concern with excess steel production over the last
decade at 31% of apparent consumption. According to worldsteel association
steel demand in China increased by 6% in 2013 because of a lot of new
infrastructure projects approved in the second half of 2012, but still overcapacity
remains a problem with Chinese steel Industry.
The apparent steel usage in China has increased from 258 million tonne in
2003 to 687 million tonne in the year 2012. In the same period the per capita
use of steel has risen from 199.9 kg in 2003 to 508 kg in 2013. The total steel
use of steel by China rose from 228 million tonnes in 2003 to 583 million tonnes.
Steel Usage in China

800
530
700
480
600
430
500
380
400
In Million Tonnes
330 In Kilograms
300
280
200
100
230
180
Apparent Steel Use
True Steel Use
Per Capita use
Source: WSA
The 12th Five year plan also focuses on the adoption of new, more
efficient steelmaking technologies to help reduce environmental pollution and
increase the sectors overall productivity. China currently has around 2,700 mills.
Most of these are very small mills with capacities below 1 million tonnes per
annum, producing commodity-grade steel with obsolete technology.
Foreign
steelmake
r
Country
Chinese
Partner
Page 9
Investment

ent
Nippon
Steel
NV
Bekaert
SA
Precision
Castparts
Japan
Baosteel
Galvanized steel
Belgium
Xinyu
Iron 50% stake; advanced
and steel
coating
US
Yangzhou
Chengde
Steel Tube
ArcelorMit
tal
Luxembo
urg
Hunan Valin 18.99% stake; steel

Iron and Steel technology, procurement
Group
and marketing
49% stake; large-diameter,

interconnect pipe for coalfired power plants
Source: merger market; Baosteel company website
During the 11th Five Year Plan, China did not make significant progress in
reducing the use of obsolete technology; however, the countrys steel sector has
increased its adoption of new technologies to improve the efficiency of its new
plants. Large Chinese players such as Baosteel and others have entered in
collaboration with global steelmakers such as ArcelorMittal and Nippon Steel,
among others, to adopt the latest technologies and gain current technical knowhow. For example, Chinese steelmakers are looking to adopt new technologies
such as Corex, Finex and ITmk3 to reduce the dependency on metallurgical coal
for future projects.
In addition, a number of Chinese steelmakers now have the technology to
compete with Japanese manufacturers in relation to the production of highquality steel products.
Exports and Imports by China

Exports from China will continue to have an impact on global producers.
Although China is the worlds largest exporter of steel, its indirect steel exports
accounted for only 10.1% of the countrys total annual steel production in
2011.Exports of steel from China to other steel-producing countries such as
Brazil and the US impose a ceiling on domestic prices. The effect on domestic
prices in other steel-producing countries will depend, however, on the types of
steel being exported from China.
China has been exporting steel to almost every region in the globe Asia,
Africa, Americas, Europe and Middle East. The countrys growth model has been
to invest in infrastructure to create demand and jobs. When Chinese domestic
demand is low, domestic steel mills exports to other markets. Steelmakers in the
importing regions have been at the receiving end of this trend as they are often
unable to compete with government-subsidized cheap Chinese steel.
Increased exports from Chinese companies will increase competition for
global steelmakers for export markets. Europe and the Middle East are an
important steel export market for steelmakers from the Commonwealth of
Independent States (CIS) as well as China. Asian countries other than China
account for almost two-thirds of all Japanese steel exports. This region is also the
largest Chinese export market. Steelmakers from these regions would face much
competition from Chinese steelmakers as the latter find domestic demand
stagnating and look for export markets.
A further decline in Chinas domestic steel demand will make the export trade
more pronounced.
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Indirect Exports - Imports by China ( In million Tonne)
80
70
60
50
40
30
20
10
0
70
60
50
40
30
20
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Indirect Imports of Steel
Indirect Exports of Steel
Indirect Net Exports of Steel
Source: WSA
BRAZIL
Brazil is worlds 9th largest producer of steel and Latin Americas largest
producer of steel. Steel has been a fundamental component of the national
development because of its production capacity, creation of jobs and foreign
exchange reserves, and generation of investment the Brazilian steel industry
had to deal with strong difficulties in 2012 created by the world financial crisis.
The excess production capacity superior to 500 million tons negatively impacted
the economic performance of the sector.
The Brazilian production of crude steel in 2013 (till November) totalled
31.5 million tons and 34.5 million tons in 2012 which was down by 2% compared
to the previous year. Because of the international economy downturn and its
negative impacts, both exports and domestic demand performed below
expectations and, thus, the Brazilian mills operated on a low level of production
capacity utilization (71.3%). Before the crisis hit, this index was above 85%. An
unimpressive growth in domestic sales was recorded in 2012, which totalled 21.6
million tons, an increase of only 0.8% compared to 2011. The same applied to
apparent domestic consumption, which reached 25.2 million tons, an increase of
only 0.6% in comparison to 2011.
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Brazil's Steel Production in 2013
3.1
3
2.9
2.8
2.7
2.6
2.5
2.4
2.3
Jan
138
135
132
129
126
Feb
Mar
Apr
May
Jun
Jul
Brazil's Production
Aug
Sep
Oct
123
Nov
World's production
Source: WSA
Brazilian crude steel production in first 11 months of current year
amounted to 31.52 million tons. Brazilian steel maker produced 2.71 million ton
of crude steel in the month of November 2013. Following table gives the demand
supply balance of steel in Brazil.
Brazil demand - supply balance
(In Million Tonne)
Production
Consumption
Oversupply
20
03
31
18
13
20
04
33
20
13
20
05
32
19
13
20
06
31
21
10
20
07
34
25
9
20
08
34
27
7
20
09
27
21
6
20
10
33
29
4
20
11
35
28
7
20
12
35
28
7
The demand of steel is not increasing proportionately in Brazil despite of

the fact that government announced incentive of raising the import tariff in
2012. However the measures, such as a drop in electricity prices, the
infrastructural/logistics package announced by the government, and events such
as the World Cup and the 2016 Olympics Games, will support the recovery of
steel demand in Brazil. Thus the problem of oversupply can reduce in future.
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Steel Usage in Brazil
In Million Tonnes
30
28
26
24
22
20
18
16
14
12
10
160.0
140.0
120.0
100.0
80.0
In Kilograms
60.0
40.0
Apparent Steel Use
True Steel Use
Per Capita use
Source:
WSA
Exports and imports by Brazil

In 2012, Brazilian exports of steel products reached 9.8 million tons and
revenues of 7.0 billion dollars, which represented a decrease of 9.6% in volume
and 16.7% in value in comparison to 2011. These results are a consequence of
the oversupply of steel products in the international market, and of predatory
and anticompetitive practices adopted by some countries. Imports totalled 3.8
million tons, the same amount achieved in 2011, maintaining the high share of
imports in total steel consumption in the country.
Indirect Exports - Imports by Brazil ( In million Tonne)

6
5
4
3
2
1
0
3
2
1
0
-1
-2
-3
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: WSA
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INDIA
Indias steel industry has grown about 10% per year, from 27 million
tonnes in 2001 to 72 million tonnes in 2013 (till November). According to the
Planning Commission of India, the countrys steel production is expected to grow
by around 60 million tonnes during the 12th Five Year Plan (201112 to 2016
17).
The growth in Indias industry is a result of domestic steel consumption,
which has been driven primarily by infrastructure related investments and
consumer durables. The 12th FYP projects an investment of US$1t in
infrastructure alone, which will accelerate steel consumption. As an estimate,
this increase in infrastructure spends may itself lead to additional demand of
approximately 40 million tonnes per annum during 201213 to 201617.
Projections for investment in infrastructure for the 12th plan (Rs '000 crore at 2011-12 prices)
1600
1400
1200
1000
800
600
400
200
0
2012-13
2013-14
2014-15
2015-16
2016-17
The rising middle-class population, along with increased urbanization, will

increase steel intensity in the economy. According to the report of the working
group on steel industry for the 12th FYP, the Indian urban population is expected
to increase to 600 million by 2030 from the current level of 400 million. The
rising middle-class urban population boosts demand for automobiles, white
goods and other consumer durables leading to higher per capita steel
consumption. Indian steel consumption growth has an elasticity of about 1.1 to
growth in GDP.46 In other words, if the Indian economy grows at 7% per year,
steel demand is likely to grow by 7.7% during the same time, from the current 68
million tonnes to around 132 million tonnes by 2020.
Currently, per capita rural consumption in India stands at around 13kg.
This is significantly lower than urban per capita consumption. Projects like Bharat
Nirman and Rajiv Gandhi Awaas Yojana have led to increased demand for
construction steel like thermo-mechanically treated (TMT) bars and galvanized
plain and corrugated (GP/GC) sheets, but there remains a significant opportunity
to grow rural steel demand by widening the distribution network and by
providing customized solutions catering to the needs of 70% of the population.
The 11th FYP (FY0712) registered a road investment worth US$66b, which is a
rise of more than 100% in comparison to the 10th FYP (FY0207). Going further,
an investment worth US$132b has been planned for the 12th FYP. The
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government has launched many road investment programs, namely the National
Highways Development Project (NHDP) and Pradhan Mantri Gram Sadak Yojana
(PMGSY), to increase the connectivity of roads to ports and plant sites.
Indian Railways has an ambitious investment plan to invest US$328b
through 2020 under its Vision 2020 program. Vision 2020 plans massive
capacity augmentation to meet traffic demand and improve safety and
operational efficiency. The organizations plan is to invest around US$42.6b out
of the total .allocated budget in laying down new lines. Freight car procurement
is also expected to increase to 75,000 per annum from the present level of
15,000 per annum. Many of the investments will have high steel intensity. Indian
Railways ability to meet Vision 2020s target holds the key to steel demand
during the current decade
The increase in volume by the automobile majors will drive the demand for
specialized steel such as ultra fine grain steel and dual phase steel. The demand
for cold rolled grain oriented steel (CRGO), which is currently imported, offers a
valuable opportunity. As India is currently short of electricity, there are plans to
exponentially increase investment in power projects, which will also drive steel
demand.
The governments plan to re-energize manufacturing will lead to
accelerated demand from the capital goods sector and projects. The current
share of capital goods in the overall steel consumption is substantially lower than
Chinas, even in ratio terms.
India's Steel Production in 2013

7
138
6.8
133
6.6
6.4
128
6.2
123
6
5.8
Jan
Feb
Mar
Apr
May
Jun
India's Production
Jul
Aug
Sep
Oct
118
Nov
World's production
Source: WSA
The above graph shows the production of steel by India in the year 2013.
India is the 4th largest producer of steel with its production reaching 72 million
tonnes in 2013 (Till November). The steel production over last one decade by
India has grown at CAGR of 10.79% which is greater than worlds CAGR of 5.29%
but less than the Chinas growth rate of 13.91%.
Indian demand supply balance is given in below table. Over years the
demand and supply of steel has remained equal. Both demand and supply are
increasing at a brisk rate of 10% for India.
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India demand - supply balance
(In Million Tonne)
Production
Consumption
Oversupply
20
03
32
34
-2
20
04
33
39
-7
20
05
46
43
3
20
06
49
49
0
20
07
53
55
-2
20
08
58
56
2
20
09
64
64
-1
20
10
69
69
0
20
11
73
76
-2
20
12
78
77
1
Per capita use of steel in India is very low and is around 60 kg in the year
2012, while the same for China and Brazil is 508 kg and 142 kg. Per capita use
has increased from 22 kg in 2003 to 63 kg in 2012 and apparent use of steel has
increased from 35 million tons in 2003 and 64 million tons in the year 2012. True
steel use in India increased from 30 million tons to 58 million tons in the year
2012.
Steel Usage in India

80.00
70.00
60.00
50.00
In Million tonnes 40.00
30.00
20.00
65.0
60.0
55.0
50.0
45.0
40.0
35.0
30.0
Apparent Steel Use
In Kilograms
True Steel Use
Per Capita use
Source:
WSA
Exports and imports by India

India has become a net exporter of steel after 2011 and it continued the
trend in the year 2012 and 2013. Weak exchange rate, subdued domestic
demand and higher availability of steel post capacity additions were some of the
key reasons for this.
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Indirect Exports - Imports by India ( In million Tonne)
5.000
1.50
4.000
1.00
3.000
0.50
2.000
0.00
1.000
-0.50
0.000
-1.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: WSA
References
Crisil Research. (n.d.). Retrieved Jan 10, 2014, from
https://www.crisilresearch.com/
Wordsteel. (2013). Steel Statistical Yearbook. Brussels: Worldsteel Association.
Worldsteel. (2013). Brazilian indirect trade in steel in 1970-2011. Brussels: World
steel association.
Young, E. &. (2013). Global Steel 2013. Ernst & young.
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Steel Industry Assignm

Steel Industry Assignm

Steel Industry Assignm

World Crude Steel production

Note: For year 2013 data till November is taken

China has remained the worlds largest producer in 2013 (712

Steel Industry Assignm

EU-27; 20% Other Asia; 11%

Other Asia; 11%

World Total: 1448 million tonnes (till Nov)

World Total: 971 million

Apparent steel use

Steel Industry Assignm

Apparent Steel Use

Apparent Steel Use, 2012 Apparent Steel Use,2003

Others; 9% Other Asia; 16%

Other Asia; 15% Japan; 4%

Apparent per capita use

Steel Industry Assignm

Source: Crisil research

Steel Industry Assignm

China's Steel Production in 2013

Steel Industry Assignm

Steel Usage in China

Apparent Steel Use

True Steel Use

Per Capita use

Steel Industry Assignm

Hunan Valin 18.99% stake; steel

49% stake; large-diameter,

Source: merger market; Baosteel company website

Exports and Imports by China

Steel Industry Assignm

Steel Industry Assignm

The demand of steel is not increasing proportionately in Brazil despite of

Steel Industry Assignm

Apparent Steel Use

True Steel Use

Per Capita use

Exports and imports by Brazil

Indirect Exports - Imports by Brazil ( In million Tonne)

Steel Industry Assignm

The rising middle-class population, along with increased urbanization, will

Steel Industry Assignm

India's Steel Production in 2013

Steel Industry Assignm

Steel Usage in India

Apparent Steel Use

True Steel Use

Per Capita use

Exports and imports by India

Steel Industry Assignm

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