Analysis of Steel Industry

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Date Submitted: 09/18/2011 09:21 AM

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1. Overview of Steel Industry

The importance of steel in our society cannot be over emphasized. The growth of steel over the last 5 decades is illustrated in Appendix 1. Iron-ore is utilized to manufacture iron, which is then melted and reprocessed in order to convert it to steel. Steel is utilized in all conceivable forms in the modern society and is responsible for a nation’s security and well-being. Some of the more popular uses of steel involve the construction of the transportation facilities of our country, such as the roads, railways, cars and ships. Apart from these uses, steel is a critical ingredient of the infrastructure needed to propel our country’s growth such as buildings, bridges, airports etc. Stainless steel, which is a steel alloy that does not corrode, rust or stain as easily as ordinary steel, has developed widespread usage in infrastructure and architecture as well as daily-use appliances such as cookware, cutlery and surgical instruments. The steel industry comprises of steel mills, steel foundries as well as the suppliers of ferrous scrap and iron-ore. Iron and steel scrap raw materials are distributed to the steel mills and foundries by brokers, collectors and dealers in the ferrous scrap industry. Currently, global steel production is 127.7 million metric tons as of June 2011.

a) Global Steel Industry-

As per the World Steel Association, the three largest producers of crude steel currently are China, the European Union and Japan with each producing more than 100 million metric in 2010. Appendix 2 indicates the global monthly production evolution for crude steel as of July 2011. In March 2008, crude steel capacity utilisation peaked at 90-91% only to fall to 58% by end 2008. However, by 2010 utilisation rate was consistently between 73-75%. Due to the financial recession of 2008, steel mills reduced their capacity till 1Q2009 due to weakness in demand, however due to recovery of the construction sector and parts of the automotive...