The global steel industry is highly cyclical, very competitive, and still fragmented in terms of market share. Currently, the industry is at the height of the business cycle and is going through a consolidation phase, which might result in the smaller players being acquired by the larger ones. The total output from the industry exceeded 1.4 billion tons in 2005, most of it augmented by the increase in output from China. This is expected to increase further, making steel output from China among the largest in the world.
Growth of the Chinese steel industry appears to be staggering. However, when one considers that China has a population of 1.3 billion, the per capita steel consumption is around or below that of the developed countries. Indeed, while China has been progressively raising steel production for many years, it has also been importing substantial quantities of steel. It is only now that China has become a net exporter of steel. This indirectly means that China has also reached a level of production saturation and its steel industry is more likely to witness more of consolidation and reorganization in coming years rather than any major expansion of its assets.
Globally, the steel industry became a billion ton industry in 2004. How much more it will grow will depend primarily on how much more steel is consumed in the developing countries.
On the consolidation front, the steel industry has been focused on Mittal’s bid to gain control over Arcelor. On June 25, 2006, Mittal won its takeover effort for Arcelor after a protracted wooing. Mittal’s victory in the battle for global steel industry control is giving the steel industry a new direction. The world’s number one and number two producers have combined and this will go a long way to push consolidation.
The combined ArcelorMittal produces over 10% of the world output, which is approximately 100 million tons of steel. This would give an increased pricing power for producers and suppliers, and decrease the fragmentation. We expect more mergers and acquisitions (M&As) transactions to occur, with large players buying up the smaller players. Currently, it appears to be that Arcelor laid its weapons, which were out before, to defend itself from being acquired by Mittal, though Mittal proved itself to be an earnest and hard-to-shake-off suitor.
This report focuses on the global steel industry and in particular countries with fast-developing steel industries, namely China, India, Japan, France, and Germany. The report is a guide to all the recent developments going on in the industry, along with an analysis on market statistics, market structure, competition in the industry, where the Chinese Steel Industry stands on a global scenario, and much more. A comparison of the U.S. and EU steel industries is also included in the report.
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