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Steel Industry Analysis

Essay by   •  December 16, 2011  •  Case Study  •  3,513 Words (15 Pages)  •  1,658 Views

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MACROECONOMICS PROJECT

REPORT ON ANALYSIS OF

STEEL INDUSTRY

Under the Guidance of: Submitted by:

Dr. Arindam Banik Navneet Goel - 11PGDM-BHU005 Smita Sangwan - 11PGDM-BHU010

DECLARATION

We hereby declare that the project is an original and independent work carried out by us with the limited knowledge and idea and resources we had within our reach. A due credit has been given to the sources from where the content has been taken by mentioning the same in the in terms of the website or printed materials in the project report wherever required.

Any printed or electronic reference which has been taken for completion of the work has been mentioned in the bibliography and the webliography.

Navneet Goel

Smita Sangwan

ACKNOWLEDGEMENT

We would like to take this opportunity to express a deep sense of gratitude to Dr. Arindam Banik for giving us an interesting topic to study and his invaluable insights in making this project a success.

We would once again like to thank all the people who have directly or indirectly helped in undertaking this work.

Navneet Goel

Smita Sangwan

TABLE OF CONTENTS

1. INTRODUCTION................................................................................1

2. TRENDS IN STEEL INDUSTRY...........................................................................2-3

3. INDUSTRY STRUCTURE.....................................................................................4-5

4. MARKET STRUCTURE............................................................................................6

5. NATURE OF COMPETITIVENESS......................................................................7-8

6. INDUSTRY FORECAST & PROSPECTS...........................................................9-11

7. CONCLUSION........................................................................................................12

8. BIBLIOGRAPHY....................................................................................................13

INTRODUCTION

Indian steel industry plays a significant role in the country's economic growth and is considered to be the backbone of human civilization. While the usage of steel continues to hold a strong position in traditional sectors like construction, housing and ground transportation, steel variant stainless steel is used in innovative way in various applications due to its unique properties. India occupies a central position on the global steel map with establishments of new state-of-the-art steel mills, acquisition of global scale capacities by players, continuous modernisation and up gradation of older plants, improving energy efficiency and backward integration into global raw material sources.

Steel is manufactured as globally tradable products and is not limited by trade barriers across national boundaries. Also it does not even suffer from the shortage of raw material as it is available in abundance to respond to the demand increase in the global market. Moreover there are no government policy restrictions and even if there are they respond only to the specific conditions in market and are temporary in nature. Moreover there are no natural monopolies in steel unlike to other sector such as telecom, electricity, natural gas etc.

However it doesn't mean that the industry will not face any competitive issue. The growing consolidation through mergers and acquisitions has already given rise to many serious problems. The fact is that on international forefront steel has always been an oligopolistic industry whereas the large firms that characterize the industry have been undergoing changes over time.

Trade and other government policies have significant bearing on competition issues. Matters of subsidies, non-tariff barriers to trade, discriminatory customs duty (on exports and imports) etc. may bring in significant distortions in the domestic market and in the process alter the competitive positioning of individual players in the market.

Global steel giants from across the world have shown interest in the industry due to its phenomenal performance. For instance - the crude steel production in India registered a year-on-year growth of 6.4% in 2010 and reached 66.8 Million Metric Tons.

TRENDS IN STEEL INDUSTRY

Steel industry is very dynamic in nature. The trends are not at all static. During the period 1910-1960 United States of America acquired the first position in terms of producing the largest amount of steel. Almost half of the total steel production around the globe was produced by USA. In the year 2009, global crude steel production was decreased by 8% as against the production levels in 2008. All major producing regions showed decline in 2009 with the biggest fall hitting most the highly developed nations. The hardest hit region in terms of production was North America, where output dropped almost by 34%, with the US total falling 36.4%, more than the regional average.

India, China and the Middle East were the only regions to show growth in 2009. China strengthened its position as the world's top producer, with its production rising to a record high at 567.8 million tonnes. Chinese production increased 13.5% to account for 47% of the world's

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