The global steel industry is at the crossroads. China ranked first in terms of steel demand. Excess demand in China finally led to a worldwide boom in the steel industry. Several changes are visible in steel business such as consolidation of business with the consequent resurgence of an oligopoly market structure from a near-competitive steel market. In this changing market situation, China has emerged as the leader while big prospects also exist in India. This paper analyzes the factors and policy measures that has led to the spectacular growth of steel demand in China. Economic reforms and industry-led economic growth of China have led to huge consumption of steel on a constant basis. The pattern of India's steel demand has been analyzed in the paper. Unlike China, India's economic growth has been led by the services sector resulting in a low level of steel demand. However, following the initiation of economic reforms, steel demand has picked up in India. Projections are being made for India's future steel demand up to 2019-20. The lessons from the Chinese experience have been utilized to suggest policy measures to be introduced to boost steel demand in India so as to reach the projected levels. It is expected that steel demand in India would pick up and China would meet its own demand through its domestic capacity and would be a net exporter by 2019-20. This could result in radical changes in the steel technology and distribution in the developed world. Stringent environmental norms may pose serious constraints to steel units in the USA and UK to go in for major upgradation, except for the rolling mill projects. Meanwhile, some new trends are visible in steel business. Some steelmakers of the developed world are closing down some mills/units in their countries and setting up plants in the developing world to cope with the changing steel business.
Massive
steel consumption in China has given a `Big Push'
to the global steel industry. China has become a
major player in steel business. Increasing demand
led to full capacity production in the steel mills.
This situation induced the steelmakers' to make
desperate efforts for augmentations, modernizations
and capacity additions by way of increasing investments
on capital equipment which in turn, resulted in
increasing demand for steel. It is said that 2003
was the `Ignition Point' with `Fuel/Explosion' taking
place in the first half of 2004 and sustaining the
`Heat' for some more time before setting at some
respectable equilibrium state (Kumar, 2004). Steel
pricing mechanism has become a `Strained Dynamics'
based on the `Push and Pull' theory, that the extraordinary
global demand for steel products have resulted in
severe scarcity of inputs which in turn has resulted
in a record level of price spikes for the inputs
and steel products. |
