Global Steel Glut

Steel Nov 28, 2012 No Comments

SteelThe trillion-dollar-a-year global steel industry is expected to remain, for the foreseeable future, the most fractured of major industries. The worlds top five steel companies control only 18.2% of global steel supply.

Global steel has big problems: It’s too big; it’s getting bigger; and because it’s so fractured, putting the brakes on seems unlikely.

This year, steel mills around the world have a production capacity of 1.8 billion tons but will take orders for only 1.5 billion tons. And instead of consolidating and becoming more efficient, the industry is building still more capacity.

By 2016, an estimated 100 new mills, with total estimated supply capacity of 350 million tons, are expected to come on stream, according to industry executives and consultants.

The oversupply issue has reduced steel prices and profits, as seen in the latest round of earnings, and led to renewed calls for consolidation and rationalization among industry officials and investors.

But at this point, there appears to be little industry progress toward doing so—and much opposition politically from governments.

via Global Steel Industry Faces Capacity Glut – WSJ.com.

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.

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