Jul 04, 2008
World may be facing steel shortageBack
New York|Africa|ArcelorMittal|Bloomberg|CoAL|Africa|Brazil|China|India|Kazakhstan|Liberia|Mauritania|Russia|Senegal|South Africa|Turkey|United States|USD|Benchmark Product|Energy|Hot-rolled Steel Sheet|Metal|Product|Steel|Steel Prices|Steel Production|Steel Shortage|Iron Ore|Lakshmi Mitta|Purchasing
By Stewart Bailey and Dale Crofts (Bloomberg News)
"There is short supply; all steel companies are running at full capacity," Mittal said last week in an interview in New York. "We're facing for the first time in decades a potential shortage of steel."
Steel prices have surged as India and China build more bridges and houses and their increasingly affluent populations buy more cars and appliances. Steel production has failed to keep pace with the demand gains because of rising costs and a lack of investment in new plants in the past decade.
Hot-rolled steel sheet, the benchmark product used in cars and appliances, climbed to an average $1 020/t in the US in May from $850/t in April, Purchasing magazine said on May 30. Prices have gained 76% since January and are about 86% higher than a year ago.
The "volatile years of boom and bust" in steel prices have been relegated to the past, Mittal said. Users of steel will have to "adjust to the new reality and the new pricing environment."
Higher prices for iron-ore and energy have raised the costs of making and transporting steel. A shortage of the metal in the US, partly because of lower imports, has allowed producers to increase prices. Inventories at US service centres were 15% lower at the end of April than a year earlier, the Metal Service Center Institute said in a May 16 statement.
ArcelorMittal will continue its strategy of buying producers of the raw materials it uses to make steel, such as coal and iron ore, Mittal said. The company wants to control about 80%of the iron-ore it uses in its mills, compared with about 45% currently.
"We will not spend blindly," he said. "We are looking at each and every acquisition that creates synergies for us. Not only looking upstream, we're also looking downstream."
ArcelorMittal is digging iron-ore mines in the West African states of Mauritania, Liberia and Senegal and has bought a 14,9% stake in Australia's Macarthur Coal.
The company also is seeking to increase the portion of its production from emerging markets to as much as 60%, from the current level of 45%, he said. The company will try to expand output in South Africa, Brazil, Turkey, Kazakhstan, India and Eastern Europe, he said.
Attempts to boost production from Russia and China may be stymied by those governments' unwillingness to allow foreign companies to control steel output, which is viewed as a strategic industry, he said.
Edited by: BloombergComment Guidelines (150 word limit)
Other Carbon Steel News
South Africa’s crude steel production fell 1.5% year-on-year to 610 000 t in July, compared with the 619 000 t produced in July 2013. However, according to the latest World Steel Association (worldsteel) statistics, Africa’s crude steel output rose 21.2%...
Barend Petersen has been appointed nonexecutive director and chairperson of Evraz Highveld Steel & Vanadium. This comes after London-listed Evraz last week announced that it would sell a 34% stake in the steel producer to South Africa-based investor Macrovest, which...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...