Memorandum submitted by UK Steel Association
(continued)
SOME REGIONAL COMPARISONS 1997-98
(Crude steel consumptions million tonnes)
|
| Region | 1997
| 1998 | +/-%
|
|
| North America | 155.8
| 166.8 | +7
|
| European Union | 142.9
| 155.8 | +9
|
| South America | 33.4
| 32.5 | -3
|
| Asia | 338.0
| 300.0 | -11
|
| CIS | 28.7
| 21.7 | -24
|
|
| Source: International Iron and Steel Institute.
|
Long supply chain—volatile steel cycle
Changes in economic growth in each major world region cause
shifts all the way up the steel supply chains across the world
from consumers, who buy goods containing steel, through the finished
goods industries back to component manufacturers, and through
them to steel processors and ultimately to primary steel producers.
This is a long and complex supply chain reaction, and, because
steel is fundamental to so many different forms of manufacturing,
results in a highly volatile "steel cycle".
Expectations as to how the market is going to perform are
reinforced at each stage; the further up the chain, the more exaggerated
the reaction. Stocks are increased when the "market"
foresees increased demand, but are unloaded when there's a general
expectation that steel demand is going to fall. This in turn affects
steel production.
Always tension between supply and demand
Other than at times of peak demand, there is a structural
surplus in steel production capacity world-wide, just as there
is in car production. Production efficiency at each plant varies
too. Some plants produce cheaper than others do. As a result there
is a "natural" economic brake on the maximum price for
steel—the higher the price of steel, the greater the world's
capacity to make and deliver steel economically across the world.
Rising production then leads to surplus so that prices weaken
and production falls back. However, direct and sometimes disguised
subsidies to steel producers in some countries upset this "market"
balancing system.
So, the reality underneath the apparently "monolithic"
figures for world steel consumption and production is quite different.
Minor shifts in global figures belie the major changes taking
place at regional or national levels, through long and complex
supply chains (see Annex, page 33). The steel production and processing
industries are in a state of constant ebb and flow.
And all this across approximately 7,000 different grades
of steel.
These are the most important steel regions globally
The USA has remained a net steel importer since the late
1950s, but has an effective legislative framework to impose anti-dumping
duties when import surges threaten the country's indigenous production.
Europe became a net importer of steel for the first time
in 1999.
Asia is the largest growing market and tends most years to
be a net steel importer.
Some major countries
Russia is the world's biggest steel exporter.
China is the world's biggest steel producer, but still requires
significant imports to achieve its long-term development plans.
Brazil, blessed with the required natural resources, is now
beginning to fulfil its potential as a major supplier of semi-finished
products into the USA, after successful steel privatisations have
sharpened performance.
Japanese production expanded rapidly in the 1960s and 1970s
to become a very large net exporter, mainly to SE Asia and the
USA, but is not generally competitive in Europe.
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