By Mr. Peter Marcus, managing partner, World Steel Dynamics,USA
Peter Marcus from World Steel Dynamics underlined in his speech that the global steel industry has entered an age in which structural changes and the need for rapid and correct decision-making are certain to be critical in the years ahead.
Given this point of view, WSD provides rankings from a variety of perspectives on the circumstances of the steel industries in the Middle East, China and the USA. The biggest difference between the circumstances of these three regions is that the Chinese steel industry has yet to endure a period of major restructuring - something that has already happened in the USA and is probably not needed in the Middle East since steel demand growth is probably outpacing steelmaking capacity additions at the present time.
In WSD's opinion, the five best places in the world to build a new steel plant are, in order: India, the Middle East, the United States, Russia and Brazil.
- India offers abundant iron ore reserves, low labor costs, a sharply growing market, a good location for exports and an incredible group of managers that are seeking to export as fast as possible.
- The Middle East offers good steel demand growth, a favorable location for exports, a good supply/demand balance at present and good profit opportunities in higher-end products. Governments in the region are desperate for growth and employment opportunities, given their rapidly growing and young populations. A number of good ports and also the Suez Canal offer access to offshore markets at low cost. Steel demand growth in the foreseeable future may approximately 10 percent per annum.
- The major benefits for the USA are its vast market, the expectation that the US dollar will remain weak, its number of older existing mills, imports that can be replaced, the river system and incentives from local groups when building new steel plants.
- Russia and Brazilian companies have natural resources, growing domestic steel demand and opportunities for new players at quite low costs. Both are facing the risk of stronger currencies in the future.
According to WSD,the five worst places in the world to build a new steel plant are, in order, Venezuela, Germany (the European Union), Japan, Taiwan and China.
• The problem in Venezuela is the high risk pertaining to this country.
- The problem in the European Union is likely slow steel demand growth and high costs (due to high wage costs and the fact that most integrated mills pay the international prices for iron ore and coking coal).
- The Japanese and Taiwanese steel mills face much slower deliveries to China, especially of high-end products, in the next decade. Moreover, the Indian steel industry poses a rising threat to others in the Pacific Basin in the next decade.
- The problem in China is the massive capacity additions and the industry structure (so many players) that makes it almost impossible for the mills to control pricing.
At the end what makes a steel mill worthy?
- A leader in training workers.
- A leader in providing jobs.
- A leader in attracting steel-consuming industries to its country and to its region.
- A leader in combating pollution.
- A leader in worker safety. Its accident rate is near zero.
- A leader in making social contributions.
- Low costs.
- Sizable expansions.
- A leader in adopting new technologies that are revolutionizing the steel industry.
- A leader in making sophisticated hot-rolled band products - especially thin gauge ones.
- A country leader in exporting (obtaining foreign currency).
- Owns its raw material sources.
- A culture that empowers management and workers.