The global steel industry has been going through major shifts in focus. Not only has a new steel making giant emerged the entire geographical focus of steel production has been undergoing major changes. Such changes have been taking place on a critical scale since the Second World War but have completely taken many by surprise in the last quarter of a century. This article aims at analysing the industry situation, so that it would be easier to follow trends in future.

Material for development and war

Steel is a strong material. The strength of steel reflects the strength of a nation. It is reflected in two ways, economic and military. The wealth of a nation and its power to protect itself or subdue others is directly linked to its steel production.

Steel is one of the basic ingredients for development. The quantum of steel consumed has been the barometer for measuring development and economic progress. Whether it is construction or industrial goods, steel is the basic raw material. Lighter metals and stronger alloys have been developed, plastics and synthetics have made great progress, but the supremacy of steel remains unchallenged. Even when steel has been replaced for some end use, there are many new requirements that have overshadowed the replacements.

The Damascus sword, reputed to have been made from Indian wootz (steel), had been the wonder till the middle ages. When a nation goes to war, it is steel that still dominates the scenario – guns, shells, tanks, and missiles. All these are made of steel. An army cannot fight without steel. Gunpowder, petroleum, aeroplanes and computers – so many inputs have played a role in developing warfare. Steel remains unbeaten as the basic material for it.

Unique material

Steel is a unique material. It is made from natural resources, still found in abundance round the world. Technological developments have brought down the time for transformation from iron ore to steel to within a day. Even after decades of use, it can be sent back to the furnaces as scrap, melted and remade into new qualities of steel. It is the most recycled material in the world. In developed countries, recycling accounts for almost half of the steel produced.

Another major feature is the continuous improvement of steel grades. Half of today’s steel grades were not available ten years ago. Just take the example of the most commonly used steel – rods or bars, used as reinforcement material with cement concrete. It used to be plain bars even in the sixties, then came the ribbed bars, followed by the cold twisted deformed bars and now it is thermo mechanically treated bars. Each development has added to the strength of construction. Older varieties of steel have been improved upon and newer grades introduced. The process continues.

Growth of the industry

Prior to the nineteenth century, steel was a specialist material. Cast iron and wrought iron were the main engineering materials. However with new process discoveries and improvements (see Steel for details), steel production started rising. The old steel cable of a colliery winding tower Steel is a metal alloy whose major component is iron, with carbon content between 0. ...

Global steel production grew enormously in the 20th century from a mere 28 million tonnes at the beginning of the century to 780 million tonnes at the end. (For elaboration see ^[1].)That was the period when the steel industry developed in Western Europe and the USA followed by the Soviet Union, Eastern Europe and Japan. However, steel consumption in the developed countries has reached a high stable level and growth has tapered off.

After being in the focus in the developed world for more than a century, attention has now shifted to the developing regions. In the West, steel is referred to as a sunset industry. In the developing countries, the sun is still rising, for most it is only a dawn.

Towards the end of the last century, growth of steel production was in the developing countries such as China, South Korea, Brazil and India. Steel production and consumption grew steadily in China in the initial years but later it picked up momentum and the closing years of the century saw it racing ahead of the rest of the world. China produced 220.1 million tonnes in 2003, 272.2 million tonnes in 2004 and 349.36 million tonnes in 2005. That is much above the production in 2005 of Japan at 112.47 million tonnes, the USA at 93.90 million tonnes and Russia at 66.15 million tonnes. For details of country-wise steel production see Steel production by country. This article summarizes the world steel production by country. ...

Growth potential of the industry

Growth of the Chinese steel industry appears to be staggering. However, when one considers that China has a population of 1.3 billion, the per capita steel consumption is around or below that of the developed countries. Indeed, while China has been progressively raising steel production for many years, it has also been importing substantial quantities of steel. It is only now that China has become a net exporter of steel. This indirectly means that China has also reached a level of production saturation and its steel industry is more likely to witness more of consolidation and reorganisation in coming years rather than any major expansion of its assets.

Amongst the other developing countries, South Korea has stabilised at around 46-48 million tonnes, and Brazil at around 30 plus million tonnes. This brings the focus of the industry to India. Considering a steel consumption of 300 kg per man per year to be a fair level of economic development, India will have to come up to somewhere around 300 million tonnes, if it is to fulfil its ambitions of being a developed country. That of course is a long journey from the present production level of around of around 40 million tonnes but one must consider its past before coming to a conclusion about its potential. India was producing only around a million tonnes of steel at the time of its independence in 1947. By 1991, when the economy was opened up steel production grew to around 14 million tonnes. Thereafter, it doubled in the next 10 years, and then it is doubling again, maybe over a slightly longer span.

In the developed countries, the trend is on consolidation of industry. Cross-border mergers have been taking place for several years. The focus is on technological improvements and new products.

Globally, the steel industry became a billion tonne industry in 2004. How much more it will grow will depend primarily on how much more steel is consumed in the developing countries.

Reduction in workforce

Steel is no more the labour-intensive industry it used to be. Earlier, it was often associated with the image of huge work force living in a captive township. All that has changed dramatically. A modern steel plant employs very few people. In South Korea, Posco employs 10,000 people to produce 28 million tonnes. As a thumb rule, one can put the direct employment potential at 1,000 per million tonnes. It could be less. However, steel being a basic industry, it generates substantial growth of both upstream and downstream facilities. According to some estimates one man-year of employment in the steel industry generates 3.5 man-years of employment elsewhere. Considering all these, total employment generation will be substantial.

The third quarter of the twentieth century, the post War years, witnessed massive growth of the global steel industry. Annual production rose more than three times in 15 years from 1960. The steel industry grew on the strength of human beings – the great steel men. It was a glorious period for the men behind the wheels in the humming steel plants.

Then in the last quarter of the century, production reached a sort of plateau and rose only by around 100 million tonnes. Increase in production gave way to increase in productivity. Technology reigned supreme. The tables were turned against the steel men. In some countries it had started earlier, others followed and swelled the tide. The highly skilled and dedicated human beings, who were producers of the metal that was the strength of nations, were no more required. Economies of scale made an impact. Automation had done the magic. Computers had taken over! The dehumanisation of the steel industry had been initiated in a big way.

During the period 1974 to 1999, the steel industry had drastically reduced manpower all around the world. In USA, it was down from 521,000 to 153,000. In Japan, it was down from 459,000 to 208,000. In Germany, it was down from 232,000 to 78,000. In UK, it was down from 197,000 to 31,000. In Brazil, it was down from 118,000 to 59,000. In South Africa, it was down from 100,000 to 54,000. South Korea already had a low figure. It was only 58,000 in 1999. The steel industry had reduced manpower around the world by more than 1,500,000 in 25 years!

(For detailed data by country see ^[2]) )

Well, you cannot stop the march of science and technology. With all the hue and cry, the world has adjusted to it.

Can we do without steel?

Some utopians think that we can. Others think that a country such as India can develop on the strength of its information technology industry. The simple answer is you cannot do without steel, not yet. A small country, such as the United Arab Emirates can afford to import its steel requirements but not the ones with large population. The employment scenario can shift from the manufacturing sector to the service sector, and it has been shifting but in the entire developing world, development in physical terms will depend on the capability of a country to either produce or import steel in larger quantities.

(All steel data in this article is from the International Iron and Steel Institute sources.)

Appendices

Both appendices are from IISI material, earlier on the web but now replaced by more recent data.

1. ^ Appendix 1

   World Steel Production in the 20th Century

   

   

   Over the course of the 20th century, production of crude steel has risen at an astounding rate, now fast approaching a production level of 800 million tons per year. Today, it is difficult to imagine a world without steel. The graph on the right shows the rise in steel production since 1900.

   
   One hundred years of steel

   
   Looking back over this momentous period of industrial advance and progress we can see the rise in consumption of steel from 28 million tons at the beginning of the 20th century to 780 million tons at the end – an average increase of 3.4% per year for this century. We have also witnessed a significant shift in the geography of steel making. In 1900, the USA was producing 37% of the world’s steel. With post war industrial development in Asia that region now (at the turn of the century) accounts for almost 40%, with Europe (including the former Soviet Union) producing 36% and North America 14.5%.

   
   How to interpret the steel production graph

   
   The graph does not indicate precise values: the methods of collating production data, and the reliability and accuracy of these data have of course changed immeasurably over the decades. So the more recent the data, the more reliable. For example, only in the last few years has it been possible to get reliable data from the formerly centrally planned economies. It is therefore unwise to make specific comparisons of data from one decade to the next. The graph is intended rather to show the broad patterns of steel production trends over the past 100 years.

   Steel use strongly reflects major economic forces, as well as major political upheavals. To put it simplistically, steel use (and hence production) increases when economies are growing, as governments invest in infrastructure and transport, and build new factories and houses. Economic recession meets with a dip in steel production as such investments falter. If you were to overlay the above graph with a time sheet showing major historical events, the peaks and dips become meaningful. Note for example the peaks corresponding to the years of the two World Wars, followed each time by a dip, and soon after by strong climbs as the major economies recovered from the war and entered new periods of prosperity and growth, most notably in the '50s and'60s. The trend over the past three decades can also be seen to be in line with cyclical economic trends, with alternating periods of prosperity and recession.
2. ^ Appendix 2

   Employment in the steel industry 1974, 1990 and 1996-2000

   Thousand at end of year

   (1) Includes former German Democratic Republic 1996-2000 (2) Serbia and Montenegro 1996-2000 Totals are rounded. United States figures are average for 12 months. Various other differences in coverage and definition exist, so that inter-country comparisons are of dubious value. E indicates estimate.

   Country	1974	1990	1996	1997	1998	1999	2000
   Austria	44	21	13	12	12	12	12
   Belgium	64	26	23	21	20	20	20
   Denmark	2	1	1	1	1	1	1
   Finland	12	10	7	7	8	7	8
   France	158	46	39	38	38	38	39
   FR Germany (1)	232	125	86	82	80	78	77
   Greece	0	3	2	2	2	2	2
   Ireland	1	1	0	0	0	0	0
   Italy	96	56	39	37	39	39	39
   Luxembourg	23	9	5	5	4	4	4
   Netherlands	25	17	12	12	12	12	12
   Portugal	4	4	2	2	2	2	2
   Spain	89	36	24	23	22	22	22
   Sweden	50	26	14	14	14	13	13
   United Kingdom	197	51	37	36	34	31	29
   European Union	996	434	306	293	290	280	278
   Yugoslavia (2)	42	69	17	17	17	15	15E
   Canada	77	53	53	53	55	57	56
   United States	521	204	167	163	160	153	151
   Brazil	118	115	79	74	63	59	63
   South Africa	100	112	71	70	61	54	47
   Japan	459	305	240	230	221	208	197
   Republic of Korea	n/a	67	66	64	59	58	57
   Australia	42	30	21	20	20	24	21E
   Total of above	2335	1388	1019	985	946	908	885