Coporate Strategy about global steel manufacture industry Essay

Coporate Strategy about global steel manufacture industry - Essay Example (Wikipedia, Steel) These are major components in buildings, tools, automobiles and appliances. The life of steel does not stop. If steels become old and torn out, it can be melted again to produce new steel. The US market experienced a decline in production from 110M tonnes in 2004 to 104.6M tonnes in 2005. The decline was a combination of overcapacity and production declines in 2005 of two (2) automobile manufacturers namely General Motors and Ford. These two (2) companies are the leading consumer of steel. (Steel Price and Policy Issues). The same scenario in China, an emerging market, is facing challenges in terms of overcapacity that lead to price erosions. (Rocsearch.com, Executive Summary, Chinese Steel Industry Analysis) Asia will be the leading steel market by 2014. Growth of Japan, China and rest of Asia are determinants of steel demand in the future. (Euro Strategy Consultants, Global Steel Industry Outlook to 2014, p.7, February 2005) The industry experienced sluggish growth rate in mid-1970s until the turn of the century. There were overcapacity and high exit barriers generated high cyclicality and decades of declining prices. In 2001, the industry climate changed. The demand surged brought about by the boom of China's economy. In 2001-mid 2006, the demand for steel in China increased to the tune of 25%. In about four (4) years from 2001-2005 prices of steel products increased. Prices of raw materials such as iron ore, coke, scarp alloy materials contributed to the high level cost of steel. The growth of global steel market transformed the business activities and outlook of steel companies. There have been restructuring across regions, privatization, re-orientation of companies' focus on high profit margin and modernization of steel-making facilities particularly in China, India and Commonwealth Independent States (CIS). (Boston Consulting Group, Beyod Boom, F. Deforche, J.Hemerling, D.Kim, W.Piacsek, M. Shanaha n, M. Wolfgang and M. Wortler, February 2007) . There have been various technological innovations for steel companies to remain competitive in the market. China is facing the challenge of upgrading to high quality steel products to counter the increasing costs of iron ore prices and price erosions due to overcapacity. (Rocsearch.com, Executive Summary, Chinese Steel Industry Analysis). The development of steels in the market also corresponds to the improvement of buildings and other industrial constructions. The industrial buyers of steels are confirming to the new trends that suits the lifestyles of the people in any parts of the world and the creation of new buildings for commercial or any type of industrial construction. There have been some improvements and upgrades of steels. The rods or bars in the past have been improved to ribbed bars, followed by the cold twisted deformed bars and the current thermo mechanically treated bars. (Wikipedia, Steel). Another development in steel industry is the growth of minimills. In the US, large manufacturers concentrate in the market across other regions. The huge volume in manufacturing led to the creation of minimills. Minimills produced small volume of steel products mostly for the local markets. They convert local scrap metal