Opportunities and Challenges of the Indian Steel Industry
1) Understanding Incredible India (Chanwahn Kim)
2) Opportunities and Challenges of the Indian Steel Industry in the Context of Future Growth (A. S. Firoz)
3) Restructuring Scenario of the Indian Steel lndustry to Enhance Its Global Competitiveness (Imm Jeong-seong)
4) Can India Become the Next China? (Lee Dae-woo)
|Chan-Wahn Kim ,A.S.Firoz,Jeong-Seong Imm,Dae-Woo Lee
Asian Steel Watch vol. 4 Press Release (December 2017)
On December 28, 2017, POSCO Research Institute (POSRI) released the fourth issue of Asian Steel Watch (ASW). This bi-annual English journal is specialized in the Asian steel industry and market. It deals with current issues in the Asian steel industry and features interviews with industry leaders and market analysis. It is comprised of five sections: Special Report, On the Cover, Interview, Featured Articles, and Asian Steel Market Outlook.
Asian Steel Watch aims to provide insightful, in-depth analysis of the Asian steel market. The fourth issue of Asian Steel Watch begins with Special Report by Ohjoon Kwon, CEO of POSCO which explains the history of iron and steel and how they affect our lives under the title, “Steel, Our Timeless Heritage.” The On the Cover section focuses on India, titled “Opportunities and challenges of the Indian steel industry,” featured interview with Thachat Viswanath Narendran, CEO & Managing Director of Tata Steel and Chairman of the Economics Committee of worldsteel. Asian Steel Watch Vol. 4 also deals with steel restructuring in Europe and Japan and development of the Korean steel industry and their implications. The Asian Steel Market Outlook section examines steel-consuming industries, including automobile, shipbuilding, and home appliance, to forecast flat steel demand in Asia over the next decade. This journal hopes to grant insight into the Asian steel industry, lay a firm foundation for the collaborative growth of Asia’s steel industry, and further contribute to the stability and prosperity of the global steel market.
Asian Steel Watch Vol.4 addresses the following issues:
(Special Report) Ohjoon Kwon, CEO of POSCO explains the history of iron and steel and how they affect our lives under the title, “Steel, Our Timeless Heritage”
History tells that people have formed the very backbone of human civilization and modern life with iron and steel. The Hittites, who were able to artificially refine iron for the first time in human history, defeated the bronze-wielding Egyptians at the Battle of Kadesh. The steel technology enabled the Hittites to rapidly expand their empire to match the Egyptians in the competition for regional hegemony around the eastern Mediterranean Sea. Romans held hegemony over the Mediterranean by taking advantage of the superiority of their iron-clad troops, which defeated their enemies across the Mediterranean and all the way to Britain. However, the military advantage provided by the steel stirrups allowed the Huns to drive westward, which gave a rise to an end to the Western Roman Empire.
Steel has also changed human history by influencing our thoughts and philosophy. First of all, steel enriched Confucian philosophy in ancient China. Increased use of farming tools made of steel greatly boosted agricultural productivity and the authority of kings or rulers was weakened with the rise of a new social class. It was inevitable for the royal class to employ a new philosophy, such as Confucianism, to protect their power. In the West, as improved steelmaking techniques increased steel supplies, production methods evolved from workshop-based to factory-based mass production which led to the emergence of industrial capitalism supported by new theories, particularly from the Scottish economist and moral philosopher Adam Smith.
There are multitude of ways that iron and steel have ensured the survival of humanity and other living creatures, as well as shaped our modern lifestyle and culture. Recalling the magnetic field created by the core of iron within the Earth, also known as the Van Allen Belt, it protects people from lethal solar winds. There are diverse applications of steel that ensure safe and convenient living: transportation, pipelines, bridges, transformers, musical instruments, and so much more. Steel technology has also been a major contributor to extending human longevity. For instance, steel pipes have replaced copper to convey clean water.
Improved steel technology is continuously adopted in steel products for safer and cleaner use in our water systems, oil and gas pipelines, and electricity transmission. At the same time, specialized steel products have become the core materials for renewable energy production such as solar, wind, and tidal power generation. In addition, strong and reinforced steel is fundamental in optimizing the use of urban space through super-towers and other skyscrapers, and also for disaster prevention in the form of tsunami protection walls. Steel products continue to foster exciting innovations in critical areas such as mitigating the impact of global warming, helping the disabled recover mobility, and improving the protective qualities of military equipment. The current civilization has been blessed with the fruits of rapid industrialization and emergence of IT technology. Nevertheless, the Age of Steel is an ongoing phase as steel is the enabler of such remarkable advances.
In the “On The Cover” section, four articles are covered under the main theme of “Opportunities and challenges of the Indian steel industry.”
Understanding Incredible India
India is undergoing a great transition as the post-reform generation strikes out into the world. This generation supports growth-oriented domestic economic development creating job opportunities and a strong India internationally. At the onset of the Modi administration in 2014, India’s economic paradigm shifted its focus from distributive or inclusive growth to growth-oriented development. From a structural perspective, India is highly likely to continue to expand at least until 2025-30. Mainly based on the “Hindi belt” and “cow belt,” India is establishing a Hindu state. For a short term, Hindu fundamentalists’ expanded influence is helpful to consolidate power and implement various measures to stabilize the regime. Over the long term, it will pose a threat to the country as it pursues stability, integration of society, and national development. Depending on how the Modi administration wields this double-edged sword, the meaning of Incredible India will change substantially in the future.
Opportunities and Challenges of the Indian Steel Industry in the Context of Future Growth
India has always been seen as a potential for significant steel market expansion. There have been various forecasts at different points, raising expectation of the steel industry and investors about growth prospects of the industry. In the recently adopted steel policy of the government of India, it has stated that India’s crude steel production capacity will have to reach 300 Mt by the year 2030-31, from the current level of about 125 Mt, which incorporates a domestic finished steel consumption forecast of about 225 Mt and export of about 20 Mt. However, the government’s goal is rather optimistic in light of varying structural issues of the Indian steel industry, including delayed projects, high debts, low labor productivity, operation inefficiency, and lack of infrastructure. Overcoming such mounting challenges, the Indian steel industry should move forward taking into account the impact of scrap generation on India’s competitiveness in raw materials, impact of environmental regulations on new investment, and impact of speculative assets on steel prices.
Restructuring Scenario of the Indian Steel Industry to Enhance Its Global Competitiveness
The Indian government has recently released the“National Steel Policy (NSP) 2017,”which declares the aim of increasing steel production capacity from 122 Mt in 2015 to 300 Mt in 2030 in order to attain self-sufficiency. However, the insolvency issue recently looming large in the Indian steel industry makes this goal appear somewhat hollow. As of March 2016, the Indian steel industry’s debt surpassed INR 3 trillion, and between INR 1.15 to 2 trillion within it is categorized as non-performing assets. However, steel imports are not the only culprit in the insolvency of the Indian steel industry. There are other fundamental reasons underlying the insolvency. The first relates to policies based on the ripple effect from the NSP 2005. The second cause of insolvency is investment fervor among Indian steelmakers, which left huge aftermath within the industry. Restructuring of the Indian steel industry will be mainly led by Tata and JSW.
Now is the right time for the Indian government to seek not only quantitative growth, but also qualitative improvement to enhance the global competitiveness of the domestic steel industry.
Can India Become the Next China?
With India’s economic growth rate exceeding that of China in 2016, many people wonder if India can manage to become the next China. A comparison of the two countries should be able to determine if India’s steel industry can match that of China’s. Comparing the ratio of gross fixed capital formation to GDP, contribution of secondary industry to GDP, and urbanization rate of India and China, the gap between the two countries is significant and is less likely to narrow profoundly.
Economic and social characteristics in India hamper high steel demand growth: strict labor laws and practices, the lack of infrastructure, high interest rates, insufficient public financial support, and complex issues related with securing land. India has surpassed China in terms of economic growth. However, its economic development has mainly been propelled by the service sector, and India’s steel-consuming industries, such as manufacturing and construction, are relatively weaker than those of China.
Interview with Thachat Viswanath Narendran, CEO & Managing Director of Tata Steel and Chairman of the Economics Committee of worldsteel under the title, “Rising Elephant: Tata and the Indian Steel Industry”
Thachat Viswanath Narendran, CEO & Managing Director of Tata Steel and Chairman of the Economics Committee of worldsteel talked to Asian Steel Watch about his company, the Indian steel industry and global steel industry: 1) Tata Steel’s brief history and business, 2) factors that drive growth of India’s steel demand, 3) restructuring of Tata Steel’s European operations, 4) restructuring of the Indian steel industry, 5) medium- to long-term outlook on the global steel industry, and 6) advise for foreign investors.
1) Tata Steel’s brief history and business
Tata Steel was set up more than a 100 years ago as our Founder J N Tata felt that for any nation to be able to stand on its own, a strong steel industry is essential. The company was set up not only to become a leading steel company in the world but also to become a benchmark in corporate citizenship. The founder, J N Tata, felt that the community is not just another stakeholder in the enterprise but the very purpose of its existence.
We have a strong culture of continuous improvement and are the only steel company outside Japan to win the Deming Grand Prize. We have done some very innovative work in marketing and sales and have a strong distribution network and a bouquet of very successful brands. We are the leading supplier to India’s automotive industry and have a market share of 44% in our supplies to the automotive industry. We are the number one player in India for wires and tinplates, and we also have a large pipes business. Overall we have a passionate and talented employee base, strong relationships in the market, a great competitive position on cost due to our efficiencies, and a culture of continuous improvement. This explains our longevity and strength even after being around for 110 years.
2) Factors that drive growth of India’s steel demand
India is still at an early stage of development and so the potential for growth in steel consumption in India is immense. Our per capita consumption of steel is currently at 63 kg which is about 25% of the world average and 15% of what it is in China. The per capita consumption of steel in rural India is about 5 kg. If India has to grow at 7 to 8% as has been predicted, the government has to spend on building infrastructure and a lot of actions on that are already evident.
According to the National Steel Policy, the biggest growth in steel consumption is coming from the infrastructure segment where the government is expecting steel consumption to grow from the current level of 10 million Mt to 100 million Mt in the next 10 to 15 years. Tata Steel will continue to invest and grow in our two main production sites of Jamshedpur & Kalinganagar. Over the next 10 years, we hope to grow from the current level of 13 million Mt in India to 25 to 30 million Mt.
3) Restructuring of Tata Steel’s European operations
Tata Steel has a footprint of 2 million Mt in Southeast Asia which is essentially long products for the construction industry through the EAF route. It has three plants in Thailand and one plant in Singapore for steel making and rolling mills and downstream units in both countries as well as in Vietnam, Malaysia and Hong Kong. In Europe, it has a footprint of 12 million Mt now (between the Netherlands and the UK). The focus of its overseas facilities is on efficiency and profitability and not so much on growth. Most of the restructuring in Europe and Southeast Asia is complete but we will continue to look for opportunities to improve the performance.
4) Restructuring of the Indian steel industry
The Indian Steel Industry has a temporary overcapacity problem as I believe that demand growth will outstrip supply growth over the next few years. Restructuring is happening because of the financial health of this sector which has invested a lot of capital in building capacity and has been plagued by a falling market in 2015 and early 2016.
Fundamentally, India’s steel industry is quite competitive. Until 2015 it had no problem competing with imports from anywhere in the world. When a slowdown in China led to imports flooding in from China and other countries at prices lower than the prices in their domestic markets, the industry took up the issue with the government and had got some support. India also allows 100% foreign direct investment (FDI) in steel and mining and so anyone who is keen to participate in growth opportunities in India is welcome to invest in India.
5) Medium- to long-term outlook on the global steel industry
Until a few months back, we felt that growth in consumption in countries other than China will more than offset the shrinkage in consumption in China, so overall global growth in steel consumption will be in the 1 to 2% range.
The most significant demand growth is expected to come from India and Southeast Asia. Together, it is a market of almost 1.7 billion people consuming about 160 million Mt of steel and growing at 5 to 6% on average.
6) Advise for foreign investors
When foreign investors look at India they should take a long term view. It is a challenging market but a market with full of potential. It may be one country but it is not a homogeneous market. There is a lot of talent available in India and it is a young country demographically. There will be challenges in land acquisition and sometimes with the myriad values and regulations. But it is a market worth investing in. Korean automotive companies and appliance manufacturers are great examples of foreign companies who came in well before many others and have built a strong equity in the domestic market. It is one of the fastest growing large economies in the world and still at an early stage of development. It is blessed with a lot of good quality raw materials. It has a government which is trying very hard to improve the ease of doing business and attract foreign investment.
(Featured Articles) In this section, there are three articles: Legacy from Europe’s Restructuring Experiences and Its Implications to the Asian Steel Industry; The Korean Steel Industry in Retrospect: Lessons for Developing Countries; and Learning from the Experiences of the Japanese Steel Industry in the Lost Decades.
Legacy from Europe’s Restructuring Experiences and Its Implications to the Asian Steel Industry
Since the 1973 oil crisis when steel demand peaked, the steel industry experienced a long, hard and costly restructuring process. Restructuring of the European steel industry was taking place from the mid-1970s under such a context that the steel demand had passed its peak level as industrialization and urbanization had seen their close completion. National economic priorities were then transforming gradually from industrial sector to service sector and industrial sector itself was transforming from traditional manufacturing industries to advanced and hi-tech ones. The privatization process lasted for 10 years, involving in many stakeholders. As a result, steel capacity was cut by 20% and steel capacity utilization ratio surpassed 70%, employment reduced by 44%, and labor productivity of the west European steel industry improved by 60%.
As exit barriers and institutional accommodation prevent restructuring from timely start-up and completion, the government has a role to play in the restructuring process at different levels.
It can provide a policy framework where restructuring can take place and ensure a level playing field during the restructuring process. While macro-economic conditions and government favorable measures came out, it is then the individual steel company that plays a vital role in the restructuring process. Besides focusing on internal adjustments, individual steel companies could pay some due attention to changes both in the economy and society, such as social and industrial megatrends (demographics, technologies, process, and IoT), and their possible impacts upon the future steel industry.
The Korean Steel Industry in Retrospect: Lessons for Developing Countries
Rising from the ashes of war, Korea has joined the ranks of advanced countries. The rapid development of the Korean steel industry offers lessons to developing countries. The development patterns differ before and after the financial crisis of 1998. Examining the changes that took place around the crisis of 1998 based on factors related to steel use, there are some distinctive items: a significant slowing in the urbanization rate after 1996, gross capital formation as percentage of GDP declining after peaking in 1996, and the Korean economy being shifted from government-driven to market-driven. The author adopted various theories to re-examine the success factors and offer implications for developing nations—catch-up theory, infant industry argument, fourth factor of production, Lewis turning point, and endogenous growth theory.
Based on its analysis on the development and success factors of the Korean steel industry, this article offers several policy implications for developing countries. The first is the importance of the government’s role and strategic decisions. The second implication is entrepreneurial leadership and a “can-do” attitude. The third is the importance of industrial policy based on medium- to long-term outlook for supply and demand. Finally, there is the importance of determined drive of technological development and R&D investment.
Learning from the Experiences of the Japanese Steel Industry in the Lost Decades
The experience of the Japanese steel industry which underwent a long period of sluggish demand might provide lessons for East Asian steelmakers as they navigate tumultuous times. In the supply chain connecting Japan’s steel-producing and -consuming industries, there exists a long-established order. They do not change existing suppliers or find new suppliers simply to save costs. Many Japanese steelmakers tolerate a rather high cost structure for a time and select steel materials through a long-term perspective, thus increasing the overall competitiveness of their own supply chains. They diversified their export targets from a focus on the USA to include Southeast Asia and other emerging markets. They also shifted their product portfolio for the US market to high value-added products in close cooperation between the public and private sectors.
From the late 1970s to the 1990s, restructuring occurred through two different methods: facility revamps and workforce rationalization. The industry attempted to increase its global competitiveness by enhancing economies of scale through integration and reducing redundancies via reshuffling.
(Asian Steel Market Outlook) Asian Steel Market Outlook: Flat Product Demand for the Next Ten Years
This section forecasts flat steel demand upon close examination of steel-consuming industries, including automobile, shipbuilding, and home appliance, in major Asian countries—Korea, China, Japan, India, and the ASEAN-5—over the next decade (2018-2027).
Steel-consuming industry outlook in Korea, China, Japan, India, and the ASEAN-5
Automobile: Automobile production in China, the ASEAN-5, and India is expected to grow continuously by 2027 thanks to government policy support and facility investment by global automakers, despite low growth trends around the world.
Shipbuilding: Global shipbuilding deliveries will decline to 50.4 mil. GT by 2020 due to the“order cliff” of the last 2-3 years, but will gradually recover by 2025.
Home appliance: As Chinese home appliance makers go global through M&As with US and Japanese enterprises, they are threatening the traditional strongholds of Japan and Korea.
< Steel-consuming Industry Outlook in Asia >
Shipbuilding deliveries (mil. GT)
Home appliance production
Flat steel demand outlook in Korea, China, Japan, India, and the ASEAN-5
Despite sluggish demand for flat products in the construction sector, China’s overall flat product demand is expected to grow at a compound average growth rate (CAGR) of 0.6% to reach 320 Mt by 2027 thanks to robust demand for automobiles.
Flat product demand will remain sluggish until 2020 since the country has the largest share of shipbuilding within total flat product demand among all East Asian countries. However, it is expected to grow at a CAGR of 1% after 2020.
Flat product demand is expected to grow slightly at a CAGR of 0.6% over the next decade due to stagnation in the automotive and home appliance industries and only weak recovery in the shipbuilding industry.
Flat product demand will continue to grow robustly at a CAGR of approximately 6% by 2027, thanks to high growth in major steel-consuming industries, including automobiles and construction.
Flat product demand is expected to increase at a CAGR of 5.2% to reach 67 Mt by 2027 thanks to robust growth in construction investment and rapid expansion of the automotive and home appliance markets.
< Flat Steel Demand Outlook in Asia >
Notes to Editors:
POSCO Research Institute (POSRI) is a leading research institute headquartered in Seoul, Korea. Established in 1994, it offers research and consulting especially focusing on steel. However, its research areas are not confined to steel. POSRI conducts research in various fields, including the economy, steel-consuming industries, business, materials, energy, and the environment. POSRI publishes Asian Steel Watch, a bi-annual English journal specialized in the Asian steel industry and market, and Chindia Plus, a bi-monthly Korean journal specialized in China, India and other Asian countries.
|Cheol-Ho Chung,Sojin Yoon
Future Megatrends in Steel-consuming Industries and Their Impact on the Steel Industry
1) Future Megatrends and the Steel Industry (Choi, Dongyong)
2) Understanding the New Mobility Paradigm (Park, Hyung-keun)
3) Will the Shipbuilding Industry Flourish Again? (Dr. Lee, Eun-chang)
4) Eyes on Energy Transition (Park, Hyung-keun)
5) Future Cities and Changes in Steel Materials (Dr. Kim, Hoon-sang)
6) The Steel Industry over the Next Two Decades (Dr. Hang Cho, Dr. Moon-Kee Kong)
|Hoon-Sang Kim,Dongyong Choi,Hyung-Keun Park,Hang Cho,Eun-Chang Lee,Moon-Kee Kong
Asian Steel Watch vol. 3 Press Release (June, 2017)
On June 30, 2017, POSCO Research Institute (POSRI) released the third issue of Asian Steel Watch (ASW). This bi-annual English journal is specialized in the Asian steel industry and market. It deals with current issues in the Asian steel industry and features interviews with industry leaders and market analysis. It is comprised of five sections: On the Cover, Interview, Special Report, Featured Articles, and Market Trend and Analysis.
Asian Steel Watch aims to provide insightful, in-depth analysis of the ever-changing conditions of the Asian steel market. The third issue of Asian Steel Watch focuses on the future megatrends in steel-consuming industries and their impact on the steel industry, autosteel and new materials competition, Sino-Indian economic cooperation and the Indian steel industry, and One Belt, One Road in China. Asian Steel Watch Vol.3 features interview with John J. Ferriola, Chairman, President and CEO of Nucor, Chairman of worldsteel. This journal hopes to grant insight into the Asian steel industry, lay a firm foundation for the collaborative growth of Asia’s steel industry, and further contribute to the stability and prosperity of the global steel market.
For the full version, please visit POSRI website (https://www.posri.re.kr/eng/
Asian Steel Watch Vol.3 addresses the following issues:
In the “On The Cover” section, six articles are covered under the main theme of “The Future Megatrends in Steel-consuming Industries and Their Impact on the Steel Industry.”
① Future Megatrends and the Steel Industry
The steel industry has been propelled by four main drivers of steel-consuming industries: urbanization, motorization, globalization, and industrialization. Together with these ongoing megatrends, global climate action and the Fourth Industrial Revolution are the emerging trends that will affect the future of the steel industry. As new megatrends develop, there will be a considerable shift in customer needs for steel products. In particular, demand is rising for high strength and toughness, high corrosion resistance, and high performance steels. Under global climate action, the steel industry will continue to develop energy saving and recycling technologies and new eco-friendly steelmaking processes. The Fourth Industrial Revolution will profoundly change the future of the steel industry. Through the smart transformation, the global steel industry will create new values.
② Understanding the New Mobility Paradigm
Automobiles are transforming from the modes of transportation to mobile IT equipment through automation, smartization, and servitization. In response to global warming, the electric vehicle (EV) market is expanding. With technological advances and the spread of charging infrastructure, EVs will become as competitive as internal combustion engine vehicles. As the automobile industry is expected to reach Level 5 autonomy by around 2020, autonomous driving technology will result in the replacement of conventional taxis with robo-taxis, and buses with autonomous mini-buses. The new mobility paradigm will bring profound changes to the automotive parts and materials markets and global demand for new cars as the attitudes toward car ownership changes.
③ Will the Shipbuilding Industry Flourish Again?
The shipbuilding industry will be recovered in the long term backed by global economic growth and highly influenced by environmental issues and technological advances. Under strict environmental regulations, demand for eco-friendly ships will rise. Ships will be required to use low-sulfur fuel oil. A wide range of technologies will bring about differentiated and innovative types of ships. Under the influence of the Fourth Industrial Revolution, remotely controlled or fully autonomous ships will become available in the future. Emerging technology will not only change ships, but also shipyards and the shipping and port industries. The changing steel industry will result in qualitative changes of steel products. As vessels become larger and lighter, the steel intensity of ship’s tonnage will fall continuously, and then decline even further following the rise of electric propulsion, unmanned, and autonomous ships.
④ Eyes on Energy Transition
Responding to global warming, the energy industry is poised to enter the era of transition. Despite the accelerated energy efficiency, global population growth and economic development are expected to drive energy consumption up. Although the share of fossil fuels continues to decline, fossil fuels will still dominate through 2035-2040. Investment in renewable energy capacity, excluding large hydropower, has stood at twice that of fossil fuel generation over the last five years. Renewable energy is no longer “alternative”energy but in fact has entered the energy “mainstream.”Influenced by the shale oil revolution, an era has come that oil prices remain below USD 50/barrel. Investment in the fossil fuel sector will remain the status quo, while investment in the T&D sector, which includes renewable energy grids and energy storage systems, is expected to make up an even more meaningful share in the future.
⑤ Future Cities and Changes in Steel Materials
Within the overall shift toward urbanization, megacities, green cities, and smart cities are emerging as new trends. As the competition paradigm shifts from competition among countries to competition among cities, the number of megacities with populations of more than 10 million is expected to increase in the future. In addition, with a growing sense of obligation to improve the environment, the paradigm is shifting to eco-friendly cities. Through convergence of IT technologies in this sector to create added value, a transition to green cities will provide a wealth of business opportunities. Under ongoing and emerging trends, megacities, green cities, and smart cities will bring changes to steel demand.
⑥ The Steel Industry over the Next Two Decades
Global steel demand will rise by around 1% for the next 20 years, reaching 1.69 billion tonnes by 2025 and 1.86 billion tonnes by 2035. Despite some concerns, global steel demand has not yet peaked and will not do so within the next two decades. Steel-consuming industries’ requirements for steel products will become stricter and more diverse under the influence of evolving megatrends. Their needs will become more sophisticated mainly in three areas: high strength and high toughness, high corrosion resistance, and high performance. The rising megatrend of global climate action will compel steelmaking processes to become more eco-friendly. For the long term, the steel industry is gearing up to develop carbon-free technologies such as the hydrogen reduction process. Under the other emerging megatrend of the Fourth Industrial Revolution, the steel industry will seek a smart transformation using IoT, Big Data and AI.
Interview with John J. Ferriola, Chairman, Chief Executive Officer and President of Nucor Corporation, Chairman of worldsteel on the subject of “Beyond Survival to Success.”
John J. Ferriola, Chairman, Chief Executive Officer and President of Nucor Corporation, Chairman of worldsteel talked to Asian Steel Watch about his company, the U.S. steel industry and global steel industry including : 1) Nucor’s business, core value, and vision, 2) technological prowess that Nucor has achieved so far, 3) the recent status and mid-to-long term forecast of the U.S. steel industry, 4) Nucor’s long-term strategy to overcome challenges in the steel industry, 5) the impact of advanced technologies, such as IoT, big data, and 3D printing, on the steel industry and implementation of Industry 4.0 in Nucor, and 6) the current major issues facing the global steel industry.
1) Nucor’s business, core value, and vision
∙ Nucor Corporation is North America’s largest steel producer and recycler with an annual production capacity of 26 million tons. We operate 25 scrap-based steel production mills in 17 U.S. states.
∙ Our 24,000 teammates are the company’s greatest asset. We are all dedicated to taking care of our customers by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We give them a great deal of freedom to make decisions about how they should run their mills. This decision making authority, along with our pay-for-performance incentive pay system, helps drive innovation.
2) Technological prowess that Nucor has achieved so far
∙ Nucor’s history is one of those that changed the U.S. steel industry through innovation. In 1969, we began operating our first electric arc furnace (EAF) steel mill. Many people thought we would only be able to make the most basic types of steel by using scrap metal, but throughout our history we have proved the skeptics wrong. Today, we are North America’s most vertically-integrated and diversified steel company.
∙ Our desire to control more of our raw materials supply and cost led us to build our two DRI plants.
∙ The secret of our success in continually innovating is our teammates and our culture. We empower our teammates to make decisions and they drive many of the ideas for improving our operations. Our production incentive bonuses mean that teams are always looking for ways to be more efficient, improve productivity, and develop new products.
3) The recent status and mid-to-long term forecast of the U.S. steel industry
∙ The U.S. steel market has been under tremendous pressure from imports the last few years. In 2016, imports were down by 15% compared to the prior year. Imports captured 26% market share, which was down from a record high of 29% in 2015. However, the average capacity utilization rate in 2016 was 71%, still well below the 87% utilization rate the industry enjoyed in 2007.
∙ We expect the U.S. economy and steel demand will improve in 2017. Non-residential construction, a major market for Nucor products, looks poised to regain momentum. With oil prices rising, we could see energy-related steel demand begin to turn around, While we expect automotive steel demand to level off.
4) Nucor’s long-term strategy to overcome challenges in the steel industry
∙ Our long-term strategy for profitable growth is built around five drivers: ① strengthening our position as the low cost producer; ② achieving the market leadership position in each product area where we compete; ③ expanding our capability to produce higher-margin, value-added products; ④ leveraging our downstream channels to market; and ⑤ achieving commercial excellence.
5) The impact of advanced technologies, such as IoT, big data, and 3D printing, on the steel industry and implementation of Industry 4.0 in Nucor
∙ The history of Nucor, and the North American steel industry, is one of constant innovation and exploration of new, more competitive and cleaner ways to make steel. Innovation and technology have transformed America’s steel industry into one of the world’s most competitive, sustainable, and environmentally progressive industries.
∙ Nucor is also using data to better inform our operations and customer service. We have grown our product offerings and can supply customers with most of their steel needs. To help facilitate that and share information across Nucor facilities, we are in the process of implementing a new information software system.
6) The current major issues facing the global steel industry
∙ Steel production overcapacity, and unfair foreign trade that results from it, is the number one issue facing the global steel industry.
∙ The U.S. steel industry has been aggressive in pursuing trade cases and we have scored a number of important victories. We have been working with our international partners to address overcapacity. We also need a timeline for capacity reductions by China and a mechanism to verify that the reductions have actually occurred.
(Special Report) Dr. Peter Warrian, Distinguished Research Fellow with the Munk School of Global Affairs at the University of Toronto talks about autosteel under the title, “Autosteel and the New Materials Competition.”
∙ The materials composition of the automobile will change relatively little between now and 2030. The dominant material will still be steel, with aluminum, plastic, and composites making marginal gains. The biggest materials shift will be the displacement of mild steels with high strength steel grades.
∙ The United States government’s Corporate Average Fuel Economy (CAFE) standards have become a global reference point for steelmakers. They also constitute a tipping point for a new kind of materials competition for the industry.
∙ The first challenge for steelmakers is the internal challenge of keeping up with the accelerated pace of technical innovation. The second major challenge will be to the autosteel customer base, the auto supply chain. Only a limited number of current customers are able to effectively deploy and apply new high end steels. Most of the auto supply chain is comprised of small and medium-sized enterprises (SMEs) with limited capital, human resources, and technical capacities.
∙ The CAFE standards apply to new passenger cars and light-duty trucks for model years 2012 through 2025. A mid-term review of the 2022–2025 standards is in process and will be finished by 2018 at the latest. The initial determination, supporting the policy, was released in late November 2016. Assuming the fleet mix remains unchanged, the standards require vehicles to meet a combined average fuel economy of 34.1 miles per gallon (mpg) in model year 2016, and 49.1 mpg in model year 2025. The new fuel efficiency targets have turned lightweighting into the overwhelming goal for autosteel.
∙ There are two redesign cycles left before 2025. Given the accelerating pace of software development and improved materials, it is reasonable that each of these redesign cycles should achieve at least a 5% weight reduction. Overall, about a 15% weight reduction should be feasible by 2025.
∙ Traditionally, autosteel design parameters were based on 2G: gauge and grade. The future is 3G: geometry, gauge and grade. Academics talk about a shift from traditional Design for Manufacturing to Manufacturing for Design in the new stage of advanced materials competition.
∙ Most of the auto supply chain is comprised of SMEs. Overcoming the challenges of change for such companies will require new perspectives, new partners, and new public policies. For both steel companies and automotive OEMs, future success will critically depend on raising the game of the SME supplier base. The autosteel issue, however, is more in the nature of a “network failure.”
∙ More explicitly collaborative “network” forms are functionally superior, especially where some combination of unstable demand, rapidly changing knowledge, and/or complex interdependencies between component technologies is present. The industrial economics lesson is that realization of value will be less and less correlated to the original site of production.
○ (Featured Articles) In this section, there are two articles: The Impact of Sino-Indian Economic Cooperation on the Indian Steel Industry; and Chinese Steel Moves along the One Belt, One Road.
① The Impact of Sino-Indian Economic Cooperation on the Indian Steel Industry
In the mid-2000s, Sino-Indian trade and investment began to expand. In light of India’s strategic culture, the economic cooperation between India and China will continue. India exports iron ore to China, while it imports steel products from China. India’s trade deficit with China is surging, dragging India down into chronic steel deficits with China. In early this year, the Indian government released draft National Steel Policy of 2017 (NSP) with an aim to boost its crude steel capacity to 64 Mt by 2030 to satisfy the continuously rising domestic steel demand and to export some steel products.
② Chinese Steel Moves along the One Belt, One Road
After President Xi unveiled the concept of a“New Silk Road”in September, the Chinese government began to actualize the“New Silk Road”and announced One Belt, One Road (OBOR) in March 2015. China has contributed USD 40 billion to a Silk Road Fund to finance OBOR and established the Asian Infrastructure Investment Bank (AIIB). China also held a major OBOR summit in May 2017. The Chinese steel industry has begun to search for a way forward through OBOR for the following reasons: falling steel consumption; prolonged oversupply with declining steel prices; and the spike in financial, environmental, and labor costs. The OBOR project is positive in that it boosts steel demand and address overcapacity; however, it needs adjustment and balance to prevent any dispute and side effect.
(Market Trend and Analysis) This section deals with “Measuring and Forecasting Steel Market Conditions with the POSRI Steel Index”
∙ It is difficult to be certain precisely what the “market conditions” may be since meanings and definitions vary. Over the history of the field of economics, a number of attempts have been made at explaining a particular state or status using indicators. The Steel Industry Index developed by the United States Geological Survey (USGS) is a representative composite index for the steel industry.
∙ As a research institute specializing in steel, POSCO Research Institute(POSRI) has been conducting research into methodology that would be able to accurately and astutely predict steel market conditions: the POSRI Steel Index. The POSRI Steel Index explicitly uses four sectors—the economy, steel-consuming industries, steel demand/supply, and raw materials—to reflect steel market conditions. The POSRI Steel Index uses five indicators each for the four sectors, or twenty in total.
∙ The primary advantage of the POSRI Steel Index is that it requires neither specialized statistical analysis nor econometric techniques. It rather uses a simple calculation of +1, -1, or 0 for a comparison of changes in indicators and scores among sectors. By transforming sector scores into radar charts, the POSRI Steel Index makes it easy to compare economic imbalances and intuitively grasp market conditions.
∙ In the comparison between the POSRI Steel Index and actual steel price fluctuations, the POSRI Steel Index moves closely with steel prices, leading by three to four months. This outcome suggests that the Chinese steel market is highly likely to slow after the third quarter. However, with robust scores in the economy and steel-consuming industry sectors, a sudden fall is unlikely to occur in the second half of 2017. Due to the time differences in the collection of the statistics, indicators used to calculate the index are only publicly released one to two months later. To solve this problem, higher frequency data should be used rather than monthly data as a means to enhance predictability.
Notes to Editors:
• POSCO Research Institute (POSRI) is a leading research institute headquartered in Seoul, Korea. Established in 1994, it offers research and consulting especially focusing on steel. However, its research areas are not confined to steel. POSRI conducts research in various fields, including the economy, steel-consuming industries, business, materials, energy, and the environment. POSRI publishes Asian Steel Watch, a bi-annual English journal specialized in the Asian steel industry and market, and Chindia Plus, a bi-monthly Korean journal specialized in China, India and other Asian countries.
|Cheol-Ho Chung,Sojin Yoon
Asian Steel Watch vol. 2 Press Release (October, 2016)
On October 11, 2016, POSCO Research Institute (POSRI) released the second issue of Asian Steel Watch (ASW). This bi-annual English journal is specialized in the Asian steel industry and market. It deals with current issues in the Asian steel industry and features interviews with industry leaders, market analysis, and forecasts. It is comprised of five sections: On the Cover, Interview, Special Report, Featured Articles, and Market Trend and Analysis.
Asian Steel Watch aims to provide insightful, in-depth analysis of the ever-changing conditions of the Asian steel market. The second issue of Asian Steel Watch focuses on the Fourth Industrial Revolution in the steel industry, smart factory, Chinese steel e-commerce, the effect of demographic cliff on the Asian steel market, the restructuring of China’s steel industry, Myanmar’s steel industry, super cycles, and Northeast Asian steel trade market. This journal hopes to grant insight into the Asian steel industry, lay a firm foundation for the collaborative growth of Asia’s steel industry, and further contribute to the stability and prosperity of the global steel market.
Asian Steel Watch Vol.2 addresses the following issues:
In the “On The Cover” section, four articles are covered under the main theme of “The Fourth Wave of Manufacturing: What It Means to the Asian Steel Industry.”
① The Fourth Industrial Revolution: The Winds of Change Are Blowing in the Steel Industry
With the advancement of the Fourth Industrial Revolution, many traditional industries now face the destruction of industrial structures, and countries are intensifying competition to take the leadership in the future of manufacturing. Under these circumstances, manufacturing will face new changes in the future. On the consumers’ front, the era of “mass personalization” will be heralded and dynamic intelligence, real-time enterprise, and servitization will become new trends on the suppliers’ front. The Fourth Industrial Revolution is also gaining ground in the steel industry, and new changes are becoming apparent. GE has a long history and tradition as an automation company in power generation and energy, but it has declared itself to be a software company. Likewise, a steel company in the Fourth Industrial Revolution might need to become a “software engineering company that produces steel,” not a “company that buys and uses software well.”
② Accelerating Digital Transformation with Smart Factory to Unlock New Value: Case of POSCO
In the face of the great paradigm shift brought on by the Fourth Industrial Revolution, many Asian steelmakers are taking preemptive measures to maintain competitiveness and contribute to the advancement of manufacturing. POSCO is also one of the leading global steelmakers in this arena. POSCO is building the world’s first continuous-process steel plant model in its Gwangyang Steelworks plate factory that houses integrated processes for steelmaking, continuous casting, and rolling. POSCO has achieved major outcomes in the realization of a smart factory, such as the development of the “digital genome map” to tackle challenges of smart factory initiatives and the construction of PosFrame—POSCO’s smart factory platform for continuous process industries. It also has conducted various smart factory projects, including material to final product defect tracking, minimizing unnecessary scarfing in the continuous casting process, and new product development simulation in cyberspace.
③ China is Shifting to the “Smart Factory of the World”
To prepare for the Fourth Industrial Revolution, represented by “Industry 4.0” in Germany and “Industrial Internet” in the USA, the Chinese government released the “Made in China 2025” policy in May 2015 and the “Internet Plus” action plan two months later. The Chinese government’s massive support makes the prospect of smart factories even brighter. It plans to designate two to three companies in each industry to support the construction of smart factories. Using its vast market as a bargaining chip in summit diplomacy, China induces cooperation from advanced global firms. As a result, China can elicit technological support for smart factories from advanced countries. However, it would take much time and energy to fully realize smart factories in China’s manufacturing and steel industries. Just as the explosive growth of China’s steel industry has shocked the world in the early 21st century, the world might be shocked again by China, if it successfully adopts Industry 4.0 and smart factories in the future.
④ The Rise, Prospects, and Impact of China’s Steel E-Commerce
China’s steel e-commerce is gaining ground in China. The rapid growth of China’s steel e-commerce after 2012 was caused by three factors that collectively intensified competition in online platforms: the changing landscape of the steel trading market due to a slump in China’s steel industry; China’s “Internet Plus” and other related policies; and an online fever across the industry. The Chinese government aims to increase total steel trade through e-commerce by about 20%, or 150-200 Mt, until 2020. China’s steel e-commerce market will be led by a few competitive firms. Most steel e-commerce firms in China are pioneering or considering overseas expansion. Therefore, their influence will become stronger in overseas markets. As China’s steel e-commerce develops, the functions of offline steel traders in countries which import Chinese steel products will be reduced. In this process, existing offline steel distribution channels will be upgraded through integration with online channels.
Interview with Edwin Basson, Director General of worldsteel on the subject of “Roads Ahead for the Steel Industry.”
Edwin Basson, Director General of worldsteel talked to Asian Steel Watch about major issues and future of the steel industry: 1) Causes of sluggish global steel demand and forecast for 2017, 2) China’s peak steel and long-term forecast for China’s steel demand, 3) solutions to overcapacity, 4) future of the Asian steel industry, and 5) influence of the Fourth Industrial Revolution on the steel industry.
1) Causes of sluggish global steel demand and demand forecast for 2017
The steel industry is affected by structural and cyclical fluctuations of the global economy. The year 2016 will be the turning point and most regions will show improvement in 2017, but growth momentum will continue to be weak, reflecting continued contraction in China and weakness in other parts of the world.
2) China’s peak steel and long-term forecast for China’s steel demand
Steel use grows fast but then reaches a peak at or close to the upper inflection point on the S-curve, before a long term decline in steel use takes place. This happens at a per capita income level of around USD 12,000-15,000. China has reached peak steel at a rather earlier stage of economic development compared with the experiences of developed economies as it has accomplished a very condensed development in a relatively short time period. Recent studies by the worldsteel economics team highlight a number of unique cases where, after the first peak, steel use recovered to the same or even higher levels of use. The future development of Western China, the continued capability of China as a competitive manufacturing base, and the geographical location of China could contribute to a new momentum in steel demand growth in the future.
3) Solutions to overcapacity
Reducing excess capacity is never an easy task, largely because of many hidden barriers to exit. Capacity reduction can have a significant impact on the balance sheets of operating companies, and are never popular with investors. China has publically announced the closure of up to 150 million tonnes over a five year period. With the determination of the current government to tackle the overcapacity problem and environmental protection, we should trust that China will be able to meet this target. Foremost for worldsteel is to insist that industry restructuring should take place on a “level playing field” principle and that restructuring should follow similar principles wherever it is done.
To that effect, worldsteel members have agreed to the following principles on restructuring: ⅰ) Governments should promote a swift and timely restructuring of the steel industry by advancing policies that ensure market forces play a decisive role in determining the future of the industry. ⅱ) Market oriented approaches should ensure survival of the fittest producers. Inefficient producers should not be subsidized to remain in operation. ⅲ) Barriers to exit that delay restructuring should be removed in an orderly and timely way. ⅳ) Develop safety net support that mitigates the consequences of restructuring. ⅴ) Commitments to adjust the steel industry structure should be made known and tracked until finalization.
4) Future of the Asian steel industry
Today, steel use is predominantly in Asia, which accounts for 65 % of global steel use. Asia as a region has a large population. Moreover, in many Asian countries, the economies are progressing rapidly up the economic development path. Given these conditions, it is likely that Asia will remain a driving force in steel use in the foreseeable future. future growth will likely depend more on the development of the ASEAN region, and growth in India strongly supporting developments in the South East Asian markets.
5) Influence of the Fourth Industrial Revolution on the steel industry
The steel industry has a long history of technological adaptation and product innovation.
Today, the industry is already extremely efficient in iron and steel making, as well as processing. Within this environment, the Fourth Industrial Revolution could continue to play an important role, but additional progress will be incremental owing to the already high level of technological achievement. It is rather in the field of the use of steel in applications that the Fourth Industrial Revolution could play an important role. The Fourth Industrial Revolution may influence the design and production of consumer goods to the extent that waste is reduced, and the lifetime of steel in use increases. It is therefore quite possible that the Fourth Industrial Revolution will have little direct influence on the steel industry. The indirect influence through changing the manufacturing process and product design of items requiring steel as an input may have a vastly more influential role in the steel industry.
(Special Report) Dong Joon MIN, Professor of the Department of Materials Science and Engineering at Yonsei University in Korea, introduces the midi-mill process route of the FINEX and CEM combination under the title, Global Competitiveness Through Hybridization of FINEX and CEM Processes.
Under the current oversupply and strengthened environmental regulations, it is burdensome for steelmakers to consider new investment in the maxi-mill (combination of a traditional BF and hot-rolling mill). In the mini-mill process, there are some limitations in producing flat steel products due to harmful tramp elements in raw materials of scrap and high electricity costs.
The needs of diversification of raw materials and flexibility of process will accelerate the development of an alternative midi-mill ironmaking route by hybridization of individually optimized steelmaking technologies. The recent concept for hybridization is comprised of the FINEX and CEM technologies with particular attention on a sustainable midi-mill process with high flexibility. The hybridization of the FINEX and CEM processes can provide high versatility by combining the advantages of their technological characteristics.
Future process should adopt a process route that lies somewhere between the maxi-mill and mini-mills, that is, a midi-mill configuration with a production capacity over 2 MTPY and operational flexibility. FINEX has more flexibility in raw materials and operations than the blast furnace route and higher productivity than the EAF route. CEM can achieve high throughput and meet product requirements by converting from batch rolling to endless rolling. The midi-mill process route of the FINEX and CEM combination can satisfy the needs to build a steel plant which is medium-scale, economically competitive, raw material and operational flexibility, and eco-friendly.
(Featured Articles) In this section, there are three articles: The Demographic Cliff: How It Will Impact Asia’s Steel Demand; Restructuring of the Chinese Steel Industry: Retrospects and Prospects; and Myanmar, the Last Frontier in the ASEAN, Will See High Growth of its Steel Industry.
① The Demographic Cliff: How It Will Impact Asia’s Steel Demand
Changes in working-age population determine economic fundamentals. They are directly related to steel demand, because the working-age population is the main consumer group of houses and vehicles, the key sources of steel demand. Therefore, the acceleration of decline in working-age population will have a negative impact on economic growth and steel consumption.
Learning lessons from advanced countries about the experience of population aging, there are some characteristics in common: the share of manufacturing shrinks in the economic structure, while the share of service increases; and steel consumption declines after a peak. Particularly in the case of Japan, which is the world’s most aged society, changes in working-age population has a strong correlation with changes in the steel-consuming industries and steel consumption.
The decrease in working-age population in Korea, China, and Japan, which have led growth of the global steel industry until now, will have a negative impact on global steel demand in the medium to long term. It is unlikely that India and the ASEAN’s demand will grow fast enough to offset the decline in steel demand in the three East Asian countries.
② Restructuring of the Chinese Steel Industry: Retrospects and Prospects
The development of the Chinese steel industry, as well as the Chinese economy, has been largely policy-driven. The Chinese government introduced more than 320 policies and measures from 1990 to 2016. Of these, nearly half (49%) were issued to control steel capacity expansion. The last capacity-related policy was introduced by the State Council in early 2016. Some industry observers doubt the potential effectiveness of the last policy, which calls for a 100-150 Mt capacity reduction by 2020.
According to a survey conducted in July 2015, many people believe that China’s domestic steel demand may have reached its peak (or first peak) in 2013 and that it will stabilize after a 10-20% decline.
The author suggests six directions for the Chinese government and the steel industry for the restructuring of the industry: 1) The government’s role should be gradually overtaken by market forces. 2) The steel industry should be consolidated to generate better synergy in the industry, in particular in market development and R&D. 3) A joint fund should be initiated to support the restructuring. 4) Reform of state-owned steel enterprises (SOE’s) should be accelerated, the sooner the better. 5) Steel companies should be more integrated into the global steel industry. 6) Steel companies’ human resources system should be more open.
③ Myanmar, the Last Frontier in the ASEAN, Will See High Growth of its Steel Industry
With the advent of the country’s first non-military government in 54 years, Myanmar is anticipated to strengthen reform and opening-up measures and the economic sanctions against Myanmar will be further lifted. With its growing geopolitical and geo-economic importance, and improved conditions for foreign investment, Myanmar is expected to maintain high economic growth until 2020.
Despite its inadequate domestic steel production, Myanmar’s steel consumption is expected to grow high, at about 8% a year. However, due to poor competitiveness in steel production, caused by power shortages, substandard operational skills, and inadequate facility management, Myanmar’s capacity utilization rate is just above 20%. Increasing demand for steel is mostly satisfied by imports. Demand for long products and flat products for construction is projected to lead the market because Myanmar’s economic development will be centered on infrastructure, construction, and light industries in the short-to-mid term.
(Market Trend and Analysis) This section starts with “Examining the Past 100 Years: Where is the Steel Super Cycle Headed?” followed by “Statistical Review of the Steel Trade in Northeast Asia.”
①“Examining the Past 100 Years: Where is the Steel Super Cycle Headed?”
Looking at long-run data of real steel prices over the last 100 years, high volatility in steel prices is not just a recent phenomenon. Steel prices had high volatility from a long time ago and repeated long-run cycles with ups and downs. If the long-run trend, long-run cycle, short-run cycle could be decomposed from steel price data, it would help in determining the direction of steel prices. With the development of a “band-pass filter” in the 2000s, it became possible to decompose a long-run trend, super cycle, and and short-run cycle from real data.
According to this analysis of US real HR prices from 1900 to 2016, it turns out that the long-run trend peaked in the early 1970s and declined afterward. The super cycle, which is a long-run cycle with upswings lasting from 10 to 35 years, peaked in 2011 and entered a downward phase. Decomposition of real steel prices suggests four super cycles. Amid a prolonged low growth of the steel industry, the critical factor to shorten the super downtrend and downcycle is how fast excessive capacity can be reduced. It is also important how fast the economic growth of emerging markets, especially India and the ASEAN, will offset a steel demand slowdown in China.
②“Statistical Review of the Steel Trade in Northeast Asia”
As the world’s top three steel exporters, Korea, China, and Japan are front-runners in the structural change of the steel export market. They are still expanding into the global market with differentiated export strategies in order to increase their shares. China is diversifying export items and destinations for its bulk supply of steel products. Japan leaps forward with investment in high-quality steel, taking advantage of locking-in demand. Korea gears up to meet demand for steel materials through overseas downstream investment in Southeast Asia, Mexico, USA, and India.
Competition for steel exports among Korea, China, and Japan has intensified. As the USA, EU, and the ASEAN strengthen protectionist measures for their steel industries, global steel trade will contract and heighten the rivalry among the three countries.
Notes to Editors:
POSCO Research Institute (POSRI) is a leading research institute headquartered in Seoul, Korea. Established in 1994, it offers research and consulting especially focusing on steel. However, its research areas are not confined to steel. POSRI conducts research in various fields, including the economy, steel-consuming industries, business, materials, energy, and the environment. POSRI publishes Asian Steel Watch, a bi-annual English journal specialized in the Asian steel industry and market, and Chindia Plus, a bi-monthly Korean journal specialized in China, India and other Asian countries.
For the full version, please visit to POSRI Website (http://www.posri.re.kr/eng/)
Asian Steel Watch
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|Cheol-Ho Chung,Sojin Yoon
China's Steel Industry Meets the New Normal
Xin chang tai (新常态) is the term that most accurately characterizes China’s economy today. It is a literal translation of the English term new normal, meaning “a new state of normality.”After reform and opening up, China’s economy maintained a double-digit annual growth rate for decades, then slowed to around 7% in 2012. Chinese authorities have described this as the “new normal” state, to which they intend to adjust China’s economic policy.
China’s new normal does not mean abandonment of growth, but rather a transition to a new way of growth. Changes in China’s economic fundamentals have confronted China’s steel industry with “new normal”market environment and structures. The industry has set out in search of new solutions.
24 Changing China’s Steel Industry in the New Normal (Dr. Ahn, Byung-kuk)
30 China's Steel Enters a “Peak Zone“: Arguments and Projections (Choi, Young-hun)
36 The Impact of China’s Early “Peak Steel“ and Scrap Generation on Steel Raw Materials Prices (Dr. Jin-Seok Huh)
42 China's Steel Exports, Reaching 100 Mt: What It Means to Asia and Beyond (Dr. Chung, Cheol-Ho, Dr. Nam, Dae-yub)
48 Dilemmas in Restructuring China’s Steel Industry (Dr. Li Wan-Yong)
54 Chinese View on the New Normal (Li Xinchuang, President of MPI) (Dr. Li Xinchuang)
Sources: On the Cover, Asian Steel Watch vol.1
|Li Wan-Yong ,Dae-Yub Nam,Byung-Kuk Ahn,Young Hun Choi,Cheol-Ho Chung,Jin-Seok Huh,Li Xinchuang
What Korea Can Offer to Indian Companies Expanding Abroad
1. Trends in Outward FDI of India
2. India-Korea Economic Relations
3. Why Korea?
1) Comparative Advantage Analysis
2) Attractive Business Partner
3) Business-friendly Environment
4) Expand the Economic Territory
Source: India-Korea Business Summit, New Delhi
India’s Mobile Market
Just as Xiaomi fervor has swept China, Micromax fervor is sweeping India. With affordable prices and simple functions, Micromax products are tailored to Indian customers’ needs. India’s smartphone market, which has been dominated by foreign handsets, is undergoing a rapid transformation. India’s mobile services market is one of the world’s fastest growing markets. This Special Report delves deeply into the characteristics and ecosystem of the Indian mobile services market.
1. With a 22% Market Share, Micromax Dethrones Samsung as the Top Handset Seller in India (Jung Moo-sup)
2. India’s Robust Mobile Service Ecosystem Bolstered by Homegrown Companies (Lee Dae-woo)
3. On the Brink of 1 Billion Mobile Service Subscribers, Entry of Major Global Companies Turns India into a Battlefield (Lee Soon-cheul)
- Source: Special Report, Chindia Plus Quarterly Summer 2015 VOL.19
|Moo-Sup Jung,Soon-Cheul Lee ,Dae-Woo Lee
China's Electric Vehicle Industry
China’s electric vehicle policy has been ineffectual for the last four to five years. Now China is resetting its policy target. On the public welfare and environmental fronts, China plans to improve air quality and reduce greenhouse gas emissions. On the industrial front, it aims to go beyond gasoline and diesel vehicles and seek innovation in the automotive industry. This Cover Story looks closely into the ecosystem of China’s electric vehicle industry and China’s distribution policy.
1. Tesla Readjusts its China Strategy, While Local Companies are Doing Well in China's Electric Vehicle Market (Park Hyung-keun)
2. Driving the Development of China's Electric Vehicles (Jo Yun-taek)
3. Strategic Cooperation with Small Local Giants Can Help Companies Enter China, the World's Largest Secondary Battery Market (Park Jae-bum)
- Source: Cover Story, Chindia Plus Quarterly Summer 2015 VOL.19
|Jae-Bum Park,Hyung-Keun Park,Yun-Taek Jo
Positioning in Strategic Groups to Survive in the Turbulent Stainless Steel Industry
1. Fources that Shape Business
2. Strategic Groups
3. Positioning They Seek
4. About the Korean Market
Source: 10th Asian Stainless Steel Conference, Singapore
Revival of "Rush to India": Will India's Economy Take Off?
The Indian economy is stirring. Under the slogan of “Strong India,” the Modi administration’s drive for reform is waking up the country. India will surpass China to become the world’s fastest-growing country in 2015. India is young, with a median age of 29 years, and has a middle class of 250 million people and an invigorated democracy. India’s growth, which signifies the emergence of a new democratic economy in the region, will have a tremendous impact on geopolitical dynamics in Asia.
1. With the 3 D's of Democracy, Demography, and Demand, India will Outshine China (Kim Chan-wahn)
2. Growth-focused China vs. Distribution-oriented India: Indian Youths Craving Change Will Lead Long-term Growth (Lee Dae-woo)
- Source: Special Report, Chindia Plus Quarterly Spring 2015 VOL.18
|Chan-Wahn Kim ,Dae-Woo Lee
An Era of Big Change: A New World is Coming
1. Big Change: The World is Changing (Shim Sang-hyung)
2. Global Doldrums: The World Economy Sprials Downward into a Prolonged Great Recession (Kim Kwang-ki)
3. Climate Change is an Issue of Survival: Polluting Companies Will Be Edged Out (Kim Ji-seok)
4. Behind the Vision of "Pax Sinica," China's Expanding Black Hole (Han Gwang-soo)
5. Conservatism and Nationalism Spread across East Asia (Yul Sohn)
6. The Shale Revolution, Shifting the Geopolitics of Energy (Park Kyung-duk)
7. Baby Boomer Retirement Diminishes Economic Vitality, Concerns of Long-term Recession Mount amidst Growing Bubbles (Lee Dae-woo)
8. Low-skilled Workers Losing Ground: Only Jobs with Human Touch Will Survive in the Face of Technology Innovation (Oh Jeong-hoon)
- Source: Cover Story, Chindia Plus Quarterly Spring 2015 VOL.18
|Sang-Hyung Shim,Dae-Woo Lee,Jeong-Hoon Oh,Kyung-Duk Park,Kwang-Ki Kim,Ji-Seok Kim,Yul Sohn,Gwang-Soo Han
Structural Changes in Coking Coal Supply in Future
1. Global Economy in 2015
2. Steel Industry Outlook
3. Supply in Coking Coal Market
Source: 13th Coaltrans China
The Chinese Steel Industry in the New Normal Era
Overcapacity has been a chronic problem in the Chinese manufacturing sector. Investment in the steel industry surged in the aftermath of a massive stimulus package during the global financial crisis, making overcapacity even worse. Chinese President Xi Jinping has announced that “China has ended its era of high economic growth and is shifting to a new economic structure.” the Chinese manufacturing industry is agonizing over a solution to the issue. this Special Report focuses on the steel industry, investigating the progress of and forecast for manufacturing.
1. Will the New Environmental Law Ease Oversupply in China’s “Winner-takes-all” Steel Industry? (Shim Sang-hyung)
2. Chinese Steel Products Spill Over into the World Market and Raise global Trade Barriers (Lee Byung-woo)
3. China’s Steel Industry Has to Adapt to the New Normal of Low growth and Corporate Reform (Shim Sang-hyung)
- Source: Special Report, Chindia Plus Quarterly Winter 2014 VOL.17
|Sang-Hyung Shim,Byung-Woo Lee
Myanmar's Reform Fatigue
For a short span of time, myanmar has experienced rapid reform and opening up. Political democracy has advanced, and economic reform and liberalization have made significant progress. myanmar’s strategic standing in the international community has been stronger than any time in the past. Global investors
are rushing into the once-reclusive country. Ironically, however, myanmar’s military junta and vested interest groups are leading the country’s reform and opening up. As they have made sweeping revisions to the national governance strategy with a view to sustaining their vested rights, this reform and opening up has problems: the speed of reform and opening is being controlled, and the benefits of reform and opening up are being concentrated in certain segments of society.
1. Due to Its Strategic and Economic Importance, Myanmar is Caught Between Superpowers (Bertil Lintner)
2. Reform in Myanmar is Losing Steam Amidst Opposition from Vested Interest Groups (Cheong Jae-wan)
3. Japan is a Trustworthy Partner to Myanmar, While ASEAN Increases Investment in Preparation for Economic Integration (Cho Dae-hyun)
4. Poorly Performing Korean Companies in Myanmar Need to Better Understand the Market (Jang Jun-young)
- Source: Cover Story, Chindia Plus Quarterly Winter 2014 VOL.17
|Jae-Wan Cheong ,Jun-Young Jang,Bertil Lintner,Dae-Hyun Cho
Global Competitive Trends in the Stainless Steel Industry
1. Trends in STS Market
2. Global Competitive Move
3. Waht Should We Do?
4. About POSCO
Source: Global EVI Forum 2014
Asia’s Tourism Market Boom
The global tourism market paradigms are shifting. Bolstered by growth in the convention and the casino industries, the number of tourists to Asia is rapidly increasing. Russian tourists visiting South Korea for medical purposes have emerged as big customers for the Korean tourism market. Travel has already started to change the world, with Asia’s “holiday economy” drawing much attention.
1. Tourism Spurs Asian Economic Growth (Keum Ki-yong)
2. Visa-free Travel Boosts Russian Tourism to Korea; Target Market Spreads from Russian Far East to Moscow (Park Hyun-bong)
- Source: Special Report, Chindia Plus Quarterly Autumn 2014 VOL.16
|Ki-Yong Keum ,Hyun-Bong Park
Expectations and Concerns for Korea-China FTA
The unexplored but inescapable path. This is what an FTA with China means for Korea. Its influence will be unprecedented and greater than that of any other FTA that Seoul has concluded so far. With Korea’s trade dependence on China reaching over 25%, it’s fair to say that the success of the Korean economy depends on how well it adapts to the new FTA paradigm. Since the 1980s, China has always been at the center of the changing international trade environment. Having recently emerged as the world’s second-largest economy, China has provided boundless opportunity as well as occasional threats to the Korean economy. That is why Korea should prepare itself well before setting out on a new path.
1. Will the FTA Help Korea Emerge as an East Asian Trading Hub and unlock China’s Domestic Market? (Kim Ji-sun)
2. With Policy Flexibility, Korea Should Balance Korea-China FTA and TPP (Kim Han-sung)
3. Industry Outlook: Steel (Shim Sang-hyung)
4. Industry Outlook: Automobiles (Kim Tae-nyen)
5. Industry Outlook: Petrochemicals (Cho Hyung-il)
6. Industry Outlook: Electronics·IT (Ha Mong-yeul)
7. Industry Outlook: Textiles (Joo Sung-ho)
8. Industry Outlook: Agriculture (Chung Chung-gil)
- Source: Cover Story, Chindia Plus Quarterly Autumn 2014 VOL.16
|Mong-Yeul Ha,Sung-Ho Joo,Hyung-Il Cho,Chung-Gil Chung ,Han-Sung Kim,Tae-Nyen Kim ,Sang-Hyung Shim,Ji-Sun Kim
Chinese Steel Industry by Korean Viewpoint
1. Growth & Impact of Chinese Steel Industry
2. Long-term Growth Forecast
3. Future & Challenges of Chinese Steel Industry
Source: 7th Asian Steel Forum
Global Steel Industry Outlook
1. Global Economy
2. Steel Market Trend
3. Steel Market Outlook
4. Global Coking Coal Market
5. What Should We Do?
Source: 2nd Coaltrans East Asia