Steel Industry is an important raw material industry of the national economy. It is also the foundation of the manufacturing industry, which plays a significant role in economic and social development. In the past few years, global steel overcapacity problem was outstanding and serious. The price of steel product was in low price volatility for a long time. Since it is sorely conditioned by resources, energy and environment load, a lot of steel companies are heavily indebted and facing operating difficulties.
US steel industry
Before the 1970s, it was an important pillar of the U.S. economy. It has evolved into an important fundamental industry, which has been protected by the U.S. government since the 1970s. Therefore, the steel industry is known as the “barometer” of the U.S. economy. The United States has more beneficial resource conditions for the development of its steel industry, such as abundant iron ore resources, developed mining industry and adequate supply of raw material. Developed railway and water system provide convenient transportation for the development of the steel industry. In 1910, the United State had 560,000 kilometers of railway mileage, which is the longest in the world. The construction of the railway is closely related to the development of the steel industry.
On the one hand, it stimulates the development of the steel industry because railway construction needs to consume a lot of steel. On the other hand, improving the railway network provides convenient transportation for the delivery of raw material, fuel and products. At the same time, the Great Lakes region of the United States water and shipping transportation plays a great role in the development of the steel industry. The capitalism of the United States was much later than Britain and France. it made full use of advanced technology from foreign countries in the early stage of its industrialization, such as coking, hot air furnace, open-hearth furnace, and other technologies introduced from Britain. After that, they tried to make improvement and created a lot of new processes and new equipment.
In the process of industrialization, the US government encourages the development of large-scale manufacturing enterprises. Mergers and reorganizations between enterprises happen from time to time. If it is necessary for production, large companies with strength and resources will not hesitate to purchase the companies they need. Objectively speaking, this kind of system environment helps steel enterprises to use the advantages of scale economy of steel industry for developing integrated steel enterprises.
The influence of the US steel industry by Donald Trump
On March 9, 2018, U.S. President Donald Trump Signed an order that impose tariffs of 25% on U.S. steel 15 days later. The tax applied to all countries which export steel to the United States. This would lead to higher tariffs in other countries to maintain the 80 % capacity utilization target for domestic steel manufacturing companies. Trump ‘s tariffs policy does not have a great influence on China steel. In recent years, steel exports from China have declined. In the procedure of supply-side reform and environmental protection production restriction, the excess capacity of China’s steel industry has been further cleared.
According to media statistics, China’s steel exports to the United States account for only 1 percent of its total steel exports so the influence of the policy would be minimal. The top five steel importers to the United States are Canada, South Korea, Mexico, Brazil and China. Industries such as airplanes, construction, oil extraction, packaging and chemicals are all dependent on steel, and the negative impact of trump’s tariffs on American manufacturing has already been shown. President Trump says his policy is saving the U.S. steel industry and because of his actions. The competition in the future between American businesses will be primarily in the domestic. This decision to impose 25% import tariff on steel from all countries will encourage domestic steel production. And it can increase employment rates and maintain high domestic steel prices for the next two or three years. Eventually, higher input prices for steel could spill over into other sectors, which could put pressure on costs, margins and pricing power for downstream producers, including drinks cans and cars. And it will spread to infrastructure and construction. In conclusion, Trump’s tariffs are good for the U.S. steel industry.
Chinese steel industry
China’s steel industry is an important pillar industry of the national economy as well. It makes a great contribution to ensuring the sound and rapid development of the national economy. However, the contradictions accumulated in the long-term extensive development of the steel industry have become increasingly prominent. The shortage of products, excess production capacity, excessively low industrial concentration, unreasonable regional distribution and environmental problems are the main factors of the contradiction. Due to technical core problems, small and medium-sized enterprises do not have core technologies, resulting in the poor quality of steel and the low concentration of the steel industry.
At present, the scale economy effect of China’s steel is not obvious. Therefore, the reform of production organization mode of China’s steel industry has been launched, which is imperative. Due to the unified production standards and industry characteristics of China’s iron and steel industry, the difference in the quality of steel produced by most Chinese enterprises is very small. Finally, they cannot form their own advantages to fight for more market shares. Therefore, product differentiation is also an important factor that hinder the improvement of China’s steel industry concentration. In the current economic conditions, steel enterprises must be stronger and more technical to survive.
Steel industry in India
India has excellent resources, large population and huge development potential. Whether China’s explosive economic growth will occur in the future has become a hot topic of discussion. The development of the steel industry is an important part of the process of India industrialization. India is rich in mineral resources, with large reserves, high grade and concentrated distribution. Meanwhile, India has abundant manganese, chromium and coal resources. These resources are geographically adjacent to each other. This environment provides favorable conditions for the development of the steel industry. India’s modern steel industry started at the beginning of the 20th century. Tata Steel, founded in 1907, was the earliest steel enterprise in India.
Although India’s steel industry is developing rapidly, there is still a big GDP gap and urbanization rate gap between India and China. By comparing the steel smelting process in India and China, the steel producing in India is mainly made by electric furnace while China’s steel production is mainly based on long processing technology. With steel capacity expanding continuously, India’s competitive power has improved and there is still potential for future growth.