The steel industry is becoming global, said Nippon Steel’s and Sumitomo Metal Industries’ President Kosei Shindo. On an endeavor to seek new opportunities across the globe due to less strong metal demand growth in Japan, Shindo partnered ArcelorMittal in November to acquire a steel plant in the U.S., as well as co-controls Latin America’s largest producer of the metal used in ships, cars and buildings, Usinas Siderurgicas de Minas Gerais SA, a Brazilian steelmaker. In October 2012, Shindo said that profit in the June quarter fell 24 percent as steel imports from China put pressure on prices.
Brazil is also known for being home to the world’s biggest iron-ore producer, Vale SA. Having mining as primary business, iron ore is a crucial raw material in the production of steel. However, even giant steelmaker Vale is feeling the pressure of the international metal industry, and sees prices rebounding in the coming months as supply growth slows and higher cost mines close at a time of strengthening Chinese demand.
Iron ore, which entered a bear market in March amid higher supply from Australia and Brazil, rose in July for the second consecutive month on speculation that demand from China, where Vale sends more than half its shipments, is improving.
India, on the other hand, sees a brighter future in the iron ore market as its steel industry grows and the nation seeks to raise living standards. India may become a net importer of iron ore this year with steelmakers including JSW Steel Ltd. (JSTL), the nation’s third-largest producer, buying as much as 15 million tons from abroad, the Federation of Indian Mineral Industries said, according to Bloomberg.
Globalization of the steel market might be a good thing, but it is necessary to keep an eye on it so no one gets caught by surprise.
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Camilla G.//SMC Editor