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Threat of new
Bargaining power of
entrants: LOW TO
suppliers: LOW
MEDIUM
PORTER'S
FIVE FORCES
Threat of
substitutes: LOW TO
MEDIUM
Bargaining power of
buyers: LOW
Competitive rivalry:
MODERATE TO HIGH
Hence for above factors, Threat of new entrants can be considered as low to moderate
THREAT OF SUBSTITUTES:
It is low to medium. Plastics and composites pose a threat to Indian steel in one of its
biggest markets – automotive manufacture. For the automobile industry, the other
material at present with the potential to upstage steel is aluminum. Perhaps the most
attractive alternative to stainless is aluminum. Stainless producers themselves are offering
their customers a range of alternatives in an effort to prevent business being lost to non-
ferrous or carbon steel materials. Such options include lower-nickel duplex grades and
ferritic types. In the meantime, nickel’s fluctuations will continue to create problems for
the stainless industry worldwide.
At the present, Steel has already been replaced in some large volume applications:
railway sleepers (RCC sleepers), large diameter water pipes (RCC pipes), small diameter
pipes (PVC pipes), and domestic water tanks (PVC tanks). The substitution is more
prevalent in the manufacture of automobiles and consumer durables.
Hence for above factors, Threat of substitutes can be considered as low to moderate
Hence for above factors, bargaining power of suppliers can be considered as low
COMPETITIVE RIVALRY:
It is medium to high in the domestic steel industry as demand still exceeds the supply.
India is a net importer of steel. However, a threat from dumping of cheaper products does
exist. Commodity prices are set internationally and individual players have no control
over it. Competition is high to identify commodity reserves leading to more market share.
The steel industry is truly global in terms of competition with large producing countries
like China significantly influencing global prices through aggressive exports. The 4 major
domestic rivals are SAIL, JSW, ISPAT and ESSAR STEEL, which the rests are all
smallish mills which together accounts for 30 % of the total market share.
Currently, two Global Steel majors namely Arcelor- Mittal, which is the world’s largest I
and POSCO, are posed to be the biggest threat as they plan to enter the Indian Steel
Industry very soon.
Hence for above factors, competitive rivalry can be considered as medium to high
CONCLUSION:
After understanding all the above view points and the current global scenario, we believe
that the domestic steel industry will likely to maintain its momentum in the long term.
However, the growth may get affected in short run. Investors need to focus on companies
that are integrated, have economies of scale and sell premium quality products