Sei sulla pagina 1di 10

Overview

The steel industry is a dynamic, innovative sector, which is constantly adapting and
refining itself to become more competitive in the market. The industry does this by
developing new, improved steel grades and production procedures that produce better
and more cost-effective product lines for the changing marketplace. Today developing
countries lead the growth in world steel demand. Steel is a key material in promoting
economic growth as it is critical in the creation of infrastructure, construction materials,
building, transport, machinery, and consumer goods.

World Steel Production 2007 and 2008

The use of steel in the world economy continues to increase at a rapid pace because it is
a commodity that is both versatile and recyclable. In 2007, the world steel industry
produced 1.3 billion metric tons of steel. The International Iron and Steel Institute (IISI- the
world’s largest steel organization with membership of sixty-six countries) reported that
the total global crude steel production for the first half of 2008 was 696 million metric
tons, a rise of 5.7% over the same period in 2007. In the first six months of 2008, China
produced 263.2 mmt of crude steel, an increase of 9.6% compared to the same period in
2007.

Overall, Asia produced 68.3 mmt of crude steel in June 2008 compared to 62.8 mmt in
June 2007, an 8.7% increase in crude steel production. Total crude steel production in the
EU was 18.1 mmt, 1.8% higher than for June 2007. The largest producer in the EU is
Germany, with 4.1 mmt of crude steel, an increase of 2.1% compared to the same month
last year. The ‘Other Europe’ region of seven countries outside the EU produced 2.9 mmt
in June 2008, an increase of 15.5% from June 2007. Turkey’s crude steel production was
2.5 mmt, which was 17.5% higher than the same month last year. Turkey produced 10.6%
more crude steel in the first six months of 2008 than over the same period last year.

As shown in the figure X below, over the past 38 years the global production has always
increased except for 1998 when there was a slight dip in production and demand. Since
2000, steel’s average growth rate has been over 6% per annum. It is projected that with
the economic development of China and India, as well as, the continued growth of
Southeast Asia, steel will be in great demand for years to come.1

Figure X: Global Crude Steel Production

Year Global
Production
in million
metric tons
1970 595
1975 644
1980 717
1985 719
1990 770
1995 752
1996 752
1997 799
1998 777
1999 789
2000 848
2001 850
1
United Nations.
2002 904
2003 970
2004 1069
2005 1147
2006 1251
2007 1344
*International Iron and Steel Institute

Figure X: Average Growth Rates 1970-2007 (Percentage per annum)

Year Global Average Growth Rate


1970-1975 1.6
1975-1980 2.2
1980-1985 0.1
1985-1990 1.4
1990-1995 -0.5
1995-2000 2.4
2000-2005 6.2
2005-2007 8.3

Figure X: Largest Steel Users In 2007 (million metric tons finished steel
products)

Location Million Metric Tons Finished Steel


Products
Asia 664.5
European Union 193.2
NAFTA 141.5
CIS Countries 54.9
Middle East 47.6
Central and South America 41.6
Other European Countries 31.3
Africa 25.4
Australia 8.6
World 1,208.5

Figure X: Top Steel Producing Companies Worldwide In 2007


Steel Outputs (million metric tons)

Rankin Company Headquarters Steel Output


g (million metric
tons)
1 Arcelor Mittal Luxembourg City 116.4
2 Nippon Steel Tokyo, Japan 35.7
3 JFE Tokyo, Japan 34
4 POSCO Pohang, South Korea 31.1
5 Baosteel Shanghai, China 28.6
6 Tata Steel Mumbai, India 26.5
7 Anshan-Benxi Liaoning Province, 23.6
China
8 Jiangsu Shagang Zhang Jiagang City, 22.9
China
9 Tangshan Hebei Province, China 22.8
10 US Steel Pittsburg, USA 21.5
11 Wuhan Wuhan, China 20.2
12 Nucor Charlotte, USA 20.0
13 Gerdau Group Porto Alegre, Brazil 18.6
14 Riva Milan, Italy 17.9
15 Severstal Cherepovets, Russia 17.3
16 ThyssenKrupp Essen, Germany 17.0
17 Evaz Moscow, Russia 16.2
18 Magang Group Maanshan, China 14.2
19 SAIL New Delhi, India 13.9
20 Sumitomo Tokyo, Japan 13.8

Figure X: Top Asian Steel Producing Countries In 2007

Country Ranking Production (million


metric tons)
China 1 489.2
Japan 2 120.2
India 5 53.1
South Korea 6 51.5
Taiwan, China 12 20.9
Malaysia 28 6.1
Thailand 30 5.5
Indonesia 37 3.9

Figure X: Scrap Steel: Estimated Consumption, Trade and Domestic Supply in


Million Metric Tons In 2007

Country Consumption Imports Exports Domestic


Supply
China 75.0 3.4 0 71.5
Japan 51.0 0.4 6.4 57.1
South Korea 26.9 6.9 0.2 20.2
Taiwan, China 11.3 5.4 0.2 6.1
Other Asia 25.0 9.1 2.0 17.8
Total Asia 189.2 25.2 8.9 172.8
Total World 481.9 89.0 86.0 478.9

Figure X: Iron Ore 2006 (million metric tons actual weight)

Country Production Exports Imports Apparent


Consumption
China 588.2 326.3 914.5
India 165.0 86.8 0.8 79.0
Japan 134.3 134.3
South Korea 0.4 42.8 43.2
Other Asia 3.2 4.0 25.0 24.1
Total Asia 756.8 90.8 529.2 1195.1
Total World 1790.8 786.4 800.6 1805.0
Imports

Imports of iron and steel products in the ten SEAISI member countries 2 expanded at an
average rate of 7.5% for the period 1998-2007, higher than the 4.6% recorded in the pre-
economic crisis years of 1991-1997. Total import volume in 2007 registered 96 million
tonnes, of which 46% were intra-group trade. The largest source of import for the group
was China, which accounted for 30 million tonnes or 31% of the group's total import
volume in 2007. South Korea was the largest importer of iron and steel products from
China (among the ten countries), with total volume of 14 million tonnes in 2007.

Exports

Exports of iron and steel products from the ten member countries surged modestly after
the economic crisis, from an average of 6.4% between 1991 and 1997 to an average of
3.2% between 1998 and 2007. Exports within the group constituted half of the total
export volume in 2007. Outside of the group, 29% of total export volume was destined for
China. The main exporters to China were Japan, South Korea and Taiwan.

Japan's total iron and steel exports in 2007 was 34 million tonnes, the highest among the
ten countries. Japan's export volume grew at an average growth rate of 3.2% since 1998,
which was lower than average growth rate of 4.6% before the economic crisis. Major
export destinations in 2007 were South Korea (9.6 mt), China (6.3 mt), Thailand (4.3 mt)
and Taiwan (3.6 mt).

Exports from Korea totaled 17.9 million tonnes in 2007. However, the average growth rate
of 1.1% from 1998 to 2007 was sluggish when compared to the average rate of 6.7%,
registered before the economic crisis. Major destinations of iron and steel exports from
Korea in 2007 were China (4.0 mt), Japan (3.1 mt), USA (2.2. mt) and Europe (1.9 mt).

Iron and Steel exports from Taiwan grew by a respectable average rate of 6.4% per
annum after 1998, but still much lower than the pre-crisis level of 21% per annum. Total
exports in 2007 registered 12.5 million tonnes, an increase of 3% from 2006.

Imports by ASEAN countries

Imports of iron and steel products in ASEAN countries picked up substantially after a
sharp drop in 1998 to reach the pre-crisis growth rate of around 8% per annum. Total
imports in 2007 reached 38 milion tonnes, of which 5 million tonnes or 13% were intra-
ASEAN trade. Main sources of import were Japan and China. Among the ASEAN member
countries, Thailand was the largest importer of iron and steel products from Japan with
total volume of 4 million tonnes in 2007, followed by Malaysia and Vietnam at 1.6 million
tonnes and 1.1 million tonnes, respectively. Imports of steel products from China were
also substantial, in the region of 1 to 2 million tonnes per country.

Exports by ASEAN countries

2
The member countries are Australia, Indonesia, Japan, South Korea, Malaysia,
Philippines, Singapore, Taiwan, Thailand and Vietnam.
Before the economic crisis in 1997, ASEAN's export of iron and steel products as a whole
was not significant. Average growth rate from 1991 to 1997 was 4% per annum and the
highest export volume of 4.7 million tonnes was recorded in 1995. However, export
volume picked up significantly since 2003 to reach 12 million tonnes in 2007. Over the
period 1998 to 2007, the annual growth rate was 8.7%. A significant portion of the
exports comprised intra-ASEAN trade. Malaysia was the largest exporter in the region with
total volume of 4.4 million tonnes in 2007, an increase of 13% from 2006. Singapore was
the second largest exporter in the region at 2.8 million tonnes, an increase of 39% from
2006. Thailand's export in 2007 registered 2.79 milion tonnes, up from 2.3 million tonnes
in 2006.

Issues with Steel Production

When discussing the development or expansion of the Steel Industry in Thailand, the
following 4 key issues arise:
i) Health and Safety
ii) Environmental Standards
iii) Climate Change Responsibility
iv) Government Accountability and Monitoring

Petrochemicals

In general, ‘Petrochemicals’ are chemicals made from petroleum (crude oil) and natural
gas. Over 4,000 industrial and consumer products are classified as originating from
petrochemicals. A more detailed definition for petrochemicals is “Organic and inorganic
compounds and mixtures that include, but are not limited to, organic chemicals, cyclic
intermediates, plastics and resins, synthetic fibers, elastomers, organic dyes, organic
pigments, detergents, surface active agents, carbon black, and ammonia.” (Webster’s
dictionary)

Petrochemical feedstock is generally classified into three groups known as olefins,


aromatics, and synthesis gas and inorganics. Primary petrochemicals are reacted to
form secondary petrochemicals, other chemical products, or polymerized to form
synthetic resins. In many instances, a specific chemical included among the
petrochemicals may also be obtained from other sources, such as coal, coke, or
vegetable products. For example, materials such as benzene and naphthalene can also
be made from either petroleum or coal, while ethyl alcohol may be developed from
petrochemical or vegetable origins.

Some of the key consumer products developed from petrochemicals are as follows:

• Bags (garbage bags, shopping bags)


• Balloons
• Clothing (polyester, nylon, rayon, panty hose)
• Computers, calculators
• Cosmetics (perfume, hand lotions, soaps, shampoos, cream, make up,
petroleum jelly)
• Credit Cards
• Dishwashing Liquids
• Disposable Diapers
• Eye Glasses
• Fertilizers
• Flooring (linoleum, tiles, carpets)
• Furniture
• Gardening Products
• Insect Insecticides and Repellents
• Life Jackets
• Medical Products (heart valves, artificial limbs, band-aids, tape)
• Parachutes
• Plastics (Toys, milk jugs, pens, paint brushes, curtains)
• Protective Products (helmets, rope, safety glass,)
• Soft Contact Lenses
• Soft Drink Bottles, Plastic Bottles
• Tapes - (cassettes, vcr tapes)
• Telephones
• Tents
• Toys (dolls, model cars)
• Tires (synthetic rubber)
• Toothbrushes, Toothpaste Tubes
• Umbrellas
• Unbreakable Dishes
• Waterproof Jackets, Boots, Pants
• Wax Products (crayons, candles)
Natural Gas Production By Region (billion cubic meters) In 2006
Location Natural Gas Production (billion cubic meters)
OECD 37.6%
Africa 6.6%
Latin America 4.9%
Asia 9.2%
China 2.0%
Non-OECD Europe 0.5%
CIS/Russia 28.1%
Middle East 11.1%
*International Energy Agency

10
Geographical Coverage

OECD
Australia, Austria, Belgium, Canada, the Czech Republic, Denmark,
Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Japan, Korea, Luxembourg, Mexico, the Netherlands, New
Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the
United States.

Middle East
Bahrain, Islamic Republic of Iran, Iraq, Israel, Jordan, Kuwait,
Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates
and Yemen.

Former USSR
Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Republic of Moldova, Russia,
Tajikistan, Turkmenistan, Ukraine and Uzbekistan.
Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Gibraltar,
the Former Yugoslav Republic of Macedonia (FYROM), Malta,
Romania, Serbia & Montenegro and Slovenia.

China
People’s Republic of China and Hong Kong (China).

Asia
Bangladesh, Brunei Darussalam, Cambodia,
Chinese Taipei, India, Indonesia, DPR of Korea, Malaysia,
Mongolia, Myanmar, Nepal, Pakistan, Philippines, Singapore,
Sri Lanka, Thailand, Vietnam and Other Asia.

Latin America
Argentina, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El
Salvador, Guatemala, Haiti, Honduras, Jamaica, Netherlands
Antilles, Nicaragua, Panama, Paraguay, Peru, Trinidad and
Tobago, Uruguay, Venezuela and Other Latin America.

Africa
Algeria, Angola, Benin, Botswana, Cameroon,
Congo, Democratic Republic of Congo, Côte d’Ivoire, Egypt,
Eritrea, Ethiopia, Gabon, Ghana, Kenya, Libya, Morocco,
Mozambique, Namibia, Nigeria, Senegal, South Africa, Sudan,
United Republic of Tanzania, Togo, Tunisia, Zambia, Zimbabwe
and Other Africa.

Japan
Phase II. The “nondifferentiated Smithian” industries: scale -economies-
based modernization of heavy
and chemical industries (prewar-built but war-torn industries) such as
steel, petrochemicals, and
synthetic fibers (the late 1950s to the early 1970s). During this phase,
the so-called “konbinato”
clusters were established along the coasts so as to handle and process
imported bulky raw materials
cost-effectively into finished products (say, ore into iron and steel, and
crude oil into basic
petrochemical stocks such as naphtha) and ship them out for export,
taking full advantage of low-cost
oceanic transportation (Figure 2).
1 Export processing zones (EPZs) are often established in developing
countries to promote labor-driven economic
development by way of attracting foreign multinationals (mass
merchandisers and manufacturers) in labor-intensive
industries such as garments and shoes. Japan did not officially set up
EPZs in any particular locations, but some jibasangyo
clusters played the same role as EPZs’.
6
Figure 2 Konbinato Clusters
A. Petrochemical complex
Trade
Imports of state-of-art technology
Oil refinery Crude oil import
(low transportation cost)
Natural Deep-sea coastal
gas port facilities
Electric
power plant
Petrochemical complex Shipping out/export of
Energy petrochemical stocks
Other industries (e.g., plastics)
B. Integrated steel complex (e.g., Kawasaki)
Trade
Imports of state-of-art technology
Integrated steel mill
Imports of iron ore and
Energy Deep-sea coastal coking coal
port facilities
Steam power plant
Shipping out/export of
steel and related products
Steel-related industries
(e.g., shipbuilding,
machinery)
7
The konbinato was a combined creature of government policy,
geographical attributes, and industrial
characteristics, an outcome that turned out to be an unexpectedly
efficient way of organizing resource
(raw materials)-based production by reducing production and
transaction costs. In fact, this particular
type of industrial clustering enabled Japan to once become the world’s
largest and most competitive
steel producer and exporter.
Japan’s oil refining and petrochemical industries were also built in
combination with steam-powered
electric generation facilities in such a way that the large amount of
exhaust gas produced during the oil
refining process was utilized by the electric power industry. The
availability of power in turn attracted
other industries as well, thereby resulting in cluster agglomerations
(Uchino, 1983).
To finance these capital- intensive industries the so-called “main bank”
system and Keiretsu also
characterized this stage’s industrial organization (Keiretsu, Mark I).
There were six major keiretsu
groups, each of which was initially led and coordinated by a major bank
during Japan’s modernization
of heavy and chemical industries from the mid-1950s to the
early1970s. For example, the Mitsui group
by the Mitsui Bank, the Mitsubishi group by the Mitsubishi Bank, the
Fuyo group by the Fuji Bank,
and so forth. All these groups vied with each other in setting up a set
of modern industries, creating a
mini-economy within themselves. This phenomenon came to be known
as the “one-set principle”
(Miyazaki, 1967). Each keiretsu bank was able to finance capital-
intensive industries by bank loans,
since it in turn was able to borrow heavily from the Bank of Japan. 2
The konbinato clusters were thus
created by inter-keiretsu rivalry (oligopolistic competition) and under
the government’s industrial
policy and state sponsorship of funding and capital intensification
(dirigisme).
Phase III. The “differentiated Smithian” industries: parts-intensive
manufacturing of