Following up on yesterday’s post: Cement production, consumption & price trends, this one talks about steel.
Steel production has only gone one way for most of this decade, with Chinese capacity growing by leaps & bounds:
China leads the way in consumption growth, of course:
As for prices, they have been in a strong uptrend since 2002, but you can also see the cyclicality since 1981:
For a longer term view of the steel industry, do check out the World Steel in Figures report, published by the International Iron and Steel Institute (IISI).
Coming to India, I would think that steel prices will face most of the same head-winds in 2009 as cement - slower economic growth, slowing construction (both residential & commerical), oversupply, etc. One difference is the impact of imports - while cement has a short shelf life, steel does not. Thus, if the Chinese decide to dump excess steel all over the world and the Indian government doesn’t levy obscene import duties (want to reduce inflation - remember?), then domestic steel prices are bound to drop.
Now, Arcelor Mittal’s spectacular results would lead us to believe that the good times ain’t over for the steel industry, but note this:
. . . the company only shipped marginally more steel in this period compared to last year, 29.8 million metric tonnes versus 29.2 million metric tonnes in the second quarter of 2007. That means almost all of the company’s revenue increase was due to spiking steel prices.
As always, things appear the rosiest near the peak - my bet would be on a cyclical downturn in steel rather than a plateau at such high prices.