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Consumption with the global steel market has been forecast to hit 2.2 billion metric tons by 2018, with the industry set to be driven by rising demand from developing countries that are witnessing massive infrastructural and industrial development activities.
Steel is an alloy made by combining iron and other elements, the most common of these being carbon. When carbon is used, its content in the steel is between 0.2% and 2.1% by weight, depending on the grade. Other alloying elements sometimes used are manganese, chromium, vanadium and tungsten.
Touted as a true barometer of the economic health of a country, steel finds extensive applications in a multitude of industries across the globe.
Getting a definite count on the number of steel mills in the world and actual production capacity is difficult in large part, because there are hundreds of small, uncounted mills in China, which accounts for 46% of world steel output. Estimates for the number of steel mills in China range from 600 to 800 mills.
With commodity and stock prices low, this is a rough climate for metal and mining mergers and acquisitions: The total value of deals in the sector was down 43% in the first nine months of 2012, to $76.8 billion from $133.7 billion in the first nine months of 2011.
The trillion-dollar-a-year global steel industry is expected to remain, for the foreseeable future, the most fractured of major industries. The world's top five steel companies control only 18.2% of global steel supply.
However, the global steel market currently has a very big problem, it's too big and it's getting bigger.
This year, steel mills around the world have a production capacity of 1.8 billion tons but will take orders for only 1.5 billion tons. And instead of consolidating and becoming more efficient, the industry is building still more capacity.
By 2016, an estimated 100 new mills, with total estimated supply capacity of 350 million tons, are expected to come on stream, according to industry executives and consultants. Companies in Vietnam, Argentina, Ecuador, Peru and Bolivia, all backed in some way by their governments, are building or planning new mills.
Despite the immediate challenges, future growth in the steel industry is forecast to stem from rapid urbanisation in developing countries, since strong urban concentration will trigger increases in infrastructure expenditures, and urban planning. The creation of large megacities involves the construction of high-rise buildings and skyscrapers which in turn provides a fertile environment for the growth in demand for steel.
For more information on the global steel market, see the latest research: Global Steel Market
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