| Experience with World of Steel | Date: 3/10/2011 |
It was the month of August, when I came to know about the brand World of Steel from my seniors. They had come to Mumbai for some project and told me about the great experiences they had working with Mr. Daanish Ellias and Mr. Gitesh Chavan which in turn motivated me to get in touch with them.
After a series of conversation and exchange of e-mails I got an opportunity to work on a project which had to deal with the “Technical, Marketing and Environmental aspects involved in Steel Trading and Manufacturing”. I found the work very interesting as well as challenging because it provided me with an opportunity to enhance my analytical abilities along with my Technical knowledge.
Working with World of Steel was a good learning experience for me where I also got a chance to develop an understanding as to how Business are carried out in this modern corporate world in a practical way and in a broader perspective. One thing which genuinely needs to be appreciated is the hospitality which the company offered me. I was provided with an authority to consult and approach the Owner directly without any hesitation and he was very kind in helping and providing assistance in any form.
On the other hand, I was glad and felt satisfied when my work was admired by the employs as well as the Owner and proved out beneficial for the Company ultimately resulting in mutual benefits. I enjoyed doing all the hard work and the research which also helped me in a better understanding of the subject and has given me immense confidence.
Karan Vohra
B.Tech IIIrd Year
Department of Metallurgical Engineering
IIT-BHU
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| How far has India come? | Date: 21/2/2011 |
The recent news of steel centers and marketing offices being opened by Essar in Europe for distribution is a culminations of many small and some big steps taken by the Indian Steel Industry. If one was Rip Van Winkle and had just woken up after a 20 years of snoozing, it would have been extremely hard to digest. Gone are the days of British Steel, Hoogovens, Sollac, Cockerill and so many other steel mills in the developed world. For Indian Mills it has been a journey of audacity.
The fire was lit by Lakshmi Mittal and it has spread like wild fire with Tata's takeover of Corus and the global growth of Jindal and Essar. Of course one can never discount the Chinese but the growth of Indian Steel Mills has been more entrepreneurial and it seems to be more effective as they seem to blend better in the global landscape.
Needless to say, India will always remain a large market and this is from where the Indian Steel Mills draw their strength and momentum. Globalization of Indian Steel Mills will help Indian consumers as best practises and improvements in steel and steel making are replicated in their operations in India.
We are living in a world where Multinational companies need to Indianize themselves to grow while Indian companies are becoming (and have become) multinational. What an exciting time when graduates prefer Indian companies for careers.
Of course we have to continue being humble and learning. An occasional smile, like this one, is perhaps in order as long as it does not go to our heads. India has the demographics of a large young population. It is the education and skill that they get along with governance from Indian politicians that will either make or break India's journey and its destiny as a leading global power. India's entrepreneurs have the gumption and the audacity.
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| Escalating Prices -- A bullwhip effect | Date: 14/2/2011 |
The recent steel price escalation reflects the classic bull whip effect in the global steel supply chain. Primary reason is the constraint of Coke supplies from Australia due to floods in Queensland. This disruption in Coke has created an exponential cascading effect on the steel supply. It is well above the price increase in Coke. Across the supply chain there is hoarding of steel as mills increase prices leaving the end users scrambling for their purchases.
Yet another explosive bubble is building up. Already Hot Rolled is being talked of in the region of USD 1000/- in coming months. Of course at some time (maybe a few months), Coke supplies will stabilize. Mills will be able increase their supplies and resulting slight downward trend will result in panic selling and then the bullwhip will be in reverse. Demand will die and and panic will result with mills unable to move materials result in further lowering and backward exponential cascading effect. The reverse bullwhip will be even worse and of course leave many shell shocked (and possibly too overstretched to survive).
If only we could be brave when others were fearful. And fearful when others were brave.
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| Breaking News!!! | Date: 14/1/2011 |
Dear Friends,
You probably saw the below article or a similar story in other publication. I just want to comment that I believe there is now no doubt the prices for all steel products are going to continue upwards (perhaps quite rapidly). I don’t know if you have been tracking the recent spot prices for HRC, Billets, Scrap, Iron Ore, copper, etc. etc. I believe you will see prices higher by $ 100 p/MT for many flat rolled steel items by month’s end, and then is on top of the already announced price increases for first quarter. It will not be long before mills announce raw material surcharges effective within the next few weeks in order to compensate for their higher costs and force prices upward. It would be prudent to purchase materials as soon as possible, as I predict items will just become more expensive as time passes.
Australian coal exports disrupted by Queensland floods
- 04 Jan 2011
Herald Sun reported that coal exports worth billions are being disrupted by severe floods that continue to devastate vast areas of Queensland. Rail networks linking mines to the ports have been washed away, halting coal trains and leaving a queue of ships off the coast waiting to be loaded.
49 ships were anchored off the Dalrymple Bay coal terminal, near Mackay, while further south another fleet sits waiting off the Port of Gladstone. Forecasts of heavy rain until late this week pose an ongoing threat to a region that produces almost two thirds of the world's coking coal and, prior to the floods, was forecast to post export sales of USD 33 billion in 2011.
Mr Michael Roche CEO of Queensland Resources Council said that mining companies are bleeding tens of millions of dollars in lost production.
The big wet has prevented many mines from amassing carryover stockpiles to aid them through a crisis. As a result, coal mines with an annual production capacity of at least 80 million tonnes or about 30% of Australia's coal exports in 2010 are now under force majeure, a contractual clause allowing miners to miss delivery deadlines without penalty.
BHP Billiton, Mitsubishi, Anglo American, Xstrata, Rio Tinto, Peabody Energy, Vale and Macarthur Coal have all declared force majeure on their affected coal interests. Overseas steel mills reliant on the region's supplies face sourcing stocks from rival competitors in other countries.
At Dalrymple Bay loading resumed at the weekend after floods and a derailment blocked the line for seven days, stalling exports worth as much as USD 4 billion. The floods also forced Wesfarmers to suspend mining at its Curragh North operation.
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| Chalo Dilli | Date: 1/3/2011 |
Taking a flight from Delhi's spanking new Terminal 3 is an experience and the journey truly begins with the Airport train from Shivaji Stadium. The experience is international from beginning to end. The station, the train with the journey progressing on the monitor makes one wish you could spend some more time before arriving at the terminal. Alas it is just about 15 minutes ride. But fortunately the new terminal does not let one down with its spaced check-in counters, ample security scanners, an array of stores and food joints.
it is an amalgamation of inspirations from Swarnabhoomi airport (Bangkok), Dubai airport, Changi (Singapore) and HK airport (definitely the airport train). And the execution is spot on.
Delhi metro and Delhi airport have indeed set benchmarks and hopefully the infrastructure coming up in the rest of the country will meet and exceed these standards. No question India has come a long way on execution and building world class project. One just wonders what happened at the Commonwealth Games. Hopefully it was an aberration and we have learnt lessons from it.
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| Happy New Year | Date: 1/1/2011 |
2011 will hopefully bring better tidings across the steel supply chain. The recession wounds are still healing and last thing we need is another jolt. Overall our assessment outlook for steel for the year is moderate. The international prices may go up in the short run especially at the time of the year when the jostling for prices begins. A couple of months of supply tightness is expected as mills try to get their prices and buyers hold back their purchases.
Europe along with USA remain a worry with the growth no where in sight and some economies still struggling. Turkey seems to be the bright spot since it considers itself part of Europe. However perhaps its links with Asia more particularly the Middle East that is giving it the growth impetus along with its young population and sound economic policies.
The emerging markets are holding up nicely although India has some concerns on its Current Account deficit. Brazil seems to be doing well but the new Government will need to match the charisma of its former President Lula. China is the unknown. Will its property boom continue through the year? I Africa should continue growing. So will Middle East as they continue to broad base their economies from petroleum to feed the aspiration of their booming populations.
Local mills across the globe have ramped up their productions. So international trade would be more freight driven and perhaps regional. Free Trade Agreements will continue playing a role due to duty advantage. China will continue being a factor in International trade with its continued over capacity. But according to us it will lessen due to a combination of rising cost of production, appreciation of yuan and reducing Government subsidies.
So outlook is not gloom but it is also not a time to celebrate. It is a time to continue keeping our heads down and staying focussed on the long run.
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| Location, location, location | Date: 10/3/2010 |
No question location is the key to any business. It could be a main street, or outskirt of a town or a confluence of roads, rivers or for that matter a port. It can also of course evolve with time.When I was a kid growing up, it was Taloja biryani on the way to Poona (sorry Pune). The NH4 highway put an end to it and just as the expressway has done to many other businesses along the NH4 highway.
Likewise Hong Kong was for for business to China before the mainland Chinese became more enterprising and the country itself opened up.
But there are some locations that at first glance look certainly more permanent. At the confluence of East and West, stands Turkey straddling both Asia and Europe with access to markets in North Africa, CIS and Middle East. Maybe its infatuation with Europe and accession to EU has not allowed it to develop its location more strategically. But its loss has perhaps been the gain of Dubai at least until its own infatuation with real estate and building castles in the sand.
But to its credit, its Freezones do attract businesses from Asia and Europe making it a major transit port. And of course its own airline became its crowing glory connecting countries even in the Far East to the Americas and taking a large chunk of traffic from the domestic airlines of various countries.
Of course location is fluid. It will be interesting what the future beholds. Who would have thought of the steel industry shifting to the East. Or the rise of the BRIC nations. Or that what happens in Beijing and New Delhi will soon perhaps be more important than in Washington and London.
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| Iron Ore price increase bringing the Steel Industry to its knees | Date: 28/6/2010 |
Our laments about unjustified price increases and their damage to the economy and the steel industry itself have found their echo in the following interview of Thyssenkrupp CEO Ekkehard Schulz:
http://www.spiegel.de/international/business/0,1518,697930,00.html
Do read it. The comments are strident and justified about the 100% price increase on Iron Ore and the damage it will cause to the economy as a whole. Our views are complete in sync. The steel industry is unable to pass these costs as buyers withhold their purchases and users actually find substitutes.
Unfortunately the Australian Government's taxation proposal on the abnormal super profits of the mining industry is not finding backing within the country. Surely the greed of 100% price increase by the mining industry needs to be curbed for the greater interest of the steel industry and the fragile global economy. We have seen the havoc of the unbridled greed on Wall Street.
Unfortunately greed is universal. And even the steel industry has shown its repeated impunity to raise prices unjustifiably and on even existing contracts and indulge in rationing and profiteering. The shoe is of course now on the other foot. It is obviously a heavy shoe,...a leaden one that is dragging the entire industry down a hole. It has a greater potential for damage because the iron ore mining industry is controlled just by three or rather two players.
Fortunately the Chinese Government has announced withdrawal of export benefits on steel which should curb its voracious appetite for iron ore. It is a sensible move because the steel exports of China (and its over capacity) is feeding a pricing frenzy by the mining industry. Ironically by subsidizing its own steel exports, China was transferring its revenue to the rest of the world while raising its own cost of production. A double whammy indeed.
It will be interesting how the situation plays. The mining industry can only meet their match with the Chinese. Lets hope the Chinese prevail and stay dogged in curbing their exports and cutting their over capacity. It will be in their own interest and of course in the interest of the industry and the global economy.
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| To Sir, With Love | Date: 4/6/2010 |
Sidney Poitier and this fantastic movie is more poignant than ever. There is a lot one can crib about the state of education in India but lets also celebrate the islands of excellence in education. The islands are of course our IITs. Certainly a gift to our nation from a great mind....Jawarhal Nehru. What Stanford is to the Silicon Valley, the IITs are to our country's growth and confidence.
They are also back in a new reincarnation for people who did not have the privilege of attending (or making the cut as one may say) while in their teens and twenties. Am speaking of their Continuing Education Programs. From personal experience their programs in Business Excellence, Steel Casting and the more intensive Human Resource Development and Marketing Programs are treasure troves waiting to be discovered. Not to mention their programs in Mathematics to get minds whirring again after gathering a bit of rust.
These are of course the programs at their vibrant Mumbai campus located around the scenic Powai lake. All are little gems, delivering more than expectation in a typical understated IIT way. Each is a voyage of discovery backed with the resources of IIT, in a live classroom environment comprising of young engineers along with marketers from FMCGs, entrepreneurs and senior professionals. Each participant sharing his or her own experience and learning from the intense interaction.
What you need is just curiosity and ability to share. What you can take back is personal growth, the joy of learning and reinventing yourself and of course life long bonds. So what, if your professors happen to be younger than you!
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| Yet another steel bubble??? | Date: 24/3/2010 |
It is March 2010 and with the soaring temperatures, steel prices are adding to the global warming along with shipping lines playing games to extract freight increases. Unfortunately, we still live in the world of bullying. It is either the big three in iron ore with an 80% price increase, or the steel producers (some what justified based on raw material inputs) or the shipping lines. In a world where getting 5% price increase requires persuasion, repeated meetings and presentations, some people can actually get these price increase extracted. That too in a world still gasping for breath after the global recession with a slippery recovery and a long hard road ahead to get back to the 2007 levels. Of course there are spots of brightness but these are far and few.
Newspapers, financial experts and economists are still cautious about recovery and the huge debts that come up for payment a couple of years down the line. Buyers are still buying for inventory (which admitted has run down). No one wants to take risks and mills still have substantial unused capacities to ramp up production. The world has moved into a bubble economy. To get back growth, new bubbles are being created (it can be called economic stimulus). To cure (or burst) one bubble, another one is created. We remain on a wing and a prayer. And the journey ahead gets increasingly turbulent.
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| Steel Recovery: Does it have legs? | Date: 31/8/2009 |
It is now one year since the Great Crash in steel prices. We have all done our reflections and introspections. Question however remains if we have learned our lessons. The answer to us is NO. Yes the multiple Government stimulus packages have worked to save the economies; "Cash for clunker" have revived auto steel sales. But to us these are temporary measures to save the economies from total collapse and the Governments will soon run out of ammunition for repeated interventions. And it is only real demand not steroid driven demand that can revive steel consumption.
Unfortunately irrational exuberance is creeping back (did it ever go away). Steel mills are raising prices left, right and centre while service centers and end users are only cautiously restocking their inventories with staggered purchases. Capacities are also coming back online! Will the resulting overcapacity sustain the discipline the mills had in controlling supplies? Does the exuberance have legs or are we going to go through another price correction (to put it mildly) that will once again bring back the headaches of high priced inventories.
The wreckage of the price crash still remains and we are already prematurely celebrating. Are we kidding ourselves into another bubble? The worst may be over but any revival which is not gradual and sustained will result in yet another crash...the dreaded "W" shaped recovery!. Already HR prices are now under pressure in China. Is it a temporary blimp or will it infect the rest of the world? It is undeniable that global steel trade has fallen in last one year and recovery is very marginal and customers are relying on prudent purchases from domestic mills. So where will the capacities coming back online go? Will we see global price wars and discounting to move inventories which will inevitably build up.
There are just too many questions. While we are cautiously optimistic because the global economic recession seems to be have found the bottom, we also remain cautious and skeptical about the myopic exuberance. It seems misplaced and could once again come to haunt us. We admit our crystal ball is not clear. So it would be prudent to be cautious on the foggy road ahead of us and make sure the entire supply chain recovers in tandem.
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| The Hidden Ingredient In China's Success In Manufacturing | Date: 7/12/2009 |
Much can be said about China being the factory of the world. Make no mistake, however, that it is also on its way to becoming a technology and an innovation leader. The ecosystem is there and there is a discipline in its method.
Several things could astonish one about the factories in China. It could be the organization at the floor level at even mid-sized factories or they being spotlessly clean or their innovative loading and unloading facilities or their simple yet effective solution to problems.
But to me the most astonishing is the camaraderie the bosses and the workers enjoy.
Cigarettes along with warm handshakes are exchanged yes even with the workers.And this seems ingrained rather than feigned or practiced. This camaraderie to me is their secret ingredient of their success in manufacturing. I don't seem to feel the envy of the workers towards the bosses and their BMWs (incidentally Chinese love cars). If you are at lunch time, you can often see food trolleys moving across the shop floor with warm rice and vegetables.....may not be a fancy lunch but it is definitely nutritious and filling.
Also don't be surprised if your driver joins you when the managers take you for lunch to a restaurant. Or join you for a game of ping pong and even demolish the boss with some sizzling smashes.
Maybe we in India lack this camaraderie (you can call it teamwork in manager speak) and are burdened by our legacy of class and caste. Maybe our managers need to walk the factory floors more and build a sense of camaraderie down the line instead of filling newspapers with their strategies and talk. And the CEOs need to spend a little less time glued to the computer screens following the sensex and more time with the ears and feet on the ground.
We cannot remain a country with islands of excellence in a sea of mediocrity. We have to pull together and develop a shared vision right down to the floor level. We have to pay attention to details because opening containers from India at a factory in China can be a gut wrenching experience. The worst packing and loading will invariably be from India
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| BIS Certification --- Update | Date: 19/2/2009 |
The Indian authorities have taken a measured and thoughtful approach. They have worked with the steel community in understanding the industry and the implications of BIS standards
Lets hope Foreign manufacturers' international standards (Japanese, EU, Korean standards are also extremely stringent and accepted globally) are accepted in lieu of BIS standards. The application process is simplified and the cost scaled down considerably. For the sake of the industry as whole a level playing field must be maintained and the steel user industry must get competitive prices and specifications/steel unavailable in India..
Beggar-thy-neighbour policy is a policy that will doom the entire domestic economy and the authorities must continue working with steel community because this global financial crisis will continue for sometime and perhaps worsen before the global economies stabilise and grow again. A misstep or a knee-jerk reaction will harm the industry creating closures, unemployment and social unrest.
This is a going to be a test for the Steel Industry and for Governments to be sensible despite increasing pressures it will face from sections of the industry.
A recap of the BIS is as follows:
I) In Effect from 12 Feb 2009
a) 1785 (Part - I) : Plain Hard-drawn Steel Wire for Pre-stressed Concrete - Part I : Cold Drawn Stress-relieved Wire
b) 1785 (Part - II) : Plain hard-drawn steel wire for Pre-stressed concrete: Part 2 As drawn wire
c) 6003 : Indented wire for Pre-stressed concrete
d) 6006 : Uncoated stress relieved strand for Pre-stressed concrete (First Revision)
e) 13620 : Fusion boned epoxy coated reinforcing bars
f) 14268 : Uncoated stress relieved low relaxation seven ply strand for Pre-stressed concrete
II) Postponed to 12th Feb 2010
a) 277 : Galvanized Steel Sheets (Plain and Corrugated)
b) 648 : Non-oriented electrical steel sheets and strips for magnetic circuits
c) 2002 : Non-oriented electrical steel sheets and strips for magnetic circuits
d) 2041 : Steel Plates for Pressure Vessels Used at Moderate and Low Temperature
e) 2830 : Carbon steel cast billet ingots,billets,blooms and slabs for re-rolling into steel for general structural purposes
f) 2831 : Carbon Steel Cast Billet Ingots, Billets, Blooms and Slabs For Re-rolling into Low Tensile Structural Steel
g) 3024 : Grain Oriented Electrical Steel Sheet and Strip
h) 15391 : Cold Rolled Non-Oriented Electrical Steel Sheet and Strip - Semi-Processed Type
III) Omitted
a) 1786 : High strength deformed steel bars and wires for concrete reinforcement.
b) 1993 : Single cold reduced tinplate and single cold reduced blackplate - electrolytic and hot dipped tinplate sheet and blackplate sheet
c) 2062 : Steel for General Structural Purposes
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| Steel Exchanges | Date: 17/2/2009 |
A promised potential that has never quite taken off. In 2000 it seemed steel would turn virtual but the dot com bust made a reality check. Since then there have been several efforts to revive some of these ideas and a few with a possible success.
We have not been able to take a firm position. It sure sounds doable and great on paper and even when programmed. It may have benefits to even out the volatility in steel. It may make steel trading more efficient.
The downside seems as negative and daunting.
There is a reluctance on the part of Steel Mills to use the steel exchange and to outsource their years of insight to another entity. There is concern about governance and neutrality of the steel exchanges and buy-in from the community at large. And how deep do you eliminate intermediaries. Some maybe actually adding value to the steel. Others through financing and the justification could go on. And when the market turns negative where do you transfer your pain (it could be called "share" when there is an existing relationship).
Steel itself is complex. It may be possible to have bench mark price for commercial grade Hot Rolled coils but what about other grades, the quantity, the financing and despite the strides made in quality, there is always a little premium on past relationships, quality controls at the mills and just the unquantifiable psychological peace of mind.
Sure education and seminars are being undertaken by steel exchanges. And some steel in some places is moving on to the steel exchanges.The technology is there and it keeps improving. It will probably be the commercial grades and the commodity items like billets and Hot Rolled. But there will be reluctance on the part of the mills and buyers to move higher grades and value added products to steel exchanges.
There is increasing cross collaboration between the steel maker and steel user and this can only happen on the shop floor or with intensive technical discussions and experiments. Neither would like to vaporize this synergy and knowledge bank that develops.
There is also the hindsight of the fiasco in the banking industry where technology took away the human insight into customers. Esoteric financial tools can transfer liabilities from one entity to another until it comes back to haunt the entire industry. Investment Funds can create froth, fictional prices and bubbles and subsequent panic which can put the savings of entire communities at risk and leave the steel industry gutted. And a bit of correction or cyclity which the steel exchanges try to iron out may actually help prevent the deep "V"s that can destroy an industry for years.
It will probably be nice to comment on this every year or two. There will be debates within the industry. At our end we are impressed with some of the trends but continue having our share of concerns. We of course keep ourselves clued in.
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| BIS Certification | Date: 31/12/2008 |
It's Here .....BIS Certification For Steel In India
This is a topic that one can call glocal. Today it is India, tomorrow it could be anywhere else in the world. And it does have implications for steel exporters across the globe.
Is the legislation "Stealth protectionism" or is it an "Enlightened legislation"? The answer is not simple. In all fairness the legislation needs to be studied in depth and passing simplistic judgements will not help.
Firstly it was to have come into effect in 2007, there were extensions and finally now it will come into effect from February 12. If you have been caught napping, you cannot really blame anyone....the notification has been online at bis.org.in for quite some time and the authorities have done their duty.
It may hurt us in the short term but greater professionalism is the need of the hour within the steel industry and we need to ensure quality steel is utilized by the industry.
Unfortunately the legislation has several ambiguities which will result in delays in import clearance, selective interpretation by authorities and dealers/importers and a atmosphere of uncertainty.
The cost of getting BIS certification for a foreign manufacturer is exorbitant This certainly needs to be revised. Domestic or international standards being followed by the foreign manufacturers should be recognized by the BIS authorities. Payment for visit of inspectors from India may not be viable for manufacturers and it would add to the cost of doing business in India. The period of certification is also very short.
The legislation also does not spell out the documents that need to be maintained for certification. It just mentions that the authorities will need access to documents and records.
According to us, instead of opposing the legislation, the steel community should work with the authorities to seek clarity, fairness and smooth implementation.
Our suggestions would be:
- a six month transition period be granted.
- Manufacturers' ISO certificates, test certificates be accepted for grant of BIS certification
- Allow tests to be carried out domestically to ensure the product meets BIS Standards
- laboratories be appointed near the major ports and ICDs by the authorities
- the legislation along with the clarifications, laboratories be widely advertised in newspapers.
The authorities should also understand that many steel specs are not produced in India and there is a huge steel using industry as well that needs to be heard.
Finally, the domestic steel manufacturing industry should also follow the BIS requirements in letter and spirit.
Are we asking for too much? Next few months will be interesting as the steel community grapples with this issue and comes to term with this legislation.
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| A Time To Reflect | Date: 27/12/2008 |
What better time to start a steel blog than the year ending 2008. A year that saw historical highs in steel prices followed by gut-wrenching drop in prices as the financial crisis infected the globe and demand died on us.
This is indeed a time for reflection....to take a deep breath. Normal adjectives cannot describe the year in the steel industry. 2008 started with price rises across the globe as the mills worked in the astounding increased price of raw materials. April/May 2008 reached the zenith in prices as we hit historical highs never seen in our times (and we have been around for some time). July was a pause and what followed was a drop off the cliff....without parachutes.
Probably finding answers will be difficult and it will only be hindsight until we forget and have a next time. However along with the rest of the world it was one common affliction that affects mankind..."greed"
Iron Ore saw price increases of over 65%, oil hit almost USD 150/- a gallon, coke and all minerals and metals reached astronomical highs. Sure demand was growing in emerging markets but price increases were irrational...squeeze the customer to his limits.
The mills in turn renegotiated contracts and added surcharges and everything boiled over. Where was our common sense! At that very time U.S. housing crisis was unfolding but we believed we were decoupled and the world had several engines. We refused to believe in an interconnected world while the industry had itself become interconnected and global.
Come August 2008 and we received one jolt after another. Housing crisis turned into a global banking crisis. Liquidity died on us. Real estate and infrastructure projects came to a grinding halt. Auto industries began curtailing production. What started as a seemingly benign price correction turned into a price crash. High priced inventory, falling demand, contracting bank credit burnt global traders, mills, service centers and within no time the booming first half 2008 turned into a graveyard of failed hopes, goals and disputes.
Fortunately the industry has shown discipline as production cuts have come across the globe. Inventories are running down, financial stimulus should be working through the global financial system however 2009 will be a year of rebuilding trust and reassessing strategies.
But we need to be careful. Irrational exuberance is being replaced with irrational timidity and anti-dumping mechanisms are rearing their heads which may make a bad situation worse as domestic produces wield their political leverage to curtail imports and set back an industry that was truly turning from a rust belt industry to a 21st century global, well-oiled industry.
We need to keep our hopes in place and our fears in check. And meet the challenges courageously as they unfold. No doubt 2009 will be a year for pause and contraction
To speculate on prices is going to be a hazard. Experts have gone from one extreme to another. We have to accept that we are a part of the larger global economy and we cannot talk up the prices. Until the financial system finds its bearings the steel prices will find it difficult getting traction. There will of course be periods of restocking and price movements due to simple demand and supply mismatches.
However we need be honest with one another and work fairly as trust worthy reliable partners with of course a reasonable profit. The steel industry and steel using industry has never had a high level of trust. Maybe it is finally time we changed and moved beyond talk. If anything it will save us from a future bust if we truly believed in interdependence.
The growth in steel will eventually return. There are massive swathes of land in Asia and Africa that will develop and people's aspirations in these developing economies will follow.
So lets be positive and ring in the new year. Happy New Year to everyone. If you have a comment, suggestion or topic you would like us to cover please email at daanish@worldofsteel.com We would love to hear from you.
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