Exclusive extracts from this 66-page-long report:
- Who are the key players?
Leading steel producing companies are mostly vertically integrated pure players. ArcelorMittal remains by far the world's largest steel maker, both in terms of output and revenue. The 2016 merger of Baoshan Iron & Steel and Wuhan Iron & Steel, supported by the Chinese government's objective to consolidate its domestic market, has led to the creation of the world's second largest steel producer, China Baowu. More generally, public support measures (subsidies, easy access to cheap credit) and strong domestic demand have propelled Chinese players among global market leaders since the 2000s. [...]
Groups analysed in this report include: ArcelorMittal, Nippon Steel and Sumitomo Metal Corporation (NSSMC), Posco, Baoshan Iron & Steel (Baosteel), Tata Steel, Nucor, Gerdau, State Authority of India (SAIL), U.S. Steel and EVRAZ.
- What are the players' strategies?
Asset portfolio optimisation – by divesting non-profitable or low-profit activities and focusing on higher-yielding products and activities – is among steel makers' key strategies to reduce costs and improve margins. The world's largest steel producer ArcelorMittal has been particularly active in this regard, by proceeding to strategic divestitures such as the sale of its wholly owned Spanish subsidiary ArcelorMittal Zaragoza, for €80 million. On the other hand, Posco has focused its strategy on developing high-value-added steel products designed for the automotive industry by opening a dedicated plant in Thailand and by strengthening partnership with car manufacturers. […]
- What are the players' key growth and profitability drivers?
Weak global demand and structural oversupply have heavily weighed on steel makers' revenues and profitability in recent years. Over 2012-2016, the world's largest steel producer ArcelorMittal has seen its revenue decline by an average 5.9% per year, while Posco's sales decreased by 4.4% annually. Meanwhile, steel producing companies specialised in one particular high-value-added market tend to record high profits. Russia's EVRAZ, which focuses on the manufacture of railway steel products, for example enjoyed an average margin of 9% per year during the 2012-2016 period. [...]