Prime Minister Modi revamped India’s economy with his “Make in India” initiative. (Source: LinkedIn)

Most notably, Prime Minister Modi launched the “Make in India” initiative in September 2014, showing his resolve to revamp the manufacturing industry in India. Under the initiative, domestic as well as foreign companies are encouraged to manufacture their goods in India with the goal of increasing the makeup of the manufacturing industry to 25 percent of GDP by 2025.

At the heart of the initiative is the government’s efforts to ignite the steel industry. The National Steel Policy (NSP) 2017 declared that India will become self-sufficient on domestic steel supplies by increasing its steel production capacity from 122 Mt in 2015 to 300 Mt in 2030. However, the steel industry currently only makes up 1.04 percent of the country’s GDP.

Challenges Ahead for India’s Steel Industry

Despite India’s promising potential and robust government support, the steel industry has not met the government’s high expectations and growth has been modest. According to researchers in volume 4 of the Asian Steel Watch, there are deep structural flaws within India’s steel industry that need to be addressed before the country can reach its full potential.

One of the industry’s biggest challenges is its growing debt – In 2016, the steel industry surpassed INR 3 trillion in debt. Most of the country’s steel and infrastructure projects are financed by the government. What India needs is more private sector involvement, but private players are hesitant due to complex regulations, a lack of business models and no guarantee on returns on investment (ROI). The government has also been slow to secure FDI because, over the years, India’s steel industry has displayed poor planning and management of projects as well as a mismanagement of funds.

India’s mining industry will directly affect the success of the steel industry. (Source: Pinterest)

Another major challenge has to do with India’s natural resource management, as mining companies do not have fair access to the country’s abundant resources. The mining industry is subject to heavy tax burdens including the royalty, local area development tax, forest development tax and much more as it is a profitable business for the government. Plus, the costs of meeting international environmental standards are passed directly onto mining companies. Thus, the price of iron ore and other minerals do not reflect the abundant supplies available, and the higher prices ripple into the steel industry.

Moreover, the government regards the steel industry as the backbone of India’s economy, but in reality, the times are changing.

Technological advances in the manufacturing industry is making the steel production process more efficient and less labor intensive. (Source: South China Morning Post)

In the past, 70,000 workers were required to produce 1.5 Mt of steel. Today, it takes about 3,000-4,000 workers to make 5 Mt a year. The steel industry is just not what it used to be in terms of the positive effects it had on the economy as a whole. The industry requires intensive capital and the only way it will survive is with low labor costs and maximum manpower productivity.

India needs to take full advantage of the country’s abundant resources and capitalize on its competitiveness to reach its full potential. In order to do so, India can start by examining other steel industries that served as the main driver for national economic growth, such as Korea’s.

Takeaways from Korea

After the Korean war in 1953, Korea had to build its economy up from scratch. Like India, the government chose to stimulate its steel industry and spent its war reparations payment from Japan to build POSCO’s steel mill in 1969. Since then, the state-led steelmaker has been a primary engine for Korea’s miraculous economic growth.

The construction of POSCO’s headquarters began in May 1968.

So how did Korea manage such growth?

The government allocated much of its resources to infrastructure construction for efficient logistics and implemented policies to support the mutual growth of steel and steel-consuming industries. Moreover, the government practiced protectionist trade policies long enough to get Korea’s steel business on its feet, then supported a market-driven business model.

The government also kept a close watch on supply and demand forecasts and updated its supply policies timely and accordingly. Factors such as demographic changes, industrialization patterns, urbanization and labor costs should be examined holistically to prevent the gap between supply and demand from increasing too much. For example, in 2010, the Korean government implemented capacity expansion policies that resulted in oversupply and a prolonged recession. This was because policymakers failed to diagnose the symptoms of the mid to long-term steel demand forecasts that showed sluggish demand. Since then, Korean policymakers keep close watch on such measures to update the country’s supply policies.

Finally, the Korean steel industry invested heavily in knowledge accumulation and R&D to wean off of Japan’s technical support and become an exporter of steel technology.

POSCO is now a leader in steel production technology.

Compared to Korea, India has an advantage in almost every aspect. The country’s per capita steel consumption is still low and the booming population will drive demand in steel-related industries. With much room for growth, the Indian steel industry can expect to see accelerated growth when paired with the right policies and government support.

Biggest Challenges in Bridge Construction

The major challenges for building urban bridges are the availability of skilled labor, access to urban areas and environmental compatibility.

A worker paints the Anzhaite Long-span Suspension Bridge in Jishou, Hunan, China (Source: The Daily Mail)

Building bridges in megacities with the current scarcity of skilled labor will require a massive recourse to prefabrication. In a few circumstances, prefabricated bridge units will be transported on water with tugs and barges, which will allow the use of heavy, large units. In most cases, prefabricated bridge units will be transported on the ground through congested urban roads, which will lead to the use of light, modular units.

A floating crane lifts prefabricated deck sections onto the San Francisco-Oakland Bay Bridge (Source: San Francisco Public Press)

The availability of deck assembly areas and the interference of construction operations with adjacent infrastructure are additional challenges that will govern the bridge design process. As such, incremental launching construction from aerial platforms will see new applications, especially when combined with on-site welding of field splices among modular bridge units. The welding of field splices will also allow for optimized segmentation of bridge units, diminish the cost of field splices, and will relax the fabrication tolerances of the units.

Size Determines Cost, Cost Determines Everything Else

When constructing a bridge for an urban area, the size of a bridge governs the construction process. in turn, the construction cost of a bridge determines the materials and technology. Technology includes labor and investment in special construction equipment. The quantities of structural materials for a bridge depend on the design loads of the bridge, the flexural and shear span of the bridge units, and the mechanical strength of the material.

The Jiaozhou Bay Bridge in China is the longest sea-crossing bridge in the world (Source: The New York Times)

Small and large-scale bridge projects are both necessary in megacities and demand will only increase in light of the newly emerging megacities all over the world. When looking at both the construction of new bridges and the maintenance of existing bridges, the number of small-scale projects will definitely be larger than the number of large-scale projects. The impact these construction projects will have on the mobility of people and goods within a megacity is massive.

Although one may assume large-scale bridge projects with a larger budget will allow for design optimization and the efficient use of high-grade steels, scale economies in competition with other megacities will govern the availability of construction materials and workforce. Eventually, the scarcity of structural materials will lead to the efficient, eco-friendly use of steel and concrete in large and small-scale bridge projects alike.

Prefabrication and Incremental Launching for Bridge Construction

It is true that small-scale bridge projects have smaller budgets for technology, which limit design optimization and construction mechanization and increase the labor demand. Therefore, small-scale bridges will most likely be procured as packages of multiple bridges to acquire scale economies and a more efficient use of materials with the optimized design of modular units.

On the other hand, large-scale bridge projects allow for massive investment in special construction equipment, which will facilitate the prefabrication of modular bridge units in smart, eco-friendly factories. It will also diminish the labor demand of site assembly and the need for complementary infrastructure in an urban environment, as well as enhance the quality and durability of the final product.

Thus, large-scale bridge projects will be designed for modularity and have prefabricated standardized units with asynchronous production lines. Parts of the bridge will likely have different cycle times, just-in-time delivery, and require minimal site operations. Overall, construction technology and risk management of the trans-disciplinary relationships of mechanized construction will dictate the design of large-scale bridge projects in megacities.

Workers assemble a prefabricated bridge in Pennsylvania, U.S. (Source: Roads and Bridges)

Small-scale bridge projects will take advantage of incremental launching technologies. Launched bridges minimize the interference between deck construction and the obstruction to overpass, and this is a major advantage for urban bridges designed to overpass congested infrastructure. Launched bridges do not require extra clearance to support the deck during construction, which simplifies connecting the bridge with existing roads and railways. Launched bridges do not require additional right-of-way as the deck is built behind the abutment and incrementally pushed into position. Additionally, the construction area is far from the infrastructure to overpass, which minimizes the risk for workers and the traveling public.

Incremental launching applied to a bridge deck construction process (Source: CARLOS FERNANDEZ CASADO S.L)

Materials For the Future Generation of Urban Bridges

Steel and concrete are the most common materials for bridges. In the field of steel bridges, high-grade steel will reduce the self-weight of bridge superstructures and the cost of piers and foundations. New composite systems and mechanized plate corrugation will increase the buckling capacity of unstiffened web panels and compression flanges to avoid the use of welded stiffeners.

In the field of prestressed concrete, new steels for rebar will offer higher strength and corrosion resistance to increase the durability and service life of the next generation of urban bridges. Post-tensioning materials are already extremely efficient, and the challenge will revolve around finding new duct systems and passivating materials to able to avoid the quality concerns raised by cement grouts.

Full-span precasting has been employed in thousands of spans of high-speed railway projects and in hundreds of spans of light-rail transit projects. Both steel and prestressed concrete bridges will be present in the mass transit systems of megacities, and both types of bridges are perfectly compatible with steel decks should high-grade steel turn out financially competitive over prestressed concrete in the megacity-oriented life cycle cost analysis.

Modern large-scale bridge projects are designed for 75 or 100-year service life in the USA. The use of renewable protective materials can easily meet this target in steel bridges, but the evolution of design loads and service conditions of urban bridges is hard to predict. Steel bridges offer a major advantage over prestressed-concrete bridges from this point of view, as they are more adaptable and can be modified, strengthened and adapted to new use conditions.

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The 2008 Financial Crisis was a blow to the global automotive industry and its suppliers. It took years to recover, but the economy did start showing signs of growth. McKinsey&Company’s 2013 report, The road to 2020 and beyond: What’s driving the global automotive industry, painted a positive picture of the global automotive market with profits projected to reach EUR 79 billion by 2020, up from EUR 54 billion in 2012, with China responsible for 60 percent of profits.

Their 2016 report, Automotive revolution – perspective towards 2030, offered a similar outlook. Overall global car sales will continue to grow, but at about a 2 percent growth rate, down 1.6 percent from the last five years. New market trends such as electric/autonomous vehicles, shared mobility and stricter environmental regulations will disrupt the market with new challenges and opportunities, but what remains constant is that the majority of growth in global automotive sales will be lead by the rising middle class of emerging markets, namely in India and China.

Thousands of vehicles are scrapped in the Chinese government’s efforts to reduce emissions. (Source: The Daily Mail)

Subsequently, China reached record vehicle sales in 2016. However, in April 2017, it recorded the lowest number of sales in the past two years for passenger cars, down 3.7 percent from 2015. This follows a national sales tax rise early in 2017 to 7.5 percent, coupled with a general decrease in demand for cars as consumption is reaching a plateau. Moreover, China’s sales tax will increase again to 10 percent in 2018.

India’s Booming Automotive Industry

Unlike China, India’s automotive market shows little signs of slowing down. India is now the world’s fastest growing economy as their GDP is projected to increase by 7.2 percent from 2017 to 2018. Their middle class is estimated to triple by 2025, reaching 89 million households.

The government of India is looking to the automotive industry to lead India’s economic growth, as outlined in its Automotive Mission Plan for 2016-2026 and “Make in India” initiative. Under such plans, the government will work towards creating an additional 65 million jobs in the automotive market and a 500 percent increase in vehicle exports by 2026.

A full parking lot of Renault cars reflects the massive automotive market in India. (Source: The New York Times)

It’s no surprise that Foreign Direct Investment (FDI) is pouring in. From 2000 to 2016, India’s automotive industry alone attracted USD 15.79 billion in FDI. For investors, India’s growing middle class of consumers is as attractive as their vast and low-cost labor.

POSCO Maharashtra in India

POSCO Maharashtra is one automotive supplier that is echoing the growth of the Indian automotive market. Their 2Q17 unaudited earnings report showed significant growth from just a year before in 2016. The reported revenue was USD 331.7 million, compared to USD 174.7 million in 2016. The company’s operating profit was USD 32.6 million, up from USD 3.5 million in 2016. Finally, their net profit was USD 22.9 million, another significant increase from USD 15.9 million in 2016.

*Earnings figures were converted from Korean won to U.S. dollars using August 22, 2017, exchange rates.

The POSCO Maharashtra Plant in India

In May of this year, POSCO Maharashtra signed a MoU with Essar Steel to supply 1.1 million tons of flat steel products during the 2017 fiscal year. This is the second year of partnership between the two companies, but the volume of steel POSCO Maharashtra will supply is 30 percent higher than in 2016.

The growing business reflects the work philosophy of POSCO Maharashtra employees: “If [we] supply quality material, they’ll come back again and again. So that’s what we’re doing right now. Although our products might be priced a bit higher in the Indian market, we are supplying quality material and our customers continue to be loyal because they understand that value.”- Chetan Waghchoure, sales representative for POSCO Maharashtra. Read the full interview here.

POSCO Maharashtra’s Chetan Waghchoure during an interview with The Steel Wire

POSCO Maharashtra is taking full advantage of the thriving automotive industry in India and continues to expand its business by reducing production and inventory costs, increasing performance and efficiency and planning to incorporate AI technology into their future production processes.

Market indicators point to India to drive the profitability of the automotive industry. India’s growing consumption of vehicles, open business environment and vast labor force will continue to attract foreign investment and new businesses. The best part is that India is not even close to being fully developed, meaning brighter prospects for future growth and good news for manufacturers and suppliers.

Read how these megatrends and the expansion of the four largest steel-consuming industries have driven the growth of the steel industry from the last fifty years and will continue to play a crucial role.

Megatrends and their impact on the steel industry

Future Cities and Changes in Steel Materials

Urbanization is a key driver in the development of the global construction industry and will further accelerate in the future with rapid industrialization in developing countries and the shift to a knowledge economy in advanced countries.

Within the overall shift toward urbanization, many countries are actively crafting policies to develop their cities as globally competitive megacities. There is an increasing number of megacities with over 10 million inhabitants as the competition paradigm shifts from competition among countries to competition among cities.

Also, with a growing sense of urgency in improving the environment in terms of ozone depletion, climate change and energy and resource exhaustion, eco-friendly, green cities are emerging as a new trend.

Lastly, smart cities, characterized by digital transformation and energy revolution, will rapidly expand in the future drawing on the Fourth Industrial Revolution.

Following the ongoing and emerging trends of urbanization and future cities, new advanced steel materials are required to accompany emerging trends and accelerate the development of megatall, eco-friendly and smart products. Conventional steel materials for construction, such as steel bar and section, will improve in functionality with higher strength, thermal conductivity and better sound isolation. They will also be developed as composite materials and new materials such as carbon nanotubes and shape memory alloys will be widely deployed in construction processes. However, as construction costs (labor costs and the use of high-strength steel materials, for example), increase, steel content per unit of construction investment is expected to decline.

A New Mobility Paradigm

Led by high-income earners, lower car prices and improved road infrastructure, the key trend for the automotive industry is motorization. Today, automobiles are no longer just a means of transportation but becoming a major arena for IT competition with the rise of electric vehicles, robotic vehicles and new mobility services.

As a response to global warming, electric vehicles and energy-efficient self-driving cars are becoming increasingly widespread along with the rise of new innovative mobility services, such as robo-taxis and self-driving mini-buses.

In the case of EVs, less auto parts will be required as metal parts such as powertrain components – the engine, vehicle intake and exhaust system, and transmission – will be replaced by batteries, motors, and electronic parts. As cars are made lighter to improve driving range, alternative materials such as aluminum and CFRP are being used in some luxury lineups.

In order to retain its competitiveness and also meet increasingly strict environmental regulations, the steel industry is developing lighter and stronger steel materials such as advanced high-strength steel (AHSS) to replace traditional steel products. Steel, a strong and economically competitive material, remains an attractive choice for both EVs and self-driving cars.

Recovery of the Shipbuilding Industry

Technological advancement as a result of the Fourth Industrial Revolution and changing environmental regulations will bring considerable changes to the shipbuilding industry.

The shipbuilding industry, which boomed in the 2000’s, experienced a downturn after the 2008-09 financial crisis. Although the oversupply will linger until 2025, the shipbuilding market will then turn to an upswing with increasing growing global trade and rising demand for ship replacement.

With the development of ultra-large container ships, LNG-fueled ships, electric ships, CO₂ carriers, polar ships, and environmentally–friendly equipment, high-strength steel for ultra-large and lighter ships and high-strength low-alloy steel for safe and affordable LNG and CO₂ storage tanks are required.

As vessels become larger and lighter, the steel intensity of ship’s tonnage will fall. Steel intensity is expected to decline due to larger and lighter vessels.

Global Climate Action and Energy Transition

As a response to global warming, renewable energy is increasingly in demand. In fact, it is no longer being referred to as “alternative” energy but “mainstream”. The International Energy Agency (IEA) has predicted that the share of renewables within global power generation is expected to rise from 23 percent in 2014 to 37 percent by 2040.

The renewable energy sector is also adopting various types of steel products. The tube tower, which accounts for 65% of the weight of a wind turbine, is made mainly of steel, while thin stainless steel sheets and frames are required for solar panels. This wide application of steel products offers additional business opportunities to steel companies.

Meanwhile, the share of fossil fuels within primary energy consumption will fall from 81 percent to 74 percent over this span. However, the decline will be gradual due to population and economic growth in emerging countries and fossil fuels will continue to play a dominant role in the energy sector in terms of quantity of consumption.

Steel companies must target new markets by developing innovative steel products for the microgrids and energy storage systems which will grow alongside renewable energy.

The Steel Industry Over the Next Two Decades

Over the next two decades, the steel industry will face the following four challenges: slowing steel demand due to decreased steel intensity across major steel-consuming industries; a need for more advanced steel products; upgrading to eco-friendly and smart steelmaking processes; and changes in manufacturing based on the Fourth Industrial Revolution.

Accordingly, it is imperative that the steel industry boost its capabilities for continues product and process innovation and build a sound steel ecosystem through partnerships with steel-consuming industries.

To this end, POSCO is not only investing in the development of an eco-friendly rolling process but also in sustainable development including energy conservation and recycling technologies. In addition to factory automation based on IoT, big data and AI, POSCO is working to increase the application of smart technology internally as well as externally with its partners and affiliates.

It is an exciting time for the steel industry as it continues to transform along with the ongoing and emerging megatrends.

Download the full version of POSRI’s Asian Steel Watch journal for more at POSRI’s official website.

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Among the challenges urbanization is expected to bring is access to fresh food. A lack of fresh food will mean that reliable packaging, storage and distribution systems will be more significant than ever. Likewise, food safety, nutritional value and environmental impact will become even more essential than they are today.

As this challenge of urbanization begins to transpire, one sustainable solution stands out: the steel can.

The History of the Steel Can

At the turn of the nineteenth century, Napoleon Bonaparte helped to prompt food packaging innovations when he offered a reward for anyone who could find a way to preserve food for his troops. In 1810, an Englishman responded by patenting a design for an iron can with tin plating and lead soldering. Commercial production began soon after in 1812 at a canning factory near London.

About a hundred years later in 1922, the process of can crimping was introduced to tin can manufacturing. By the mid-1950s, tin cans no longer used lead solder but instead consisted of two or three pieces of tin-plated steel crimped together to form an air-tight seal, resulting in an attractive, safe and functional product.

Although tinplate currently only accounts for around 1 percent of steel production, it is still a highly visible and dynamic industry, allowing for high quality, shelf-stable food to be available to people in all corners of the globe.

Feeding the World

Now, as the world’s population continues to increase, steel cans continue to offer significant advantages over alternative food packaging systems.

Modern-day food processing has utilized state-of-the art manufacturing techniques to package and preserve food for an extended time. Thanks to the superior performance attributes of cans with epoxy resin coatings, consumers can have the utmost confidence in the canned foods and beverages they enjoy.

And considering that more than 1,500 different varieties of food, including a range of seasonal fruits and vegetables, are packed in steel cans, consumers are offered a supply of diverse foods at any time of the year.

Additionally, as fresh food becomes less available, steel cans help to extend the shelf life of food. The containers are tamper-resistant and protect food and drink from moisture, oxygen and light, helping to preserve the nutritional value of their contents without the need for added chemical preservatives. Studies show that canned tomatoes, for example, contain as much or more vitamin C than fresh tomatoes.

Energy-Saving, Eco-Friendly

While steel cans are incredibly useful for people, they’re also environmentally-friendly—an essential factor in a world threatened by climate change.

Compared to other food preservation methods, steel cans save energy because refrigeration and freezing are not necessary.

Furthermore, steel cans can be recycled again and again without losing their key properties such as strength, ductility or formability. Steel’s magnetic attributes also make it the easiest packaging material to extract from the waste stream for reuse.

As a result, the steel can remains the world’s most recycled packaging material, with the global recycling rate for steel cans being 68 percent in 2007. According to worldsteel LCA data, this saved 11 million tonnes of CO2 (carbon dioxide), which would have otherwise come from new steel production. This saving is equivalent to taking approximately 280,000 cars off the road.

Nowadays, steelmakers like POSCO are producing ever-thinner materials, allowing more cans to be produced per tonne of tinplate. This will help to contribute to resource efficiency and reduce the amount of CO2 being emitted over the can’s life cycle.

Today’s steel can is a versatile, efficient and sustainable packaging solution that will become increasingly more important in the near future. Along with all the advantages cans offer consumers, their eco-friendly factors will be a big benefit as the urbanizing world increasingly turns to steel cans for food packaging.

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At that time, steel ovens, steel cooking utensils and steel tableware were regarded as costly luxuries. Things have since changed, thanks to good design, mass production and competition. Now, just about anyone can enjoy the advantages and features of this extraordinary metal.

Today, the material has become a favorite not only in the home, but also across a number of industries. In fact, as more than 30 percent of all stainless steel produced goes into products related to the food and beverage sector, it’s clear that the material is closely connected to all aspects of food.

Throughout May, The Steel Wire will feature stories that illustrate the various ways steel is utilized in the processing, handling, manufacturing, storage and distribution of the foods and beverages we consume on a daily basis. See below for a few of the stories you can expect to find published throughout the month.

The Food Industry’s Many Stainless Steels

Just as steel is iron which contains a controlled amount of carbon, stainless steel is a steel which contains a controlled amount of chromium. However, stainless steel is not a single material but instead a family of over 200 iron-carbon-chromium alloys. This article will explore the types of stainless steels most commonly used in the food and beverage sector, as well as their properties and their applications.

Steel Cans: Food for a Changing, Growing World

Today’s trend toward urbanization increases the importance of good packaging methods for food. Food packaging must be safe, maintain nutritional value and have a positive environmental impact. This article will explore how steel cans meet these requirements in a world with a population that is continuously expanding, as well as how steel cans are a sustainable solution that offers significant advantages over alternative food packaging systems.

How Steel is Improving Food Hygiene Across the Globe

Stainless steel has had great success in improving food hygiene in restaurants, public kitchens and even the home as a result of the material’s hygienic properties, corrosion resistance, strength and formability. It has become especially important in emerging economies, and has helped to solve many problems related to the lack of hygiene in food-related environments, reducing to a large extent the risks of food poisoning by keeping the areas clean and sterilized.

Steel: The Essential Material, from Dairy Farm to Table

Stainless steel exhibits some of the most suitable characteristics of the construction materials used for food equipment. It is the most widely used material in direct contact with food found in the industry. This article will include where steel is used in the dairy industry, such as processing equipment, storage tanks and form equipment, as well as the reasons why it is used.

Cheers to Steel: How the Metal Affects the Alcohol Industry

Liquids that contain alcohol are not contaminated by steel, leaving the color, taste and composition of the beverage fully intact. Stainless steel can also be easily cleaned to guarantee optimal hygiene while processing and treating fluids containing alcohol. This article will explore some ways that steel is specifically used in beer brewing, liquor storage and moonshine packing.

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Now some experts claim that the steel industry cannot avoid a long-term recession without resolving the issue of global steel overcapacity. As a result, overcapacity has become a hotly debated and contentious issue.

Calculating Overcapacity

One of the major difficulties in determining the level of overcapacity is the calculation process. The report states that to calculate the extent of overcapacity, an accurate measure of capacity is necessary. However, the common method of calculating overcapacity by using nominal capacity is likely to yield exaggerated figures. This happens because it is physically impossible for plants to operate year-round at 100% nominal capacity, due to various issues such as raw materials supply, facilities maintenance, and the existence of outdated facilities.

Nominal Overcapacity Rate Relative to Steel Demand

The only way to accurately calculate capacity at the highest possible operation rate, known as effective capacity, is by investigating every single steel plant around the world. As you can imagine, this type of study is practically impossible. However, we are getting closer to a more accurate study.

Effective Capacity

In recent years, the Organization for Economic Co-operation and Development (OECD) has perfected its method of quantifying the effective capacity of member states. The OECD bases maximum production on peak market condition during a certain period. The market condition is estimated with consideration to factors such as steel production, price, and profitability.

Using effective capacity to estimate the maximum possible production of steelmakers yields a smaller magnitude of overcapacity. The introduction of effective capacity measurement can potentially dispel worries about overcapacity causing stagnation or recession in the steel market.

Steel Prices and Overcapacity Rate

From 2008 to 2014, global nominal overcapacity increased steadily in size, but demand also grew. According to the report, the degree of nominal overcapacity relative to demand size fluctuated, following the peaks and valleys of steel prices. These findings support the argument that stresses the importance of effective capacity and disregards nominal capacity as a meaningless figure. Hence, some experts refer to overcapacity as a myth because we have yet to learn the exact magnitude of overcapacity and its impact.

Despite this idea of myth and exaggeration, overcapacity is considered the most challenging issue for today’s global steel industry. For this reason, relieving overcapacity remains an urgent issue and it requires the attention and efforts of the global steel industry.

The Reality of Overcapacity

Dr. Rod Beddows, author of Steel 2050, published in 2014, pointed out that “While efforts to reduce capacity are important, the continuous growth of steel demand is essential in lowering overcapacity rates.” One of the biggest concerns in the steel sector today is the future of Chinese demand and supply. But according to Dr. Beddows, we don’t have to worry because Chinese steel demand has not peaked yet. He claimed “There are still over 300 million Chinese requiring industrialization and urbanization. The housing and general building stock needs replacement.” And of course all of this development involves steel products.

Dr. Beddows admits that “Current overcapacity in China is large,” but he stated that “growth plus Xi Jinping’s new policy initiatives for China’s infrastructure and manufacturing will lead to its rapid decline, and by 2017-2018 supply and demand should be in balance.”

Meanwhile, the report states that investment in infrastructure and the growth of the manufacturing sectors in emerging countries such as India and the Middle East is important in creating steel demand, and might offset China’s declining steel demand in the future. However, the global economy has not shown clear momentum for recovery since the financial crisis, and concerns are mounting over a slowdown in the Chinese economy.

Overcoming Overcapacity

No matter how you look at it, overcapacity is a problem and a recurring one at that. Dr. Beddows claimed that “The only way to manage this problem is to create a level playing field in terms of ownership, by eliminating state ownership, and trade in the industry. Regulation in general is also of increasing importance.”

Dr. Beddows suggested ways that the industry can remove state ownership. He said, “Price risk hedging mechanisms and improved service levels to customers are the two most important issues for the industry. I recommend that organizations such as World Steel Dynamics focus on these to help the industry improve.”

So it seems that overcapacity is becoming a reality, but the situation is not as dire as many think. It is possible to overcome the challenge of overcapacity if the Steel industry works in unison to reduce unnecessary excess capacity.

Related Link:

In Southeast Asia, Surging Imports Lead to Rising Trade Barriers

The Future of Manufacturing in Korea

China’s Era of New Normal and its Implications on the Steel Industry

The Evolution of the Steel Production Process

POSRI Releases First Edition of Bi-Annual English Journal “Asian Steel Watch”

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Still, in the small town of Nuanquan in Heibi Province, China, just west of Beijing, a small group of farmers are keeping one of the world’s most unique fireworks displays alive.

Resource: China’s Blacksmiths Put On Dazzling Display for New Year

About 500 years ago, there were many blacksmith shops in the farming town of Nuanquan. Unable to afford expensive fireworks during the Chinese New Year holiday, lower income residents such as blacksmiths and farmers sought an alternative. Inspired by the beautiful sparks emitted during their iron working, a group of brave blacksmiths began splashing molten metal on the city walls, which resulted in the creation of beautiful flower shapes from the cooling iron.

Photo Credit: Robert Berkowitz Creative Commons

As time went on, locals began to prefer the stunning, steel-catalyzed display to fireworks, and donated their scrap metal to the blacksmiths to use during the annual performance. Eventually, a more developed system evolved and eventually became known as dashuhua, which roughly translates as “throwing tree fireworks.”

To create the display, men first soak wooden ladles in water for three days prior to the show to prevent them from combusting on impact. After dipping the ladles into the molten iron (which is made from smashed up pieces of pig iron), flames instantly shoot up. As such, the men work quickly to splash the molten iron onto the city wall to avoid injury.

As the metal strikes the cold, hard wall, it explodes into a shower of sparks, mostly over the performers. Due to the danger posed by the falling molten iron, only the bravest individuals performed in the show, wearing only a jacket made of sheepskin—a material that naturally repels the molten iron—and a straw hat to protect against the splash of hot metal.

Photo Credit: Robert Berkowitz Creative Commons

Despite being banned during the Cultural Revolution from 1966 to 1976, the tradition has since carried on through the ages. Refusing modern protective clothing to more closely maintain the tradition, today’s performers are prideful of their region’s rich cultural heritage and are eager to pass on the custom to their children. They are also pleased that the event continues to attract spectators from all over China, who gather in freezing temperatures to witness the incredible scene of a night sky illuminated by the sparks of molten iron.

However, as urbanization surges in the world’s most populated nation, the tradition is on the decline, with only four performers left. As such, the Chinese government has designated dashuhua as an Intangible Cultural Heritage and has helped organizers build a dedicated stage for their performances, with an aim to preserve the country’s past as well as Nuanquan’s steel-centric custom.

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 Before the Revolution

Before the Industrial Revolution, most people lived in small, rural communities where their daily lives revolved around farming. Life for the average person was difficult, incomes were barely sufficient and malnourishment and disease were common. People lived from making their own food, clothing, furniture and tools.

Before the invention of machine tools, metal was worked manually using basic hand tools. It was tedious and expensive. Because of this, before the new technology in steel production was discovered, most tools were made of wood.

Urbanizing the World

The Industrial Revolution marked the transition to new manufacturing processes. New chemical manufacturing and iron production, water power, steam power, machine tools and the rise of the factory system all contributed to the urbanization of the world. The volume and variety of factory-produced goods raised the standard of living for many people, particularly for the middle and upper classes.

The availability of cheaper iron and steel was fundamental in the growth of several industries. The development of machine tools made precision iron working possible. Other changes included improved roadways, waterways and railways. Raw materials and finished products could be moved more quickly and cheaper than ever. Improved transportation also meant as people moved to new places, ideas and information spread. This was the beginning of globalization.

One of the defining impacts of the Industrial Revolution was the rise of cities. By 1850, for the first time in world history, more people Great Britain lived in cities than in rural areas. By 1920, the majority of Americans lived in cities. The new industrialized cities grew the economies of their nations.

The Industrial Revolution changed materials production, standards of living, labor conditions and population distribution. Job opportunities in growing factories resulted in a population shift from rural areas to the cities, creating the world’s first urban populations.

Changing Societies

The Industrial Revolution marks a major turning point in history; almost every aspect of daily life was influenced in some way. Average income and population growth began to experience unprecedented sustained growth. The standard of living for the general population began to increase consistently for the first time in history.

Prior to this era, most of the working population were land owners, tenants or laborers who worked on farms. With the growth of factories, workers began to move from working on farms to working in cities. The Industrial Revolution also created a middle class of professionals, lawyers, doctors, industrialists and businessmen, rather than a class nobles.

For the first time in history, there was a simultaneous increase in population and in per capita income. Life expectancy of children increased dramatically. A dramatic decline in the death rate cab be attributed to a decline in famines, warfare and illnesses.

Steel production was the major driving factor of the Industrial Revolution, which is one of the periods of greatest change in history. Steel helped drive industry, globalization and urbanization.