Overview of markets and trends in steel

"In the early 1970ssteelmakers worldwide were looking forward to many years of expansion and profitability. Huge government investments in Europe, the United Kingdom, Japan, Brazil, and Venezuela were committed in anticipation of growing market s based on long-term OECD forecasts. In 1973 the first OPEC oil shock occurred. Steel demand shrank. Restructuring became the buzz word of the day as billions of dollars in taxpayers' money was poured into eliminating excess capacity and labour. In the United States, where government help was not available, inefficient companies went bankrupt; capacity was cut to 100 million tons from 155 million tons. The industry throughout the industrialized world shrank. By 1979the world economy seemed back on track and a modest degree of optimism could be detected in the international steel fraternity. Then came the second oil shock. By 1982 the industry was in the midst of another shakeout. More bankruptcies, more rationalization, and fewer jobs resulted. In Canada some well-known companies came close to the brink as low prices and high interest rates took their toll. In the light of the turmoil in the steel market over the past 20 years an attempt to forecast the trends through to 2001 is intimidating.However, there are good reasons to be optimistic today about both markets and technology.An economic super power is emerging in western Europe as 1992 draws near. The creation of a single market of 320 million well educated and economically ambitious people has major positive implications for steel demand. The mega projects of the channel tunnel, a European network of high speed railways, and the London docklands are the forerunners of greater things. Still to come is another $200 to $300 billion by the year 2001 in identifiable major projects for highways, railways, airports, water and sewage systems. Add to that the demands of an increasingly affluent population for automobiles, appliances and housing. On top of all that place large increasing demands for electric power and you have a potential beyond anything seen during the 1970s and 1980s. In 1988 the EEC steel industry operated at 90% and in 1989 at 92% of effective capacity. A surge in spot prices indicated that 92% was close to the ceiling. This pace moderated in early 1990 but any slack will probably be taken up rather quickly."