Monday, March 03, 2014

China Bans New Steel Industry Projects

To alleviate oversupply in the blown up steel sector, China has decided to ban new steel sector projects for the next 4 years. Overcapacity has been a cause of concern for China’s steel industry for some years, causing huge losses at highly indebted mills, wasting resources and compelling steel mills to depend on government subsidies.

The Chinese government has put additional capacity creation under firm controls and the amount of further capacity will be extremely small. China has about 300 million tons of surplus steel capacity, which is equivalent to roughly double the total output of the European Union last year. Even then, mills have continued to expand and added ~70 million tonnes of new steel production capacity in 2013.

As part of a plan to clean up the environment and deal with steelmaking overcapacity, the Chinese government will also close ~90 million tonnes of obsolete steel mill capacity in the Northern provinces by 2017.

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Friday, February 28, 2014

POSCO to replace five CEOs

POSCO Group is to replace CEOs at five of its six business units as part of the newly-named chairman Kwon Oh-joon’s reform plan to overhaul the world’s fifth-largest steel maker. On Friday, POSCO affiliates announced the key agenda of their shareholders’ meeting planned on March 17, including candidates of new in-house directors who are likely to be named their new CEOs. According to their statement, POSCO's Shin Jung-suk is the only one who will retain his job due to his successful management performance.

Wow!  Might steel producers in European benefit from similar treatment? I bet they would...

Visit for further world steel news reports.

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Saturday, February 08, 2014

Signs of steel market recovery?

As ArcelorMittal report improving profits [see], should we assume that European steel is on the road to recovery?

European steel demand is expected to grow by up to 4 per cent this year, compared to a decline in demand of 0.6 per cent last year. The United States, ArcelorMittal's largest market, is expected to do even better, up by as much as 4.5 per cent in 2014 compared to a contraction of 0.5 per cent during last year. For discussion about this, see

Nonetheless, with steel demand increases of 4-5 per cent plus additional price improvements (feeding straight through to the bottom line) 2014 should indeed be a much better year for the big steelmakers.

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Wednesday, January 15, 2014

Steel industry competitor analysis

Did you know that we help a lot of clients with steel industry competitor appraisal?

Whether you are interested in supply shares for production of a given steel product, competitor material flow charts, competitor cost benchmarking or even a SWOT analysis for a particular steel facility – contact us. We should be able to help you. For more information visit

Andrzej M Kotas
Chief Executive
Mobile: +44 775 149 0885

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Thursday, December 19, 2013

European Green Party fights steelmakers on climate change

In a fascinating article, the European Green Party today suggests that European steelmakers are wrong in their attitude to adaptation to climate change.

Europe's steel industry – say the Greens - is caught in the grips of the economic crisis. With reduced industrial activity, the demand for steel has plummeted. Since the beginning of the Great Recession, steel demand in the EU-27 has dropped by around 25 per cent. Simultaneously, new industrial powerhouses such as China and India have increased their share in the global steel market, putting pressure on European steel companies. This has hit the European industry hard. According to the Greens however the industry seems to have mistakenly believed that it would enjoy its preeminent position with a constantly growing world hunger for steel ad infinitum.

Now – say the Greens – the sector is struggling to find a way out of this dilemma. Restructuring efforts such as closing down production sites or reducing output has shed about 40.000 jobs. Yet, the steel sector is not recovering. As a truly European industrial sector with over 500 production sites split between 23 EU member states, the steel industry has appealed to the European Union for help in these difficult times.

Regrettably, instead of addressing the root problem of the situation - depressed demand, over-capacity and a lack of a movement to higher value-added steel production - the industry has made the EU's climate and energy framework responsible for its conundrum. Climate and energy policies - from the steel industries' perspective  'are destructive, are badly constructed and have to be changed'. The steel industry in particular calls on the EU to revisit its policies to bring down energy prices for industry, which they say have increased due to the EU's climate and energy framework such as the emissions trading system.  Dr Eder, CEO of the Austrian steelmaker Voest Alpine, has said that EU climate and energy policies are among the main causes for the deindustrialisation in Europe.

This short-sighted approach is – suggest the Greens - faulty in two fundamental ways. First and foremost, it does not take into account the large variety of exemptions and free CO2 allocations that the steel industry enjoys, which cushions the impact on energy prices. According to an analysis by the Oeko-Institute, energy-intensive industry in Germany such as steel receives a CO2-cost compensation; receives free CO2 emission allowances that can be sold for a profit or banked for the future given that production has decreased; and is exempt from paying fees for energy network use. Combined with the fact that the increase in renewable energies has actually over time led to a decrease in energy prices of about 10 €/MWh, the Oeko-Institute comes to the conclusion that the energy-intensive sector in Germany would [with a smart energy procurement strategy] almost reach parity with its counterparts in the US when it comes to energy prices.

Secondly, by attacking the energy and climate agenda, the European steel industry is actually undermining the very agenda that provides a vision for addressing the overcapacity crisis which it is facing. It's simple: the European steel sector has a clear demand-side problem. Neither the construction nor the automotive industry can come to its rescue and solve this. But, a clear focus on sustainable infrastructure development could bring hope suggest the Greens. After all, renewable energies need a lot of steel they propose. A single 3MW wind turbine needs the same amount of steel as about 500 cars. Improving the energy performance in existing buildings by setting ambitious standards could lead to a veritable renovation boom that would be a boon for the steel industry. Fuel efficiency standards would also provide an opportunity for developing and selling new light-weight steel products as would hybrid and electric cars, all of which would help the European steel industry move into an increased value added speciality segment allowing it to open up and conquer new markets.

This discussion is certain to continue. To see the original article however visit

Dr Andrzej M Kotas

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Sunday, December 15, 2013

Time for a new standard for steel bar?

Steel bar is often painted at the ends. This is to colour code the bar, generally by steel quality (i.e. grade).
However, different suppliers tend to follow different colour codings. What one supplier paints blue, another will mark in green.

Time for a new standard perhaps - where colours are applied consistently by all rolling mills across the industry?

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Monday, December 02, 2013

What is a steel industry due diligence?

We often get asked – what is a steel industry due diligence study?

I would answer as follows. A steel due diligence is a review of a steel business, that reports on certain key techno-commercial characteristics. If you want to put money into a steel business, you are likely to want a due diligence study that covers market, technical, financial issues. Sometimes, environmental issues are included in this list as well.

So the due diligence study typically consist of a visit from several steel experts [e.g. market, technical, financial, environmental] who each look at the main issues under their expert topic. For example, a market expert will look at the steel market today and tomorrow; will consider market requirements in terms of size, quality and shape; review competition; consider future investment; project current and future sales and market share; assess steel prices today; establish future steel price trends; project current and future revenues; review steel distribution arrangements etc. Once the expert visits the steel plant and talks to management about the relevant issues – and often validates these by speaking to customers – he or she typically then prepares a written report on this topic. That market report – together with similar technical, financial, environmental or other chapters – is an important chapter in the final due diligence report.

A well-prepared due diligence report will of course be internally consistent. Therefore, sales assumptions in the market study will relate to production levels in the technical study; both sales and production volumes will also relate to the financial assessments describing fixed and variable costs; and so on.

A due diligence report should also be independent. This is important, because if financiers are to have confidence in the written opinions contained in the report, it is important that such opinions are objective and unbiased.

To learn more about how our consultants can help in preparing a due diligence or feasibility study, visit

Dr Andrzej M Kotas
Chief Executive

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Saturday, November 30, 2013

Visit our Twitter page

Read our steel industry twitters and tweets. Visit us at

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Sunday, October 20, 2013

European blast furnace coke prices

One of the biggest raw material costs for integrated steelmakers is the cost of metallurgical (or blast furnace) coke. We report European met coke prices on our website. Prices for blast furnace coke are updated monthly.

To see the monthly price date since January 2008 visit

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Sunday, September 29, 2013

Hot rolling of steel - video clip

Here is a good film clip about the hot rolling of steel.

This is a Dalarna / SSAB training clip which provides a video overview of the main processes in a hot rolling mill.

Reheating furnace, roughing mill, coil box and finishing mill operations are all briefly described, starting from steel slab. Mill scale production, de-scaling, strip gauge control, strip temperature control and similar issues are discussed.

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