GLOBAL STEEL GLUT

GLOBAL STEEL GLUT

Steel producers in high-cost countries say their best hope for surviving the global glut is to develop higher value specialised products. But they will still face a tough time competing with low-cost Chinese producers that are breathing down their necks.

The announcement that India’s Tata Steel is abandoning Britain has hammered home the threat to developed countries’ steel industries from a glut caused by over-capacity in China, which has led to a collapse in the global price of commodity steel used mainly in construction.

Firms from Europe, Japan and South Korea say they are trying to keep afloat by increasing the share of higher-value products in their output, focusing on speciality steels used mainly in manufacturing, which command a premium over lower grades.

Some companies are venturing further down the supply chain to make their own aircraft or auto parts. Others are forming tighter relationships with their customers as a way to keep their order books full.

 “Sticking to technological and quality leadership will be the only solution for European steel producers to secure profitability and future growth,” said Wolfgang Eder, CEO of Austrian steelmaker Voestalpine.

Voestalpine is aiming to become less dependent on traditional steel markets by raising its production to finished parts for the aerospace, rail and automotive industries.