Steel Industry Overview

STEEL
Steel is an alloy made up of iron with typically a few tenths of a percent of carbon to
improve its strength and fracture resistance compared to other forms of iron. Many other
elements may be present or added. Stainless steels that are corrosion- and oxidation-
resistant need typically an additional 11% chromium. Because of its high tensile strength
and low cost, steel is used in buildings, infrastructure, tools, ships, trains, cars, machines,
electrical appliances, weapons, and rockets. Iron is the base metal of steel.

STEEL INDUSTRY
As of October 2021, India was the world's second-largest producer of crude steel, with an
output of 9.8 MT. In FY22 (till January), the production of crude steel and finished steel
stood at 98.39 MT and 92.82 MT, respectively. In FY22, crude steel production in India is
estimated to increase by 18%, to reach 120 million tonnes, driven by rising demand from
customers. The growth in the Indian steel sector has been driven by the domestic
availability of raw materials such as iron ore and cost-effective labour. Consequently, the
steel sector has been a major contributor to India's manufacturing output.

The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived
for continuous modernization of older plants and up-gradation to higher energy efficiency
levels.

The Indian steel industry contributes about 2%of the Total GDP in India.
MARKET SIZE
In FY22 (till January), the production of crude steel and finished steel stood a 98.39 MT and
92.82 MT, respectively. According to CARE Ratings, crude steel production is expected to
reach 112-114 MT (million tonnes), an increase of 8-9% YoY in FY22. The consumption of
finished steel stood at 86.3 MT in FY22 (till January). Between April 2021-January 2022, the
consumption of finished steel stood at 86.3 MT.

In January 2022, India's finished steel consumption stood at 9.65 MT.

In FY22 (until February 2022), exports and imports of finished steel stood at 12.2 MT and
4.3 MT, respectively. In April 2021, India's export rose by 121.6% YoY, compared with 2020.
In FY21, India exported 9.49 MT of finished steel.

Global Scenario
The steel industry can be considered a backbone of the world economy when it comes to
global infrastructure development. As per the 2019 report steel sector contributes 0.7% of
global GDP which is around $99.40 billion. The world's total crude steel production in 2021
was 1911.95 million tonnes (MT), up by 3.6% in 2020. April 2022 crude steel production of
64 countries was 162.7 million tonnes (MT), short by 5.1% compared to April 2021.

China remained the world’s largest crude steel producer in 2021 (1032.8 MT) followed by
India (118.1 MT), Japan (96.3 MT), and the USA (86.0 MT), based on rankings released by
the World Steel Association.

Per capita finished steel consumption in 2020 was 228 kg for the world and 691 kg for
China. The same for India was 70 kg (Source: JPC) in 2020-21.

Domestic Scenario
The steel sector has a strong influence on our country's GDP as it contributes 2% of the
total GDP of the country. India's average steel consumption per capita has increased from
150kg in 2001 to 230kg in 2020. According to the world steel organization, by 2050 steel
use is projected to increase by 20% to meet the needs global population.
EMPLOYMENT GENERATION
According to the JSW website, the steel industry employs about 6,00,000 people directly
and 20,00,000 people indirectly i.e., 019% of the country's population. Globally, over 6
million people work in the steel industry.

PRODUCTION
• Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively.
• India was the 2nd largest producer of crude steel in the world in 2021.
• In 2021-22 (provisional), production of total finished steel (alloy/stainless + nonalloy) was
113.60 MT, a growth of 18.1% over last year.
• Production of Pig Iron in 2021-22 (provisional) was 5.76 MT, a growth of 18.1% over last
year.
India was the largest producer of Sponge Iron in the world in 2021. The coal-based route
accounted for 77% of total Sponge Iron production (39.03 MT) in the country from 2021-22
(provisional).
• Data on the production of Pig Iron, Sponge Iron, and Total Finished Steel (alloy/stainless +
nonalloy) are given below for the last five years:

Indian steel industry: Production (in million tonnes)

Category 2017-18 2018-19 2019-20 2020-21 2021-22*

Pig Iron 5.73 6.41 5.42 4.88 5.76

Sponge Iron 30.51 34.71 37.10 34.38 39.03
Total Finished Steel 95.01 101.29 102.62 96.20 113.60
Top 10 Producing Nations
 China — 1,032.8 MT
 India — 118.1 MT
 Japan — 96.3 MT
 United States — 86.0 MT
 Russia — 76.0 MT (estimated)
 South Korea — 70.6 MT
 Turkey — 40.4 MT
 Germany — 40.1 MT
 Brazil — 36.0 MT
 Iran — 28.5 MT (estimated)

Top 10 Producing Companies

 ArcelorMittal.
 Nippon Steel & Sumitomo Metal Corporation (NSSMC)
 Hebei Iron and Steel Group.
 Baosteel.
 Wuhan Iron and Steel Group.
 Posco.
 Jiangsu Shagang.
 Tata Steel Group.
 HYUNDAI Steel Company.
 JFE Steel Corporation.

STEEL CONSUMED BY WHICH SECTOR

Steel Consumption by Sectors
 The construction industry is the largest consumer, accounting for approximately 52%
of total world steel consumption.
 Transport sector (cars, trucks, aviation, shipbuilding, and rail) is the second.
 The machinery industry and metal products industry each consume around 16% of
the world’s steel.

Steel consumption in countries

Construction industry
• The output of the construction market amounts to around USD 7.5 trillion, representing
13.4% of global GDP.
• The U.S. is the largest market and China is the second.
• Growth in China has been driven by non-residential structures and infrastructure.

Automobile Industry

• Iron and steel make up around 70% of an automobile’s weight.

• Surface-treated steel sheets are the main products used for vehicle
manufacturing and these generally include hot-dipped galvanized, electro-
galvanized, and galvannealed steel sheets.
• Steel sheets are used in the basic vehicle frame and for making hoods, doors,
bumpers, mufflers and fuel tanks.
Machinery industry
• According to VDMA, China’s industry has grown rapidly in recent years, and its share of
global industry turnover has risen to 17% from 12%.
• Although developed countries have lost market share, they are still thought to have a
significant advantage in high end machinery products.

Imports
• Data on import of total finished steel (alloy/stainless + non-alloy) is given below for last
five years:
Indian steel industry: Import of Total Finished Steel (in million tonnes)
Category 2017-18 2018-19 2019-20 2020-21 2021-22*
Qty 7.48 7.83 6.77 4.75 4.67

Exports
• During the last five years, India was a net exporter of total finished steel in 2017-18, 2019-
20,2020-21, and 2021-22.
• Data on the export of total finished steel (alloy/stainless + non-alloy) is given below for
the last five years:
Indian steel industry: Export of Total Finished Steel (in million tonnes)
Category 2017-18 2018-19 2019-20 2020-21 2021-22*
Qty 9.62 6.36 8.36 10.78 13.49

Graphical representation of trade of total finished steel for last five years is as below:-

Top 10 Companies Globally

 ArcelorMittal.
 Nippon Steel & Sumitomo Metal Corporation (NSSMC)
 Hebei Iron and Steel Group.
 Baosteel.
 Wuhan Iron and Steel Group.
 Posco.
 Jiangsu Shagang.
 Tata Steel Group.
 HYUNDAI Steel Company.
 JFE Steel Corporation.
Top 10 Companies in the Country

1. Tata Steel –$22Billion

2. JSW Steel –$ 12 billion
3. SAIL –$7.7Billion
4. VISA Steel –$ 3 billion
5. Rashtriya Ispat Nigam Limited (RINL) –$2.9Billion
6. Essar Steel –$2.5Billion
7. Bhushan Steel –$1.7Billion
8. Jindal Steel & Power –$ 3 billion
9. Facor Steel –$1.5Billion
10.MESCO Steel –$ 2 billion

Michel Porter’s Five forces analysis

THREAT OF NEW ENTRY

Is low for the integrated steel industry

 Growth is stagnant from the low price of steel
 Economies of scale
 Significant capital investment in acquiring property and equipment
 Barriers to exit are also very high as "tax laws and accounting rules inhibited the
closing of inefficient plants"
 Difficult access to supply and distribution
 Slightly higher for the mini-mill industry due to lower capital commitment and scale

BUYER POWER

 Is moderate
 The huge availability of steel products has allowed buyers to get the price they will
for steel products
 Relatively low switching cost
 Large buyers (e.g. car makers) have more bargaining power. for example, the steel
U.S. steel producers had to fulfill Japanese automakers’ quality before they were
allowed to supply Japanese auto plants in U.S.
THREATS OF SUBSTITUTION

 It is moderate to high
 High in applications where strength is not a crucial concern the but cost is (e.g.
plastic, wood, synthetic materials, fiberglass)
 Moderate in applications that require strength since substitute materials are just not
strong enough
 Threat of cheaper Chinese steel could take sales from domestic players too.

SUPPLIER POWER

 For the industry, it is moderate

 Iron ore and scrap are relatively cheap commodities
 Few suppliers
 Mini-mills’ reliability on scrap metal can cause it to shift to more costly materials like
iron carbide in cases of the higher cost of scrap metal due to limited supply
 For integrated steel makers, supplier power is low because of their backward
integration practice (acquiring their own coal/coke mines and transportation
facilities).
 Bargaining power of union workers is medium too.

COMPETITIVE RIVALRY

 Industry rivalry is high

 There is not much product differentiation resulting in intense competition to get
large contracts thereby minimizing customers’ switching costs and loyalty and
causing excess capacity.
 High exit barriers since assets are specialized due to various techniques being used in
the industry
 Increase of mini-mill competitors
 Increase in global competitor (Japanese Steel, Arcelor Mittal Steel) taking up greater
market shares
PRICING OF THE PRODUCTS OR SERVICES RENDERED

Steel prices have risen significantly since July 2020. As of July 2021, flat steel prices and
long prices stood at 134% and 58% higher than one year earlier, respectively (Figure 4).
The price upswing has been sudden, following a rather weak first half of 2020. The last
time steel prices were so elevated was on July 2008; current flat prices are 8% higher than
in July 2008, while long prices remain 23% lower. Initially, the rise in prices was partly
explained by the vast steelmaking capacity made idle during the heights of the pandemic
which could not be brought online on time to meet recovering steel demand and restocking
(Fitch Ratings, 2021[44]). Currently, most of the plants that idled capacity during 2020 have
resumed full production, according to the OECD Secretariat’s desk research, yet prices
continue to creep higher. Government infrastructure spending, but also stronger than
expected demand during COVID-19 due to unanticipated switches in household
consumption patterns, with households substituting leisure and travel for equipment and
housing (Fortune, 2021[45]), partially explain higher steel prices. This is despite massive
Chinese steel production in 2021 (Russel, 2021[46]). The strong recovery in a number of
sectors should continue to support steel prices.

All regions displayed similar dynamics with respect to both flat and long steel prices. Steel
prices increased more rapidly in the United States than in other economies since July 2020
for both flat and long products. The intensity of the demand rebound in July 2020 surprised
steel users with low steel inventory levels, spurring late orders that were less sensitive to
the price (World Steel Dynamics, 2020). Additionally, the domestic production response
may have been slow to react to rising demand potentially due to higher than expected
demand and supply chain challenges resulting from the COVID-19 pandemic. In spite of a
widely shared perception that steel supply would catch up with orders by the end of the
first quarter of 2021 and that prices would level off (Wood Mackenzie, 2021; World Steel
Dynamics, 2020), flat steel prices in the US have continued to increase. Demand remained
robust which prompted US mills and service centres to raise their offer prices. According to
market participants, US mills and service centres were in no rush to sell their (limited) steel
production for August and September (Ruggiero, 2021), which indicates they are confident
that price levels will remain elevated. The Platts US HRC index hit a record high 1921 USD/t
in July, as prices have risen by 278% since August 2020, when the recovery began.

PROFITABILITY
The average operating profitability of the global steelmaking industry, defined here by the
ratio of earnings before interest, taxes and depreciation (EBITDA) to sales revenues
(weighted by total sales) increased to 12% in 2020 from 9% in 2019 (Figure 11). This
rebound in average operating profitability followed a three-year decline that saw
profitability fall from 13% in 2016. Nevertheless, median profitability only increased by a
negligible amount, suggesting that the increase in profitability affected steel firms
unequally and was mostly confined to larger steel firms (as average operating profitability is
weighted by total sales, contrary to median profitability). In spite of the rebound, average
operating profitability is not high by any historical standard: it is still below its 13.6%
average for the period 1998 to 2020.
MARKET STRUCTURE E.G., MONOPOLY, DUO-POLY, PERFECTLY COMPETITIVE MARKET
Market structure is talking about interconnected characteristics of a market, such as the
number and relative strength of buyers and sellers and degree of collusion among them,
level and forms of competition, the extent of product differentiation, and ease of entry into
and exit from the market. Market structure has four basic types, those are:
Perfect competition: many buyers and sellers, none being able to influence prices.
Oligopoly: several large sellers who have some control over the prices.
Monopoly: single seller with considerable control over supply and prices.
Monospony: single buyer with considerable control over demand and prices.
In the steel industry, the number of potential customers is limited and the products sold
are not well-suited for online sales. The analysis indicates that ICT and e-business can
hardly be used to open up new markets, increase the number of customers, and impact the
steel market’s structure.
Each country’s demand for steel market structure is not the same. For example, in China,
the concentration ratio of the commercial run, compared with developed countries and
other industrialized economies is relatively low. One enterprise said: The structure of
industrial products of our enterprise, we above the steel market, our domestic demand for
steel products structure, if we were top of the domestic steel market, the demand for its
iron and steel costs are relatively high level, need to focus on relatively large degree of steel
plant products can be produced, it is definitely demand factors will encourage its
production to focus on. But if that is at the top of the steel market, our domestic steel
industry and the current market, it needs itself is more dispersed, small-scale iron and steel
enterprises, it can better meet the demand for products produced.

PROCUREMENT OF RAW MATERIAL

The three main raw materials used to make pig iron (which is the raw material needed to
make steel) for primary steel production in a blast furnace are the processed iron ore, coke
(residue left after heating coal in the absence of air, generally containing up to 90% carbon)
and limestone (CaCO3) or burnt lime (CaO), which are added to the blast furnace at regular
intervals.
Ironmaking furnaces require at least a 50% iron content ore for efficient operation.
However, the cost of shipping iron ore means that it is often purified to some degree
before being shipped - a process called 'beneficiation'. These processes include crushing,
screening, tumbling, floatation, and magnetic separation. The refined ore is enriched to
over 60% iron by these processes and is often formed into pellets before shipping.
In secondary steel production - in an electric arc furnace - scrap is the primary raw material.
Scrap is also used in smaller quantities in primary steel production in order to control the
reduction reaction (from iron oxides to 'free' Fe ions)
There are several basic elements which can be found in all commercial steels. Carbon is a
very important element in steel since it allows the steel to be hardened by heat treatment.
Only a small amount of carbon is needed to produce steel: up to 0.25% for low carbon
steel, 0.25-0.50% for medium carbon steel, and 0.50-1.25% for high carbon steel. Steel can
contain up to 2% carbon, but over that amount it is considered to be cast iron, in which the
excess carbon forms graphite. The metal manganese is used in small amounts (0.03-1.0%)
to remove unwanted oxygen and to control sulfur. Sulfur is difficult to remove from steel
and the form it takes in steel (iron sulfide, FeS) allows the steel to become brittle, or hot-
short, when forged or rolled at elevated temperatures. Sulfur content in commercial steels
is usually kept below 0.05%. A small quantity of phosphorus (usually below 0.04%) is
present, which tends to dissolve in the iron, slightly increasing the strength and hardness.
Steel can be given many different and useful properties by alloying the iron with other
metals such as chromium, molybdenum, nickel, aluminum, cobalt, tungsten, vanadium, and
titanium, and with nonmetals such as boron and silicon.
STEEL RAW MATERIAL PRICES
Prices of the main steelmaking raw materials increased significantly since July 2020, and as
of July 2021 benchmark prices for iron ore, coking coal and scrap were up 99%, 127% and
89%, y-o-y, respectively.
Iron ore prices have continued to increase due to record demand from Chinese mills
(Financial Times, 2021). Furthermore, no increase in iron ore supply is foreseen in the
coming months a large iron ore producers are experiencing a range of issues in their efforts
to boost output, from labour shortages to bad weather (Financial Times, 2021). Global
miner BHP is set to start a “major maintenance” campaign at Port Hedland, its key iron ore
loading facility in Western Australia, and is experiencing some skilled labour shortage in
the Australian market (Clarke, 2021). Vale, the Rio-de-Janeiro based company, indicated
delays to the start of some of its operation following the damn disaster. Anglo American
owned company Kamba Iron Ore reduced its iron ore volume sales guidance citing adverse
weather in South Africa as well as logistic constraints. Indeed Transnet, the state-owned
freight and logistics company, reported a number of derailments this year and is running
an investigation to ascertain if sabotage by contractors might be the cause. In addition to
the low rail utilisation rate, Transnet has also reported low turnover at its various ports,
partly owing to Covid-19 related absenteeism (McKay, 2021). Rio Tinto, the largest iron
ore producer, indicated that the replacement of some of its mines was late on schedule
(Financial Times, 2021). In the absence of additional supply, and if the strong demand
for iron ore from Chinese mills persists, iron ore prices will remain at elevated levels. In
their effort to decrease iron ore prices, China’s National Development and Reform
Commission (NDRC), the nation’s top economic planner and market regulator, and
Beijing’s Iron Ore Trading Center have issued a joint statement saying that the current high
price for iron ore was not sustainable and that they had launched a joint probe into the
trading volume and prices of iron ore, will continue monitor closely the spot price and
“identify abnormal transactions and speculation” to take action (Graham, 2021). Going
forward, iron ore prices will probably be determined by China’s policy action concerning
the reduction of steel production (Russel, 2021).

ENTRY BARRIERS

INITIAL INVESTMENT

The investment could start from lakhs to crores.

On the other hand, a steel fabrication business can start with an investment of Rs.
10,00,000 - Rs. 20,00,000
▪ In October 2021, JSW Steel invested Rs. 150 billion (US$ 19.9 million) to build a steel plant
in Jammu and Kashmir and boost manufacturing
in the region.
▪ In October 2021, ArcelorMittal and Nippon Steel Corp.’s joint venture steel firm in India,
announced a plan to expand its operations in the
country by investing ~Rs. 1 trillion (US$ 13.34 billion), over 10 years.
▪ In August 2021, Tata Steel announced to invest Rs. 8,000 crore (US$ 1.08 billion) in capital
expenditure to develop operations in India in
FY22.
▪ In August 2021, ArcelorMittal announced to invest Rs. 1 lakh crore (US$ 13.48 billion) in
Gujarat for capacity expansion.
▪ In August 2021, Tata Steel announced to invest Rs. 3,000 crore (US$ 404.46 million) in
Jharkhand to expand capacities over the next three
years.
▪ In August 2021, Jindal Steel & Power Ltd. announced plans to invest US$ 2.4 billion to
increase capacity over the next six years to meet the
rising demand from customers.
▪ Between April 2000-December 2021, Indian metallurgical industries attracted FDIs of US$
16.1 billion.
▪ In the next three years from June 2021, JSW Steel is planning to invest Rs. 47,457 crore
(US$ 6.36 billion) to increase Vijayanagar’s steel
plant capacity by 5 MTPA and establish a mining infrastructure in Odisha.

COMPETITION

 As of October 2021, India was the world’s second-largest producer of crude steel,
with an output of 9.8 MT.
 Easy availability of low-cost manpower and presence of abundant iron ore reserves
make India competitive in the global set up.
 India is home to fifth-highest reserves of iron ore in the world.

SPECIAL ESTABLISHMENTS

The iron and steel industry in India is among the most important industries in the country.
India surpassed Japan as the second top steel producer in January 2019.[1] As per
worldsteel, India's crude steel production in 2018 was at 106.5 tonnes (MT), 4.9% increase
from 101.5 MT in 2017, means that India overtook Japan as the world's second largest steel
production country. Japan produced 104.3 MT in year 2018, decrease of 0.3% compared to
year 2017. Industry produced 82.68 million tons of total finished steel and 9.7 million tons
of raw iron. Most iron and steel in India is produced from the iron ore.

Policy for the sector is governed by the Indian Ministry of Steel, which concerns itself with
coordinating and planning the growth and development of the iron and steel industry, both
in the public and private sectors; formulation of policies concerning production, pricing,
distribution, import and export of iron and steel, ferro alloys and refractories; and the
development of input industries relating to iron ore, manganese ore, chrome ore and
refractories, etc., required mainly by the steel industry.

Steel Authority of India shortly called as SAIL is one of the top public sector steel-makers in
India and they produce steel products both for export and for domestic consumption as
well. SAIL holds the pride of being one among the four Maharatnas in the Central Public
Sector Enterprises in India. They are the major manufacturers and sellers of the following
steel products:

Alloy steel
Stainless steel
Rods and bars
Railway products
Structurals
Electrical sheets
Galvanized steel
Cold and hot coils and rolled sheets

Most of the public sector undertakings market their steel through the Steel Authority of
India (SAIL). The Indian steel industry was de-licensed and de-controlled in 1991 and 1992
respectively.

HOW DO THEY PRODUCE ?

OWNED MANUFACTURING

Company Owned Manufacturer means any Affiliate or operating unit of Company located in
the United States that manufactures any of the Authorized Covered Beverages for
distribution or sale within the United States.

CONTRACT MANUFACTURING

Contract manufacturing is when a contract manufacturer enters an agreement with

another company to make certain components or products over a specified period of time.

Recognized as a form of outsourcing, a contract manufacturer may enter a business

agreement with a company to produce parts, components, or whole products for the
company to their specifications. The manufactured products are then used by the company
in its own manufacturing process or to complete their own products.

Contract manufacturers are often third-party organizations that work exclusively in

subcontracting or sell their products to other firms or agencies.
A global supplier in the corrugated box and paper industry contracted with Marlin Steel
Wire Products, for example, to fabricate sheet metal parts on a contract basis for its
container machines. Marlin Steel was able to serve the client’s "Just in Time" needs with
speed, engineering expertise and automation capacity.
FRANCHISEE

A franchisee is an independent small business owner who operates a third-party retail

outlet called a franchise. In doing so, the franchisee has purchased the right to use an
existing business's trademarks, associated brands, and other proprietary knowledge to
market and sell the same brand, and uphold the same standards as the first business.

LICENSE IN LICENSE OUT

What is in licensing and out licensing?

If I license a product from you, I am in-licensing it and you are out–licensing it. If I license a
product to you, then I am out–licensing and you are in-licensing.

PPP MODEL

A public-private partnership (PPP) is a funding model for public infrastructure projects and
initiatives such as a new telecommunications system, public transportation system, airport
or power plant. Government agencies represent the public partner at a local, state and/or
national level.

ROYALTY BASED MODEL

Royalty payments are generated based on use and the rights owners collect payments for
the same. As a practice, artists enter into contracts with publishers which grant them
ownership of the work to commercially exploit it and collect the royalties it earns.

RESEARCH & DEVELOPMENT

EMPOWERED COMMITTEE ON RESEARCH & DEVELOPMENT

Research & Development in the iron and steel sector is normally being carried out by the
steel plants, academic institutions and national research laboratories.
However, to supplement and encourage research activities in the iron and steel sector,
Govt. of India is providing financial assistance from the Steel Development Fund (SDF) for
some of the R&D projects received from the public and private sector steel plants, national
laboratories, academic institutions etc. Thrust areas of the R&D projects, so assisted, are
given below: -
· Design & development of new technologies & production processes.
· Reduction in raw material and energy consumption.
· Development of Human Resources.
· Utilisation of waste materials.
· Environment management and pollution control.
· Development of new value added products.

An Empowered Committee under the Chairmanship of Secretary to the Government of

India, Ministry of Steel with members from Department of Science & Technology,
Department of Scientific & Industrial Research, Steel producers in both private and public
sectors, Indian Institute of Technology (IIT), Kharagpur, National Metallurgical Laboratory
(NML), Jamshedpur, MECON Ltd, and others was set up on 24.2.1998 with a view to
providing overall direction to the total research effort on iron and steel in the country and
approve specific research projects placed before it for funding fully or partially, from the
SDF.
Since it was set up, the Empowered Committee (EC) has met 9 times and approved 31 R&D
projects. The total cost of these 31 projects is Rs.212.73 crore Out of this, Rs. 99.573 crore
is to be met from the SDF of which so far Rs. 72.487 crores has been released.

GOVERNMENT INITIATIVE

Government initiatives in the Steel industry are as follows:

The Government approved the National Steel Policy (NSP) 2017 on May 3rd. The NSP is in
step with the government's long term vision to give thrust to the steel sector. National
Steel Policy 2017 envisages 300 MT steel-making capacity and 160 kgs per capita steel
consumption by 2030-31.

100% FDI through the automatic route allowed in the Indian steel sector.

The government hiked the export duty on iron ore to 30% ad valorem on all varieties of iron
ore (except pellets) to ensure supply to domestic steel industry.

Ministry of Steel has issued necessary direction to the steel companies to frame a strategy
for taking up more Research and Development (R&D) projects by spending at least 1% of
their sales turnover on R&D to facilitate technological innovations in the steel sector.

The government introduced Steel Scrap Recycling Policy aimed to reduce import.

THE ENVIRONMENTAL IMPACT OF STEEL PRODUCTION

Steel production has a number of impacts on the environment, including air emissions (CO,
SOx, NOx, PM2), wastewater contaminants, hazardous wastes, and solid wastes. The major
environmental impacts from integrated steel mills are from coking and iron-making.

Climate change
Virtually all of the greenhouse gas emissions associated with steel production are from the
carbon dioxide emissions related to energy consumption.

Emissions to air

Coke production is one of the major pollution sources from steel production. Air emissions
such as coke oven gas, naphthalene, ammonium compounds, crude light oil, sulfur and
coke dust are released from coke ovens.

Emissions to water

Water emissions come from the water used to cool coke after it has finished baking.
Quenching water becomes contaminated with coke breezes and other compounds. While
the volume of contaminated water can be great, quenching water is fairly easy to reuse.
Most pollutants can be removed by filtration.

Waste

Slag, the limestone and iron ore impurities collected at the top of the molten iron, make up
the largest portion of iron-making by-products. Sulfur dioxide and hydrogen sulfide are
volatized and captured in air emissions control equipment and the residual slag is sold to
the construction industry. While this is not a pollution prevention technique, the solid
waste does not reach landfills.

SOCIAL IMPACT

With the growing demand for steel products, the industry supports thousands of jobs and
pays billions in wages and compensation – from firms leveraging on financial, advertising,
personnel, legal and transportation services to those that only focus on steelmaking, it is
the backbone of developed economies.
Steel plays a vital role in the modern world. In addition to being one of the most important
materials for building and infrastructure, steel is the enabler of a wide range of
manufacturing activities. It also creates opportunities for innovative solutions in other
sectors and is indispensable in research and development projects around the world.

Given such a wide range of steel applications and its functions, it is not an easy and simple
task to give a fair assessment of the economic impact of the steel industry through
numbers. This is why in 2019 worldsteel commissioned Oxford Economics to evaluate our
industry’s impact on a global scale.
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Höganä
Changes in raw materials supply and
quality
over time
The third external uncertainty is related to
changes in the
supply and quality of important raw
materials. The supply
and quality of raw materials are not static
and may change
dramatically over time. For example,
currently, China pro-
duces more than 95% of the world’s rare
earth metals
(Ericsson 2015) and well above 80% of
tungsten and magne-
sium (USGS 2013a, b). Because of the risk
for monopoly
prices, such supply concentration should
clearly impact
long-term planning for buying firms.
Furthermore, the volatility of metal prices
is increasing,
including many raw materials used by the
steel industry. For
example, iron ore prices increased by
roughly 100% from
early 2011 to early 2012 only to fall back
dramatically in
2013, 2014, and 2015 (Löf and Ericsson
2017). When the
price for a certain raw material drops to a
level at which pro-
ducers cannot make a profit, some
producers may disappear or
withhold production capacity, which has
been the case in the
iron ore mining sector. For Höganäs, the
emerging local
Swedish iron ore miner Northland might
have become a sup-
plement to its traditional iron ore supplier,
but Northland went
bankrupt in 2014 (Wilson and Stammler
2016). Even when
the iron ore prices fell in the mid-2010s
after a few years of
very high levels, such periods clearly
underline the impor-
tance for firms whose operations rely
heavily on a specific
raw material to have a knowledgeable and
efficient RMM in
place.
Another example is the recent changes in
the markets for
new scrap metal, a raw material Höganäs
uses to produce
metal powder. In brief, new scrap metal
prices have sky
rocketed as supply has decreased, along
with increasingly
problematic contamination levels in old
scrap. Historically,
Höganäs has relied heavily on scrap metal
from the automo-
tive industry. However, car manufacturers
use more alloyed
steel (for example with manganese) in
lightweight bodies,
than they have done historically which
poses a problem to
Höganäs. Furthermore, with changing
demand patterns for
example for vehicles, scrap
availability is changing
(Rombach et al. 2012). This clearly affects
production of
any industries which rely on scrap for
its production.
Höganäs is but one example of companies,
which must adapt
firm-internal production processes and
process technologies.
Changes in customer needs
The fourth external uncertainty is related to
how customers’
preferences change over time. The product
properties that
customers demand will demarcate the
options the firm has
concerning its choice of input raw
materials. For example,
for Höganäs, the changing demands by its
customers have
over time pushed Hö