Asia: The “New” Leader in Stainless Steel Production

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Although Asia, especially Japan and China, have been involved in the business of stainless steel manufacturing and production, they have always had stiff competition from Europe and North America. After 2008, stainless steel production dropped on a global level as the demand decreased. The industry hasn’t fully recovered even up to 2012 especially in Europe.

According to French company, Eramet Group, developed countries faced rising debt aside from the lower demand among emerging economies especially China. China began to buy less and produce more locally even as it just recently celebrated its 60^th year in stainless steel production.

The sentiment among many experts is that demand for global steel could drop even more this 2013 because Asian steel companies will be producing enough to sustain its needs. There has been an increase in the steal-making facilities around developing countries, not just in Asia but in other parts of the world. Excess capacity levels are higher than in 2012 because of this.

Japan stainless steel companies are also recovering and slowly getting back on track even with the problems they are having with their currency value. Thus, the chances of an increase in demand in global steel are unlikely to improve.

In addition, the cost of raw materials has continued to be volatile which challenges steel manufacturers with high production costs like labor and energy. Older steel companies will also be unable to sustain its cost if it does not upgrade its facilities. A few steel companies in Europe have merged to secure jobs and stay out of the red. One such merger was between Outokumpu and Inoxum which the European Union approved of last year.

Finally, the political stability and interference can affect how stainless steel companies outside of Asia can further bring down the performance. In Asia, the major stainless steel producing countries are Japan, China and India. The problem with China is the worsening reputation they have for undercutting their products that has resulted in added taxes for them. India and Japan are doing quite well in spite of internal difficulties mainly because the companies are supported by their respective governments and the managerial styles.

According to Ernst & Young’s 2012 report, the key elements to a sustained growth in the steel industry are operational agility, customer reach, confidence in the company, and cost competitiveness.

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