Thursday, 28 Jan 2010
Mr Narendra Chaudhary Global steel consultant & Former Executive Vice President ArcelorMittal during an exclusive interview with SteelGuru shared his insights of global steel industry

Q - We have seen lot of upheaval in last 2 years, with steel prices climbing to USD 1500 per tonne levels and than dropping to less than USD 400. Although, global steel industry has witnessed many ups and downs in last 20 to 30 years, but how different it was this time?

A - Recent ups and downs in global steel industry are significantly different from past.

Earlier, they happened because of demand supply imbalance. Whenever the demand was good, supplies increased. There was rush of materials pulling down the market, which used to be followed by a distress period for the steel industry. Some of the high cost producers used to suffer in those situations and eventually close down regaining the balance.

In the last 2 years, if you recall that steel was selling at USD 1500 per tonne. It was true in 4th quarter of 2007, beginning of 2008 and 2nd quarter 2008. Demand was strong all around the world as all the economies were growing. It was a unique situation where demand and supply mismatch was distinctly absent. This time, we found that in Latin America, North America, Africa, Asia and Europe, there was spurt in demand of steel causing huge imbalance in demand and supply. The price increased exponentially to touch USD 1500 levels for some products.

The demise of that period was not caused by the steel industry. It was not self inflicted on the contrary it was by “Financial Tsunami”. It all started in US leading to practically no liquidity in West as a result of which the steel demand shrunk within no time.

Whereas in the past, steel industry used to be responsible for it own doings, but in 2008 it was severe credit crunch afflicting the global economy and industry. All pervasive nature of this malaise was not restricted only to steel industry.