Current Global Scenario and the Steel Industry

The world economic recession had put an abrupt end to the steel market upturn that began in 2002. The market had been turbulent over the last three decades but today, the steel industry is better prepared thanks to global restructuring and consolidation. The Group of Eight (G8) industrialised nations have begun preparing for an economic recovery, acknowledging signs of stabilisation in the economy and exploring options to establish procedures to unwind hefty stimulus packages. Despite short-term uncertainties, the long-term prospect of the global steel market is strong and growth in steel demand will resume eventually supported by domestic-led growth in many emerging economies. Such recovery might well be accompanied by significant structural changes in the industry worldwide.

The economic crisis has led to the cancellation or review of many planned investments in capacity expansions in the steel industry. However, since many expansion projects continue to advance in some emerging economies, world steel making capacity is expected to maintain an upward trend into 2010 which will well exceed future demand levels. This imbalance between capacity and demand is likely to hasten retirement of inefficient, more environmentally polluting or high cost capacities in certain countries, further affecting industry employment. Steel makers in developed countries will maintain their pursuit of a shift from volume to value. All this will further make the steel industry more competitive and efficient as the world economy recovers.

Climate change is one of the most important issues that faces the steel industry in the 21st century. Steel fulfils a unique place in our lives and is essential for sustainable development. It is also key to infrastructure, energy delivery, transportation, housing, construction and consumer goods. All major steel producing countries are engaged in the process of substantive reduction in global emissions and learning to cope with climate change, a phenomenon caused by greenhouse gas emissions that are warming the atmosphere. The Tata Steel plant at Jamshedpur has reduced the CO₂ emissions by 36% over the past 12 years. This was possible through the adoption of several measures which included, among others, the installation of energy efficient equipment and processes, improving by-product fuel recovery and usage, and waste heat recovery. Tata Steel India is currently working on several projects that could yield a reduction of 2 million tonnes of CO₂ a year. In addition to this, Tata Steel Europe is also working with other steel makers in Europe on a major research and development project, ULCOS (Ultra Low CO₂ Steelmaking) with the ambitious objective of reducing carbon emissions per tonne of steel produced, by 50% by 2050.

Looking towards the future, the steel industry’s main contribution to the reduction of CO₂ emissions should be to further develop the use of by-products and to work with its customers to help design better, long lasting, more energy and material efficient products. Additionally, improvements in areas other than primary steel production may offer further opportunities for CO₂ reduction.

The steel industry prioritises on health and safety. In most countries, the steel industry has been synonymous with economic growth and prosperity. Steel is used in everything from railroad tracks to automobiles to orthodontic instruments. However, the production of steel happens to be one of the most hazardous jobs. A workplace fatality is tragic no matter what the circumstances are. As an industry, we have the opportunity and responsibility to provide the best health and wellness solutions for our employees. Health and Safety remains the Tata Steel Group’s priority with clear objectives for health, process safety and occupational safety. The Group has taken an integrated and systematic approach towards managing health and safety through structured programmes across all entities.

Despite the current slowdown in consolidation within the global steel industry, mergers and acquisitions remain a critically important business strategy for most corporates. Steel analysts are expecting a new wave of consolidation to take place in the next three years. Global giants are refocussing on positive markets by applying their resources to the core business where they are most needed. This creates opportunities to gain market share from competitors who diversify and split their focus. Acquisitions and strategic alliances are also critical to strengthen, refocus and position companies for increased growth and profitability. The Tata Steel Group is strongly pursuing its long-term strategy of acquiring and developing mining projects for its raw material security for iron ore and coking coal. The Group has been concentrating on the geographies that are logistically favourable with respect to its plants in Europe and Asia.