High prices affect all nations
which has occurred already has done nothing but help tighten world supply of steel and push prices up even further. Xinhua reported that, in the first four months of 2008, Chinese rolled steel exports to the European Union fell by 55 per cent on the same period in 2007 while those to the US were down by 33.1 per cent.
Two of the consequences of this extraordinary growth in steel demand will be, first, that not everyone can get their hands on steel when they need it and, two, there will be enormous investment in new capacity.
The Wall Street Journal reports that a planned new bridge in New Delhi has been on hold because of steelrelated cost overruns and that Venezuela has renationalised its largest steelmaker and is limiting exports. So the deals are on. Tata Steel has entered a partnership with Vietnam Steel and will invest in a new iron ore mine and steel plant there. Another Indian company, Essar Group, in late May announced a $ US1.65 billion investment in a new plant for its US subsidiary, Minnesota Steel.
Russia’s largest domestic steelmaker, Evraz Group, will spend $ US1.8 billion over the next three years to increase capacity at its existing mills and build new plants in Siberia and Kazakhstan. Evraz is also the world’s largest producer of railway track lines.
Another Russian player, Severstal, has launched a $ US688 million bid for all the shares in US steel manufacturer Esmark, the parent of Wheeling- Pittsburg Steel.
And it is not just steel itself, but the feedstock that is seeing huge investment. Chinese money is pouring into Australian iron ore companies, and now Nippon Steel wants to take a stake in a new metallurgical coal mine being developed in Mozambique by Brazil’s Vale.