Chapter III

Abstract
Steel is a commodity which is of prime importance in an economy because of its use in various
critical and varied sectors in an economy. Global growth in steel production is linked to human
development. The global steel industry is undergoing a consolidation to increase steel capacity
utilization to maximum levels .The common means such as mergers and acquisitions is We
examine the linkages between GDP and steel consumption and determine the importance or
contribution in its economy . Countries according to requirements in various sectors of the
economy consume steel. We set out to examine the steel consumption patterns of Developed
(U.S.A, Japan, Germany ,South Korea , Italy , France , Spain , Canada , United kingdom ,
Belgium , South Africa , Austria, Sweden ) and Developing (India , China , Russia , Turkey ,
Mexico , Egypt , Malaysia , Thailand , Indonesia , Colombia , Portugal , Peru , Poland) countries
corresponding to GDP to represent their levels of economic activity. The steel consumption
behavior has been analyzed using indicators calculated through data extrapolation to gain and
corroborate insights of the economic reasons for the level of steel consumption and its relation
with respect to GDP .

ACKNOWLEDGMENT
We think if any of us honestly reflects on who we are, how we got here, what we think
we might do well, and so forth, we discover a debt to others that spans written history.
The work of some unknown person makes our lives easier every day. We believe its
appropriate to acknowledge all of these unknown persons; but it is also necessary to
acknowledge those people, we know have directly shaped our lives and our work.
I have put my earnest efforts in this project. However, it would not have been possible
without the kind support and help of my mentor Mr. Krishna Kant Roy I would like to
extend my sincere thanks to him.
I am highly indebted to all the faculty members of Symbiosis School of Economics for
their guidance and constant supervision as well as for providing necessary information
regarding the project & also for their support in completing the research paper.

Table Of Contents

List of abbreviations
List of tables
Chapter I: Introduction
Chapter II: Steel and its uses in various sectors of the economy
Chapter III: Steel industry outlook
Background
Global scenario
Indian scenario
Chapter IV: Research methodology
Chapter V: Steel consumption and GDP analysis: Developing countries
Background
India
Russia
Turkey
Mexico
Egypt
Malaysia
Thailand
Indonesia
Colombia
Portugal

Chapter VI: Steel consumption and GDP analysis: Developed countries
Background
Japan
U.S.A
Germany
South Korea
Italy
France
Spain
Canada
Belgium
Sweden
Conclusion
Appendix

List of abbreviations
1. WSA-World Steel association
2. FTA-Free Trade agreements
3. JV-Joint venture
4. JPC-Joint Plant Committee
5. IRR-Internal rate of return
6. USA-United States of America
7. ISV-India Steel Vision
8. NAFTA-North Atlantic free trade agreement
9. EU-European union

LIST OF TABLES
Table 1: country wise calculated coefficient of determination and elasticity of demand
Table 2: Year wise GDP(in rupees) and steel consumption(in million tonnes) for india(1992-
2011)
Table 3: Year wise GDP(in ruble) and steel consumption(in million tonnes) for russia(1992-
2011)
Table 4: Year wise GDP(in lira) and steel consumption(in million tonnes) for Turkey(1992-2011
Table 5: Year wise GDP(in peso) and steel consumption(in million tonnes) for mexico(1992-
2011)
Table 6: Year wise GDP(in Egyptian pound) and steel consumption(in million tonnes) for
Egypt(1992-2011)
Table 7: Year wise GDP(in ringitt) and steel consumption(in million tonnes) for Malaysia(1992-
2011)
Table 8: Year wise GDP(in baht) and steel consumption(in million tonnes) for Thailand(1992-
2011)
Table 9: Year wise GDP(in rupiah) and steel consumption(in million tonnes) for Indonesia(1992-
2011)
Table 10: Year wise GDP(in peso) and steel consumption(in million tonnes) for colombia(1992-
2011)
Table 11 : Year wise GDP(in euro) and steel consumption(in million tonnes) for Portugal(1992-
2011)
Table 12: country wise calculated coefficient of determination and elasticity of demand for
developed countries.
Table 13:Year wise GDP(in yen) and steel consumption(in million tonnes) for Japan(1992-2011)
Table 14:Year wise GDP(in dollars) and steel consumption(in million tonnes) for USA(1992-
2011)
Table 15:Year wise GDP(in euro) and steel consumption(in million tonnes) for Germany(1992-
2011)
Table 16:Year wise GDP(in won) and steel consumption(in million tonnes) for South Korea
(1992-2011)
Table 17:Year wise GDP(in euro) and steel consumption(in million tonnes) for Italy(1992-2011)
Table 18:Year wise GDP(in euro) and steel consumption(in million tonnes) for France (1992-
2011)
Table 19:Year wise GDP(in euro ) and steel consumption(in million tonnes) for Spain(1992-
2011)
Table 20:Year wise GDP(in candian dollars) and steel consumption(in million tonnes) for
Canada (1992-2011)
Table 21:Year wise GDP(in euro) and steel consumption(in million tonnes) for Belgium(1992-
2011)
Table 22:Year wise GDP(in krona) and steel consumption(in million tonnes) for Sweden(1992-
2011)

Chapter I: Introduction
Steel is one of the most versatile metal known to man and is used in almost each and every
aspect of our life . From computers to surgical instruments to mega structures steel is
everywhere. Steel is thus required for more and more diversification and growth of economy.
The world is developing faster in the 21
st
century, with the world debate shifting to provision of
infrastructure , steel becomes an even more important topic. Steel is one of the key drivers of the
global economy. Steel usage is generally related to growth in infrastructure and each countrys
steel consumption pattern can tell us a lot about the economies characteristics. Steel products are
used in automotive, construction, transport, power and machine goods Just like Rostows three
stages of growth ,steel consumption also follows a pattern. Interpreting the pattern can help us
classify countries into developing and developed countries. But what is more important is that
developing and developed countries are two very broad terms ,there are various stages at which
countries are even within developed and developing countries. Global growth in steel production
is linked to human development .Steel consumption patterns can provide us very important
insights about the stages at which countries are within developing and developed countries. The
global steel industry is consolidating and it is providing solution for problems of overcapacity
and cyclical earnings . There are various factors that are affecting the steel industry . The
fluctuations in demand , availability and distribution of raw materials and environmental issues
which are affecting the industry The steel industry has to cater towards more quality than
quantity . To address these issues steel industry has to take various measures among which
investment in research and development is one of the steps required . Steel is also at the core of
the green economy being sustainable financially ,environmentally and socially.

Chapter II: Importance of Steel industry
Steel is by far the most important, multi-functional and most adaptable of materials. The
development of mankind would have been impossible but for steel. The backbone of developed
economies was laid on the strength and inherent uses of steel.
The various uses of steel which in turn is a measure of adaptability of steel can be judged from
the following characteristics of steel :
- Hot and cold formable
- Weld able
- Suitable machinability
- Hard, tough and wear resistant
- Corrosion resistant
- Heat resistant and resistance to deformation at high temperatures.
Steel compared to other materials of its type has low production costs. The energy required for
extracting iron from ore is about 25 % of what is needed for extracting aluminum. Steel is
environment friendly as it can be recycled. 5.6 % of element iron is present in earth's crust,
representing a secure raw material base . Steel production is 20 times higher as compared to
production of all non-ferrous metals put together.
The steel industry has developed new technologies and has strived hard to make the world's
strongest and most versatile material even better. There are altogether about 2000 grades of steel
developed of which 1500 grades are high grade steels. There is still immense potential for
developing new grades of steel with varying properties .The large number of grades gives steel
the characteristic of a basic production material Steel has enjoyed an important position in our
lives and will continue to do so in the years to come. However, the degree to which it maintains
its dominant position will depend on if steel can exploit its potential by developing new higher
grades and adaptable grades . This can be achieved by refining the structure and applying
alloying techniques and thus furthering its utility value.
The industry directly employs more than two million people worldwide, with a further two
million contractors and four million people in supporting industries. Considering steels position
as the key product supplier to industries such as automotive, construction, transport, power and
machine goods, and using a multiplier of 25:1, the steel industry is at the source of employment
for more than 50 million people. World crude steel production has increased from 851 megatons
(Mt) in 2001 to 1,548 Mt for the year 2012. (It was 28.3 Mt in 1900).World average steel use per
capita has steadily increased from 150 kg in 2001 to 215 kg in 2011. India, Brazil, South Korea
and Turkey have all entered the top ten steel producers list in the past 40 years.

The uses of steel in various sectors are-
1.Steel is also there in the background. It provides the infrastructure of our hospital buildings,
delivers clean water to hospitals using pumps and pipes, and helps us move about more freely
with lifts and wheelchairs. Steel brings us rapid assistance when and where
we need it through the use of emergency vehicles and ambulances. Installed in steel containers,
mobile hospitals can be operational with full medical facilities, including intensive care units,
within 36 hours of a disaster. Steels strength and durability also make it suitable for exercise
equipment, like weights, treadmills and exercise bikes that contribute to a healthy lifestyle. This
is especially important in our ever-growing cities where we increasingly use indoor gyms to help
us stay fit year-round.
2.Steel and health
From sterile surgical instruments to exercise machines, steel is with us in many ways that benefit
our health. Around the world, steel is in the hospitals we rely on, the pharmaceutical
systems that manufacture our medicines and in emergency equipment that gets medical
assistance to us rapidly, when it counts. Meeting the worlds freshwater needs is a serious
challenge. At least one in five people in the world lack an adequate supply of safe drinking
water. Steel is helping to meet this growing need. From obtaining and purifying our water to
make it suitable for drinking, to delivering it safely, steel is there at every step. It is used to line
boreholes, in filtering and holding tanks at water treatment facilities as well as pumps and pipes
that carry the freshwater throughout the community all the way to our homes. In regions of
freshwater scarcity, steel provides water through rainwater storage, drilling wells and
desalination facilities.
In and around cities
Steel enables communities to build water infrastructure such as canals, harbours, fish
passages, culverts, sewers and storm-water detention. Steel bridges and tunnels allow people
to get around water easily. Steel barriers are also important to prevent flooding in areas of
increasing sea-levels around the world. Today, more than half of the worlds population lives in
cities. In many cities, more than 40% of the total water supply is lost during distribution. Steel
solutions reduce these loses. Tokyo has adopted corrugated stainless steel pipes for 90% of its
extensive network of underground potable water pipes, eliminating leakages and lowering costs.
3.Steel and water
Steel plays a fundamental role in helping to make freshwater accessible for everyone.
From rainwater storage tanks to complex pump and pipe-infrastructure, steel is involved in the
Entire process of water collection, purification and delivery. Steel enables us to manage water,
from raindrops to ocean waves.
4. Steel and Agriculture
Agriculture without steel is unimaginable. From tilling the land and planting seeds to watering,
harvesting, storing and transport crops, steel is a vital part of agriculture. Steel also facilitates the
feeding, shelter and transportation of livestock. Some steel industry by-products are even used as
fertilizers. Steel has been involved in agriculture for much of history. From basic tools, such as
hoes, picks, shovels, and forks, to the most technically advanced tractors, ploughs and harvesters,
steel is there. Continual developments in steel agricultural equipment have made farming easier
and more efficient. In developed countries, as little as 3% of the workforce can feed the entire
population, compared to over 75% just a hundred years ago.
On the farm
Steels durability and versatility make it ideal for countless farming applications. It is used for
pipes and irrigation systems, for water tanks and buckets, and in scythes, sickles and shovels.
Wool and fleece are gathered using steel shears and scissors. Many types of feed storage
facilities are built of steel, including barns and silos. Steel is also an ideal material for automated
animal-feeding systems. Crops and livestock are brought to local and global markets on trucks,
trains, planes and ships all made with steel.
4. Steel and environment
An important part of protecting our environment is making efficient use of our natural resources.
Steel is made primarily from iron, the fourth most abundant material in the earths crust.
Improvements in energy efficiency have led to reductions of about 50% in energy required to
produce a tonne of steel since 1975 in the top steel-producing countries. By-products produced
during steelmaking are put to good use. Slags can be used in road-making, while process gases
provide energy. Every steel product contains recycled steel and is 100% recyclable. Solar energy
and water desalination in deserts, pressure resistant vessels for exploring deep waters, barriers
for flood-prone areas and earthquake resistant buildings are all made of steel. Artificial reefs,
made from a special steel mesh or recycled steel plates, are providing new habitats for coral and
fish. By restoring coral reefs that have been bleached by rising temperatures, steel plays a part in
fighting the effects of climate change. Lightweight steel vehicles minimize the amount of fuel we
use. Steel is also used to construct clean and economical sources of alternative energy. However,
steels most important contribution to our environment is its infinite recyclability.
5. Steel and climate change
Steel is part of many solutions to combat climate change. Renewable energy sources, such as
solar panels and wind turbines use steel. Steel also enables creative solutions to meet our energy
needs. These include alternative energy sources, such as geothermal and wave energy.
.
6. Steel and food supply chain
Steel is an essential part of our food supply network. It helps to grow, preserve, deliver, store,
And prepare our food. The machines and equipment that process what
We eat and drink are also made with steel. Trucks and steel containers are used to transport our
food. Shopping carts, cars, buses, and trains all made with steel help us to carry our food
home. In our kitchens steel is used in the production of knives, pots, pans, eating utensils,
refrigerators and stoves. When we are finished with the cans that protect our food and drinks,
steels magnetic properties allow them to be efficiently separated from waste streams with
magnets. Steel cans are an important part of our food distribution system. Almost 200 billion
cans of food are produced in the world each year. Steel cans are strong, tamper-resistant and
protect food and drink from moisture, oxygen and light. Steel cans naturally preserve their
contents without any additives.
Several years ago, a 40-year-old can of corn was found in a house in the US. The corn inside
Had been kept safe from contaminants and most nutrients were still preserved. The corn also
looked and smelled as though it had been canned recently.
7. Steel and housing
Humanitys need for housing is great and growing. About 1.1 billion people are living in
inadequate housing conditions in urban areas alone. Steel is an ideal material to help meet their
needs, whether it is for basic housing or luxury apartments. Our homes provide us with comfort
and shelter from the elements. Steel frames, structural beams and foundations support our homes.
Steel panels and roofs protect us from extremes of temperature, water and wind. Steel locks and
bolts help to keep everything we treasure, safe. Within our homes washing machines make our
lives easier, refrigerators keep our food fresh, while steel ducts, pipes, and taps circulate air and
provide clean drinking water. Steel also provides elegant light fixtures and furniture.
The possibilities of building with steel are limitless. Its strength-to-weight ratio is the highest of
any residential building material. Steel is easily formed and joined. It can withstand
Natural disasters including hurricanes and earthquakes. Steel is also impervious to attacks from
termites or fungi. Steel facilitates the conversion of obsolete buildings, such as warehouses or
train stations into modern living or working spaces, extending their useful life.
Innovative steel solutions are fundamental to meeting humanitys growing need for shelter.
Steel is one of the most sustainable building materials with unique characteristics that favour
its use in the construction industry. Steel is long-lasting, versatile, earthquake resistant, and
100% recyclable.
8. Steel and infrastructure
Steel has moved us through the centuries. From carriages to bicycles, automobiles, trains, ships,
Submarines, planes, and spacecraft, steel facilitate our mobility. Steel is essential in all transport
Infrastructure. Roads, railways, bridges, tunnels, sea ports, and airports all use the strength and
versatility of steel to move us and our goods.
Steel and your car
9. Steel and transport
Mobility is essential in our modern society. Steel provides transport solutions that move
Us quickly, efficiently and economically. It also helps to keep us safe as we move. Innovative
Advances in steel design ensure that steel will continue to contribute to the development
of fuel-efficient transport solutions long into the future. Cars are one of the most popular modes
of transport in the world. There are approximately nine cars for every 100 people. Steel makes up
Approximately 55% of an automobiles overall mass. Power trains, gear boxes or vehicle bodies
are all made from steel. Seat-belt buckle and anchors and crash-energy absorbing side-bars are
also made from steel to keep you safe. Even tires are strengthened with steel wire. Transport
accounts for over 25% of total world energy use. New lightweight Advanced High-Strength
Steels (AHSS) have the potential to reduce energy consumption of automobiles by 50% over
their life cycle. AHSS can already be found in many vehicles on the road today. Many current
automotive advances, such as fuel cell vehicles, would not be possible without steel. In all forms
of travel there is an associated crash risk. That is one of the main reasons why all types
of passenger vehicles, including cars, trucks, buses, and trains use steel in their construction. One
of steels most important safety attributes is its ability to collapse like an accordion, thereby
absorbing the energy of a crash. Steel becomes stronger as it bends, reducing the chance of
intrusion into the passenger compartment.
The steel skeleton of a vehicle provides its base strength. However, there are many other steel
Components in a typical car that are designed to keep you safe. These include seat tracks to
Keep passenger seats in place, steel buckles and seat-belt anchors, and steel door beams that help
Absorb the energy of a side-impact collision. Steel also brings road safety by providing road
signs, traffic signals, street lights for night driving, and crash barriers.

10. Steel and energy

Steel is critical for supplying the world with energy. It is indispensable for energy production,
distribution and application. It is used in mines and offshore oil platforms, oil tankers and gas
pipelines that deliver our fuels, hydroelectric dams, backing for solar panels and storage for fuel
cells. Steel is also used in pylons and cables for electricity distribution. Generators, transformers,
and electric motors made of electrical steel create energy to power our world.
Renewable energy, increased efficiency
With concerns over climate change increasing, there is an urgent need for solutions to meet our
rapidly growing energy needs in a sustainable manner. Steel helps to make clean and renewable
energy available. It is used in the construction of wind turbines, and in photovoltaic solar panel
systems that harness energy from the sun. Steel-based solutions can convert ocean wave energy
into electricity. Steel is also needed for hydrogen storage tanks and hydrogen fuel cells.
Steel reduces our need for energy by providing energy-efficient solutions. Fuel-efficient vehicles
And innovative modular construction methods are just two examples of how steel reduces energy
consumption, while minimizing the impact of our lives on the environment.
Steel and energy
Every time you switch on an electrical appliance, you are using steel. Hi-tech electrical steels are
used to create the power you use. Pylons and cables made of steel transport the electricity
directly to you. Steel is also used in the creation of renewable energy including hydrogen fuel
cells, wind turbines, and solar panels. Steel powers your world, day and night.
Steel provides essential safety in all aspects of our lives. Property gates, door locks, keys, and
Safes keep us and our personal belongings secure. Hand and guard railings help to prevent
accidents in stairwells. Steel is used in fire extinguisher casings, water sprinkler systems and fire
doors. Steel is also the material of choice when constructing earthquake-resistant buildings and
skyscrapers.
10. Steel and communication
Satellites and beyond Radio transmitters are the basis for many of our methods of
communications. They are used in baby monitors, toys, mobile telephones, radar, and satellites.
Radios also play an important role in communications between emergency services and have
many applications in industry. All radios contain steel components to enable communication.
Steel is an integral part of many other communication devices. Ballpoint pens rely on a steel
sphere less than 1 millimeter in diameter to dispense ink. Approximately 25% of an average
computer is made of steel. Many people rely on satellite dishes to provide them with a wide
variety of television channels. The actuators in these dishes are made of high-tech steel. Steel is
also used to protect communication cables that cross continents
and even the ocean floor. Almost every form of human communication uses steel in some way.
Newspapers and books could not be created without steel presses. Computers and pens contain
steel and are produced using steel equipment. Postal systems around the world depend on
Steel sorting equipment and infrastructure to deliver our letters and packages. Steel is there even
when we make a telephone call, all along the line.
All around the world, steel brings culture into our lives. Impressive sculptures, delicate watches,
museums and music all utilize different attributes of steel. Steel is also there in the buildings we
use to celebrate our cultures and ceremonies. The roar of a crowd in a football stadium would not
be heard without steel.
Take something as basic as your daily newspaper that connects you with the world. Steel was
used in countless ways to produce and deliver it to you. From the facilities that produced the
paper and ink, the trucks that transported it to the giant steel presses for printing, to the
transportation network that delivered it to you. When you are through with your newspaper,
trucks deliver it to recycling facilities that use equipment made of steel.

Chapter III: Steel industry outlook

Steel is a cornerstone and key driver for the worlds economy.It is a key material needed for
industrialization and urbanization, hence, strongly associated with status of a nations economy.
Often, steel industry is a barometer of the economic health of a nation.
Per capita steel use Percentage distribution of steel use sector wise

1

Steel is the most widely used material in modern society thanks to its unique combination of
strength, formability and versatility - steel is everywhere in our life. It is used in construction,
automotives, machinery and metal products, transport, electrical equipment and domestic
appliances with construction industry having highest share of 51%.
2

Steel industry directly employs 2 million people worldwide, with a further 2 million contractors
and 4 millions in supporting industries. As key product supplier to industries such as automotive,
construction, transport, power and machine goods. Steel industry has employment multiplier of
25:1 and is at the source of employment for more than 50 million people word wide.
3

Steel is also at the core of the green economy, in which economic growth and environmental
responsibility work hand in hand. Under green economy, steel industry has to be sustainable on
three levels that isit has to be financially, environmentally and socially sustainable. Steel industry
is financially sustainable as it is profitable throughout its cycle. Steel industry is very active in
development of new products, new production and environmental protection technologies
through innovation and strong R&D activity. Steel industry has been environmentally
responsible and has operated within its boundaries by efficiently using natural resources. It has
been providing safe and healthy working conditions and provides special social security, care
about the health and well-being of workers and the communities in which it operates.

1
https://www.worldsteel.org/statistics/statistics-archive.html
2
(2013 STEEL PRODUCTION, 2013)
3
(ECONOMICS)
The amount of energy required to produce a tonne of steel has been reduced by 50% in the last
30 years. All steel created as long as150 years ago can be recycled today and used in new
products and applications. By sector, global steel recovery rates for recycling are estimated at
85% for construction, 85% for automotive, 90% for machinery and 50% for electrical and
domestic appliances leading to a global weighted average of over 70% making it one of the most
recyclable material. Steel is the main material used in delivering renewable energy solar, tidal
and wind. Nowadays, 97% of steel by-products can be re-used.

Global Steel Scenario
World crude steel production has increased from 28.3 million tons in 1900 to 851 million tons in
2001 to 1,527 million tons in 2011. As per World steel, the production is expected to reach 2000
million tons by 2030 primarily driven by emerging economies. World average steel use per
capita has steadily increased from 150kg in 2001 to 215kg in 2010.
World steel production Per capita finished steel use(2011)(in kg)
4

Over the years, steel consumption has shifted from region to region coinciding with growth in
economy of the region. From 1950 to mid seventies, the growth in steel consumption was driven
by USA, Western Europe, Erstwhile USSR and Japan. The last quarter of 19
th
century saw
decline in consumption from Erstwhile USSR, especially, after its disintegration in late 90s. This
period also saw growth in rest of world and an emerging China. The growth in first 12 years of
2000 belongs to China which is now producing and consuming more than 40% of total world
consumption. This period has also seen decline in consumption in USA, Europe and Japan. As
steel consumption in China is also reaching a plateau, the future growth will be driven by other
emerging economies including India.
Global demand and production has continued to slow down. From 9% year on year growth in
the third quarter of 2011 it has come down to 2% growth in the 3
rd
Qtr of 2012.. This is because
of demand contraction in Europe , NAFTA , Japan and other developed countries. Even Asia
and other emerging economies have shown slower growth. World Steel Association (WSA)
has revised its short time market outlook downwards during their forecast in October,2012 as
compared to April,2012 forecast. As per the forecast, the global apparent Steel consumption is
expected to grow by 2.1% in 2012 and 3.2% in 2013. This is against a very high growth figure

4
of 6.2% in 2011. This forecast, has been revised downward by 1.5% for 2012 and 1.3% for 2013
as compared to April,2012 forecast.
Factors affecting Steel Industry
Steel industry is highly affected by two major steel making raw materials Iron ore and Coking
Coal. These two raw materials account for almost 60-70% of their production cost. These raw
materials
5

supply is controlled worldwide by big 6 suppliers like Vale, BHP-Billiton, Rio Tinto, Xtrata,
Anglo-American etc. These suppliers not only control supply of these raw materials but also
control prices. Most of the steel producers, except for those who have their own captive mines,
have no other option but depend on these suppliers.
Some of the steel producers, in past, have tried to acquire mines but it has been seen in the past
that these big miners do not allow steel producers to acquire mines as these miners have deep
pockets and steel companies are no match for them.

Steel industry, on other hand, is highly fragmented not only in terms of ownership but also in
terms of production locations. Steel is produced in almost all countries of the world. In terms of
ownership, top 10 steel companies account for less than 25% of world steel capacity. The
condition was even worse 20 years back, until Mittal Steel started trend of mergers and
acquisitions. Some Japanese and Chinese companies have also later on gone for merger and
acquisition. Mittal steel acquired Arcelor to form biggest steel company in the world
ArcelorMittal.
In some way, this helped big steel producers to mitigate losses but in absence of raw material
security, they were still vernerable. Being highly fragmented industry in terms of ownership, it is
highly competitive and steel prices are decided by customers. Thus, steel industry gets hit from
both sides. Steel industry survives and is still growing because of these difficulties. The industry
has taken steps to improve efficiency to cut cost of production.
Steel companies are trying to add more and more value added products in their basket of
products, however, the share of special steel in over all consumption is limited and competition
is intense. Steel because of its unique properties is still one of the most popular engineering
products and substitution of Steel by plastics, Aluminium etc., is far less than substitution by
Steel of various traditional building material like Wood, bricks etc.,

The future of steel, as a material, is favorable but Steel Industry faces big challenges. On long
term basis, the global steel demand is expected to reach 2.3 billion tones in 2025 which
represents a slow down in rate of growth as compared to growth in last decade. The slower
growth is attributed to lower contribution from China, modest growth in advanced countries and
lower intensity of Steel use per unit output. Construction will continue to account for 2/3
rd
of
increase in consumption. Energy exploration and transportation needs will be a major
contributor to growth in Steel consumption.

5
(KEY FACTS)
The Steel companies will have to increase their competitiveness through lower cost of
production. Most of the new technologies will look into lowering energy consumption both in
steel making as well as rolling along with finding ways to use cheaper energy sources.
Production through shale gas- DRI route in USA is costing $85 to 100 per tonne cheaper than
normal BF-BOF route. A host of new capacities have been announced by various US
companies. At present, the share of EAF is growing in advanced countries due to availability of
cheaper electricity (EU- 50%, NAFTA- 60%, Asia- 15%) as compared to emerging economies
where is electricity cost is higher.
Steel companies are trying to add more and more value added products in their basket of
products, however, the share of special steel in over all consumption is limited and competition
is intense. Steel because of its unique properties is still one of the most popular engineering
products and substitution of Steel by plastics, Aluminium etc., is far less than substitution by
Steel of various traditional building material like Wood, bricks etc.,
There is excess capacity in Steel Industry. The average rate of capacity utilization during 2012
was 77% to 78% as per WSA which means there is huge latent capacity available in the system
which can be activated at short notice. Taking overall maximum capacity utilization of 90%, the
idle capacity is 12% which amounts to almost 160 to 170 million tones. Ideally, the
uneconomical capacities should close down, however, different factors like social cost of
closing, government support measures and trade policies, environmental and clean up cost etc.,
are ways to keep these uneconomical units running. Of late, various governments are
employing various non-tariff measures to avoid import and protect local industry. CARE
certification required for export to GCC, CE Mark, GLD for ship building quality etc., for
Europe are some of the non-tariff measures employed by these countries. China has also
identified almost 800 items including various steel categories where technical qualifying criteria
has been imposed. The cases of anti dumping measures and imposition of countervailing duties
are on increase.
Iron ore and coking coal are the two most important Steel raw materials which account for
almost 60 %to 70% of the total steel manufacturing cost. In short term, raw material availability
is set to increase which may keep prices moderate. With the capacity addition in Iron Ore by
VALE, BHP Billiton Rio Tinto, Fortescue etc., is expected to create a 40 to 45 million tone
surplus capacity. In case of coking coal Mangolia has emerged as a major supplier to China. In
2001, it supplied around 45% of Chinese requirement of coking coal (20.04 million tone) and
overtook Australia as major supplier of coking coal. Major coal mining companies like BMA
Alliance, PEA Body are also increasing their production. US, Mojambique and Russia are
expected to be major exporters of coking coal in next two years.

Apparent crude steel use region wise(1950-2011)
6

Indian Steel Scenario
Domestic Steel consumption has shown healthy growth after Steel Industry was liberalized in
1991. Steel consumption has almost doubled in last 7 years. India is 4
th
biggest steel producing
country in the world while it is 3
rd
biggest, after China and USA, in terms of steel consumption.
It is expected to become 2
nd
biggest steel producing country by 2017.
Apparent domestic steel consumption(million tonnes)
7

As per India Steel Vision 2020 Study by WorldSteel released in Oct2012, Steel consumption in
India is driven by Infrastructure and Construction which accounts for 63% (45 million) of total
consumption followed by Engineering & Fabrication (22%), Automotive (10%), Packaging (3%)
and Other Transport (1%).

6
7
0
10
20
30
40
50
60
70
80
Apparant Domestic Steel Consumption
(Million Tonnes)

India, at present, is net importer of Steel at present but with new capacities and capabilities
coming in, it is expected to be net exporting country in near future. Overall, Steel consumption in
India is expected to reach 110 million tones by end of XII th 5 year plan (2016-17) and forecast
to reach a level of 155 million tones by 2020-21 as per ISV2020 study.

Import export Analysis Long Term Consumption Forecast as per
ISV2020 Study
8

The steel consumption is dependent on current economic scenario. Due to global slow down, the
Indian economy has been effected. The IIP which showcases performance by industry sector is
down and expected to be in the region of 1 - 1.5% growth which is one of the lowest in last 10-
12 years. New projects are not taking on as last project cycle which started in 2007 has ended
and new cycle has not started. This has severely affected capital goods and intermediate goods
industries. Government is taking policy decisions to boost economy which is expected to start
new investment cThe domestic steel producers are facing lost of challenges,especially, because
of slow down in global and domestic economy which has resulted in slower growth in steel
consumption. The demand fluctuations in various sectors are also a major problem area. During
last 3-4 years auto sector was growing at a very hectic pace due to which lot of new capacities
and capabilities were added by steel producers. However, auto sector, consumer durable sales
has come down in recent months which have resulted in steep decline in growth in demand of
steel from these sectors.
Poor quality of basic infrastructure like roads, ports, non-availability of railways are adding to
the high logistic cost for the industry. The quality of raw materials available domestically is
also of not very good quality due to which overall productivity comes down resulting in higher
cost. The energy cost in India is also on higher side due to which Steel industry, at times, are
not able to compete with global steel industry.

8
The steel industry, as a whole, lack focus on R&D which can improve their working parameters.
R&D investments by major producers range from 0.15 to 0.25% of turnover which is much
below compared to what some of the leading international steel producers spend. Moreover,
these R&D efforts are mostly directed towards solving day to day problems than to find
ways/develop new technologies to use domestically available resources in a cost effective
manner. Another factor which is affecting steel industry is availability of skilled as well as
unskilled manpower specific to the requirements of steel industry at cheaper cost. The turnover
from steel industry, because of its working conditions, is very high due to which quality skilled
manpower is under short supply. Keeping employee morale and productivity high in addition to
retention of talent pool is a challenge of steel industries.
Requirement of financial resources is very high for creating new capacities. While the gestation
period is high, the IRR for steel industry is moderate; hence new capacities cannot be planned on
the basis of debt alone. There is total requirement of 2.5 lakh crore for creating 60 million tones
of
9
additional capacity during 12
th
5 year plan. Availability of such large quantum of investible
fund at a reasonable cost will be a challenging task for the steel industry.
India has signed special treaties with Japan, Korea and recently with Thailand. Under these
treaties, the import duty is sledged for import from these countries. This is proving a threat to
domestic steel industries which is already reeling from various problems like shortage of iron
ore, non availability of coking coal.
Problems apart, Indian Steel industry is expected to grow at a faster pace as the growth is steel
consumption on an average is expected to be 9% up to 2020-2021 as per recent ISV 2020 report
released by WSA. As per report, the steel consumption is expected to reach to 110 million by
2016-17 and 155 million by 2020-2021. The per capita consumption of steel in India is 58 kg
against world average of 216 kg which means India has still to do lot of catching. As per study
released by JPC, rural consumption in India is a meager 9.78 kg per capita as next growth
impetus is expected to come from rural there is ample opportunity of increase in steel
consumption from rural area.
Steel from Indian companies are finding growing acceptability in international market. Our
current market share in world trade is a miniscule of 2% and with various FTAs and anti -
dumping measures being taken by various countries against China there is possibility for Indian
producers to increase their presence in world trade. Various foreign steel companies are also
showing interest to have JVs with Indian steel producers and agreeing to technology

transfers.Japan as a country is looking towards Indian as a manufacturing base for further supply
to Africa and Gulf countries.

Chapter III: Research methodology
Econometrics has been used to find parameters regarding to the model extrapolated. Two
variable regression analysis has been used to find goodness of fit of model and slope of the
models.
The two models examined are
1.Linear model: Y=a+b*X
Here Y is the dependent variable and X is the independent variable.
a is the intercept and b being the slope.
Coefficient of determination(R
2
) of model is computed to find out how well changes in variable
X is explained by changes in variable Y.
10

2.Log-Log model: Log(Y)=A+B*Log(X)
The log-log model is used to calculate elasticity of demand. A is the intercept of the model, the
slope B here represents elasticity of demand.

10
www.camo.com/365

11

11
http://faculty.ucr.edu/~hanneman/soc203a/nonlin.html

Chapter IV: Steel consumption and GDP analysis: Developing countries
The relationship between steel consumption and GDP of a country has been
established.Relationship between GDP and steel consumption is analyzed econometrically . Two
models have been used that is linear model and log-log model. The linear model will yield
results regarding the relation between GDP and steel consumption . The indicators being taken
in consideration are the goodness of fit and the slope coefficient (beta).The goodness of fit is
determinant of extent to which variation in Y is explained by X. The higher the coefficient of
determination the more the countrys steel consumption is explained by GDP growth. The log-
log model has been used to calculate elasticity of demand for steel , a higher elasticity is
indicative of greater influence of steel on growth. The relationship between steel consumption
and GDP of a country has been established.
The linear model: Y(steel consumption)=a+b*X(GDP)
R
2
(Goodness of fit ) is determined by the above model.
The log-log model: Log(Y(STEEL CONSUMPTION))=A+B*Log(X(GDP))
The slope calculated by the log-log model is the elasticity of demand for steel .
Table 1: country wise calculated coefficient of determination and elasticity of demand
Country R
2
(Coeff of determination in
%)
Elasticity of demand
India 99.3 1.16
Russia 61.66 0.814
Turkey 66.7 1.622
Mexico 93.5 1.632
Egypt 74.10 1.15
Malaysia 43.09 0.5041
Thailand 66.60 1.582
Indonesia 70.2 1.18
Colombia 81.03 1.409
Portugal 46.43 1.4

Table 2: Year wise GDP(in rupees) and steel consumption(in million tonnes) for India(1992-
2011)
INDIA
YEAR GDP(X) STEEL(Y)
1992
15,804,616,085,681.40
15,450
1993
16,794,283,076,257.40
15,710
1994
18,038,484,372,326.10
18,600
1995
19,277,002,856,935.30
22,170
1996
20,536,365,874,930.90
22,800
1997
21,739,196,000,519.40
22,900
1998
23,210,585,731,601.70
23,500
1999
24,860,278,670,361.90
25,000
2000
25,716,130,863,487.00
26,300
2001
26,971,050,694,700.40
27,100
2002
27,786,161,834,433.50 30,677
2003
30,275,517,681,482.20 33,119
2004
32,198,340,000,000.00 35,300
2005
35,274,188,993,418.70 39,900
2006
38,552,657,831,874.70 45,600
2007
42,476,609,492,292.50 51,482
2008
44,651,699,208,631.80 51,438
2009
48,160,697,577,678.60 57,892
2010
53,345,101,036,361.60 64,940
2011
56,835,157,611,989.00 69,800

GDP to Steel Consumption elasticity: 1.16
R Square: 0.99
Economy Type: Developing
Explanation:
1. A very high R square value of 0.99 shows that steel consumption is highly related to
GDP.

2. India being a developing economy requires lot of steel for infrastructure development and
for manufacturing sector.

3. A growth in economy comes from investment in infrastructure and industry as
contribution of agriculture in overall GDP is very low.

4. Indian economy, however, is dominated by service sectors which is unusual for a
developing economy. Normally, developing economy graduates from agrarian economy
to industrial economy to service economy. However, has leap-frog from agrarian to
service dominated economy. Philippines is the only other country having similar
economic situation. Due to this, the per capita consumption in India is not very high and
much below the world average.

5. While India is developing and needs lot of steel for infrastructure, its manufacturing
sector is lagging due to which overall steel consumption is still very low.

6. The elasticity of 1.17 shows that steel consumption is highly dependent on GDP growth.

RUSSIA
Table 3: Year wise GDP(in ruble) and steel consumption(in million tonnes) for Russia(1992-
2011)

1992
8,927,683,025,268.79
45839
1993
7,848,059,334,158.18
30862
1994
6,626,157,778,016.53
16431
1995
6,322,554,264,810.60
17236
1996
6,101,873,463,342.68
16213
1997
5,979,038,490,191.88
16834
1998
5,358,640,774,230.95
14587
1999
5,630,079,765,840.61
16732
2000
7,116,116,320,000.00
22973
2001
7,392,317,104,665.43
25041
2002
7,631,022,054,578.90 24930
2003
8,334,571,074,525.17 25329
2004
9,754,844,165,250.49 26286
2005
11,224,246,888,881.90 29251
2006
12,845,734,988,574.40 34916
2007
14,250,860,275,231.90 40379
2008
16,247,923,196,753.20 35419
2009
12,131,947,199,363.80 24944
2010
14,068,805,091,951.80 35630
2011
16,361,771,138,608.00 40994

R Square: 0.61
Explanation:
1. Russia is one of the cheapest steel producers because both the raw materials for steel
industry i.e. iron ore and coking coals are available in the country making it a highly
suitable country for exports. However, due to higher cost of transportation and non
availability of all weather port, its advantage gets slightly diminished.

2. The R square value of 0.6 signifies that there is less than average correlation between
steel consumption and GDP growth.

3. One of the factors affecting steel consumption in Russia is relatively low level of
urbanization.

TURKEY
Table 4: Year wise GDP(in lira) and steel consumption(in million tonnes) for Turkey(1992-
2011)

1992
51,585,316,343.71
7500
1993
56,039,300,505.10
9120
1994
52,778,419,699.58
7200
1995
56,790,788,781.06
10200
1996
60,349,371,297.70
10090
1997
65,408,308,708.11
11910
1998
69,424,958,500.00
12110
1999
67,244,513,077.96
10980
2000
70,299,558,672.33
12870
2001
65,167,314,154.51
10700
2002
70,029,272,048.27 11286
2003
74,373,995,842.33 13655
2004
82,092,257,821.31 15221
2005
89,105,540,558.54 18440
2006
94,189,533,637.50 21222
2007
99,170,504,993.25 23770
2008
98,987,290,819.96 21453
2009
94,346,909,167.94 18026
2010
102,630,737,451.98 23567
2011
110,564,074,340.31 26931

R Square: 0.97
Explanation:
1) Turkey as a country is suitably placed between Europe Asia and Africa and thus is a
major trading hub, especially, for steel. Its all weather port also have been storage of
steel pertaining to Russia and other countries who do not have all weather port facility.

2) The high level of R Square value shows that there is high correlation between steel
consumption and GDP growth.

3) Turkey being a developing country is investing heavily into urbanization and is also
known as mini manufacturing hub. High level of steel elasticity with GDP shows that
steel plays important role in GDP growth.

MEXICO
Table 5: Year wise GDP(in peso) and steel consumption(in million tonnes) for Mexico(1992-
2011)

1992
5,542,746,852,993.14
7815
1993
5,637,853,673,102.04
7445
1994
5,878,163,614,314.76
10336
1995
5,354,579,070,436.44
6957
1996
5,657,056,295,920.35
9182
1997
6,134,187,342,460.81
11097
1998
6,400,379,457,681.81
12633
1999
6,716,042,556,586.11
12782
2000
7,217,295,236,769.35
14143
2001
7,239,670,163,274.30
12917
2002
7,339,823,842,661.99 14295
2003
7,422,214,515,675.11 14937
2004
7,723,229,801,983.38 16015
2005
8,012,426,725,982.15 15279
2006
8,454,695,070,326.28 17133
2007
8,749,255,365,940.48 17915
2008
8,879,919,419,393.47 17377
2009
8,261,994,089,323.83 14791
2010
8,747,625,286,047.65 17247
2011
9,053,679,461,823.66 17977

R Square: 0.93
Explanation:
1. Mexico is also a developing country with high investment in infrastructure and
manufacturing which is seen by high R square value 0.93,

2. As a developing economy, steel consumption and infrastructure development and
manufacturing play a key role in overall economic growth.

EGYPT
Table 6: Year wise GDP(in Egyptian pound) and steel consumption(in million tonnes) for
Egypt(1992-2011)

1992
277,118,917,517.81
2606
1993
286,071,693,763.84
2660
1994
296,513,706,281.87
3520
1995
308,711,437,138.04
3720
1996
322,491,174,791.88
3940
1997
342,017,635,074.91
4554
1998
353,994,982,879.66
4593
1999
373,437,053,143.54
5146
2000
394,205,248,135.02
4007
2001
410,807,770,777.16
4364
2002
419,595,121,978.08 5536
2003
430,995,507,821.96 4184
2004
446,621,627,551.23 3845
2005
465,418,904,508.60 4971
2006
499,993,587,643.27 4663
2007
529,336,520,324.54 5465
2008
557,646,082,297.17 6548
2009
572,975,521,347.33 9361
2010
602,533,693,370.59 8617
2011
609,493,277,404.07 7529

R Square: 0.74
Explanation:
1. Egypt is a developing economy. However, its overall economy at initial stage of
development and is still dominated by agriculture.

2. The R square value of 0.74 signifies that there is significant correlation between steel
consumption and GDP growth.

3. Being developing economy, the growth in steel consumption is positively pegged with
growth in GDP.

MALAYSIA
Table 7: Year wise GDP(in ringitt) and steel consumption(in million tonnes) for Malaysia(1992-
2011)

1992
192,786,251,032.93
3986
1993
214,143,782,972.02
4785
1994
235,653,912,468.01
4154
1995
261,652,681,137.14
7632
1996
291,693,022,756.26
7748
1997
311,910,553,473.51
8071
1998
291,079,468,796.26
3305
1999
302,343,657,855.58
4870
2000
327,492,000,000.00
6039
2001
324,629,445,041.42
6400
2002
347,800,812,563.95 7061
2003
383,461,570,428.84 6194
2004
421,662,010,547.35 7138
2005
460,668,200,212.78 6826
2006
502,121,368,015.76 6779
2007
537,768,987,690.86 7694
2008
588,310,594,089.71 8276
2009
566,186,810,881.91 6655
2010
585,469,137,540.38 8314
2011
617,483,122,374.14 8238

R Square: 0.43
Explanation:
Malaysia is also a developing country and is using lot of steel for infrastructure development.
However, manufacturing base is low and also their economy is majorly dominated by oil
industry, due to which correlation between steel consumption and GDP growth is not very
significant.

THAILAND
Table 8: Year wise GDP(in baht) and steel consumption(in million tonnes) for Thailand(1992-
2011)

1992
2,198,764,975,081.46
7578
1993
2,397,579,889,468.59
7776
1994
2,598,200,739,393.44
8031
1995
2,844,058,819,020.17
9137
1996
3,070,363,429,612.86
8995
1997
3,006,328,651,168.99
7665
1998
2,617,908,209,050.13
3914
1999
2,660,340,430,555.56
5854
2000
2,760,978,942,444.29
6566
2001
2,699,412,672,580.22
7610
2002
2,801,867,520,618.07 9988
2003
2,987,026,936,365.37 11009
2004
3,132,767,760,089.20 12661
2005
3,183,462,642,580.22 13876
2006
3,403,647,506,854.21 12590
2007
3,684,771,861,675.23 12718
2008
3,688,596,726,732.32 13565
2009
3,697,144,615,830.86 10713
2010
3,923,308,260,719.70 14052
2011
3,908,676,795,098.19 14653

R Square: 0.66
Explanation:
1. Thailand is also a developing country with average manufacturing base. It is also
investing in infrastructure development.

2. The R square value 0.67 shows that steel consumption is relatively significant. The
correlation between steel consumption and GDP growth is relatively significant

INDONESIA
Table 9: Year wise GDP(in rupiah) and steel consumption(in million tonnes) for Indonesia(1992-
2011)

1992
977,461,484,897,615.00
4162
1993
1,023,603,533,304,200.00
4593
1994
1,149,327,819,516,760.00
5279
1995
1,233,810,798,844,030.00
6368
1996
1,358,083,372,196,930.00
6924
1997
1,455,258,961,013,280.00
6865
1998
1,246,942,279,202,510.00
2871
1999
1,229,214,132,772,910.00
3175
2000
1,297,636,700,000,000.00
4913
2001
1,360,623,351,806,390.00
5000
2002
1,405,675,318,288,470.00 4859
2003
1,461,322,486,494,250.00 4689
2004
1,530,745,945,967,310.00 5718
2005
1,578,176,413,000,180.00 7235
2006
1,706,341,880,520,350.00 6245
2007
1,779,489,097,611,360.00 7245
2008
1,817,506,674,949,910.00 8823
2009
1,938,423,011,185,620.00 7420
2010
2,038,535,612,077,090.00 8950
2011
2,141,972,135,980,290.00 10952

Explanation:
1. Indonesian economy is a developing economy. It has overall manufacturing base.
However, because of good income from oil industry, the investment and infrastructure
development is significant.

2. The R square value of 0.7 shows that there is good correlation between steel consumption
and GDP growth.

COLOMBIA
Table 10: Year wise GDP(in peso) and steel consumption(in million tonnes) for Colombia(1992-
2011)

1992
223,424,011,506,084.00
1042
1993
231,902,681,978,379.00
1404
1994
249,461,999,464,461.00
1495
1995
262,715,702,699,005.00
1822
1996
266,279,459,325,316.00
1698
1997
275,551,360,819,498.00
1610
1998
273,788,434,266,101.00
1546
1999
262,053,679,406,045.00
988
2000
274,222,374,708,743.00
1695
2001
274,601,257,417,324.00
1734
2002
281,394,719,188,270.00 1296
2003
291,267,007,139,908.00 1373
2004
309,040,942,739,127.00 2140
2005
327,478,715,495,471.00 2381
2006
353,156,850,344,070.00 2823
2007
379,316,496,796,474.00 2760
2008
399,645,224,081,798.00 2558
2009
401,258,841,174,981.00 2233
2010
423,695,097,645,588.00 2798
2011
461,582,282,152,540.00 3217

R Square: 0.90
Explanation:
1. The country shows high R square value which shows a significant correlation between
GDP growth and steel consumption.

2. The overall economy of the country is very small, but because of relatively peaceful
political scenario in the last 15 years both the countries are developing fast and major
growth is coming from urbanization and infrastructure development.

PORTUGAL
Table 11 : Year wise GDP(in euro) and steel consumption(in million tonnes) for Portugal(1992-
2011)

1992
115,840,150,849.25
2677
1993
113,684,750,124.12
1602
1994
114,724,095,672.18
1694
1995
120,642,630,311.91
2271
1996
124,131,740,504.63
2006
1997
129,005,296,966.17
2452
1998
136,363,834,838.69
2568
1999
142,010,959,062.62
2853
2000
144,901,011,548.37
3018
2001
147,137,643,196.55
3021
2002
150,359,410,894.45 3352
2003
150,090,767,116.35 3439
2004
152,012,400,426.34 3269
2005
151,980,600,000.00 2656
2006
152,009,277,231.52 3052
2007
155,711,436,294.73 3400
2008
153,812,754,301.91 2931
2009
150,731,629,142.75 2250
2010
153,891,759,320.15 2438
2011
149,714,679,288.45 2080

R Square: 0.46
Explanation:
1. Portugal is a relatively developed country. However, last 20 years they have been
struggling with the economic condition. There is hardly any infrastructure development
and Portugal is also known to be a manufacturing base.

2. A low R square value 0.06 shows that there is no significant correlation between GDP
growth and steel consumption.

Chapter VI: Steel consumption and GDP analysis: Developed countries

The relationship between steel consumption and GDP of a country has been established.
Relationship between GDP and steel consumption is analyzed econometrically . Two models
have been used that is linear model and log-log model. The linear model will yield results
regarding the relation between GDP and steel consumption . The indicators being taken in
consideration are the goodness of fit and the slope coefficient (beta).The goodness of fit is
determinant of extent to which variation in Y is explained by X. The higher the coefficient of
determination the more the countrys steel consumption is explained by GDP growth. The log-
log model has been used to calculate elasticity of demand for steel , a higher elasticity is
indicative of greater influence of steel on growth. The relationship between steel consumption
and GDP of a country has been established.
The linear model: Y(steel consumption)=a+b*X(GDP)
R
2
(Goodness of fit ) is determined by the above model.
The log-log model: Log(Y(STEEL CONSUMPTION))=A+B*Log(X(GDP))
The slope calculated by the log-log model is the elasticity of demand for steel .
The chapter analyzes various developed countries steel consumption patterns.
Table 12: country wise calculated coefficient of determination and elasticity of demand for
developed countries.

Country R
2
(coeff of determination
in%)
Elasticity of demand
Japan 1.02 0.182
USA 0.13 -0.0361
Germany 33.32 0.701
South Korea 90.42 1.31
Italy 49.24 1.689
France 9.12 0.3342
Spain 38.80 1.103
Canada 11.9 0.343
Belgium 41.08 1.238
Sweden 54.33 0.8752

JAPAN
Table 13:Year wise GDP(in yen) and steel consumption(in million tonnes) for Japan(1992-2011)

1992
455,879,211,447,990.00
79029
1993
457,536,566,035,282.00
74155
1994
462,134,242,216,917.00
64867
1995
471,036,305,607,447.00
77705
1996
482,898,949,752,981.00
75787
1997
490,056,091,434,322.00
79881
1998
482,795,118,061,422.00
70300
1999
481,441,472,504,247.00
68900
2000
490,987,244,439,286.00
76100
2001
493,028,999,664,154.00
73200
2002
494,324,785,528,526.00 71700
2003
501,601,161,863,766.00 73430
2004
512,054,904,402,244.00 76800
2005
515,614,100,000,000.00 76730
2006
521,411,994,697,881.00 78990
2007
531,917,579,629,753.00 81180
2008
518,446,019,499,260.00 77950
2009
497,014,627,203,628.00 52790
2010
512,902,153,699,946.00 63570
2011
506,047,351,648,583.00 64100

R Square: 0.01
Economy Type: Developed
Explanation:
1. Until last years of last century, Japan was only country producing more than 100 million
tons of steel per annum, however, a large part (40-50%) of steel produced was exported
and not consumed in Japan.
2. By mid seventies, Japan was a developed country and majority of investment in
infrastructure were over.
3. Japanese industries were technologically advanced and soon started dominating Auto
sector, shipping and Engineering sector all over the world.
4. Hence, most of the steel was used in industry making machineries, cars, ships etc which
again were getting exported in large numbers.
5. From 90s onward, Japan came into grip of stagflation. The big companies of Japan
started investing in USA and other emerging markets. As the GDP growth itself was very
low and sometimes going negative, the relationship between GDP growth and Steel
consumption cannot be established which comes out clearly in form of very low R square
value.
6. Due to this reason, the elasticity of steel consumption vis--vis GDP for Japan cannot be
established despite the fact that Japan is still 2
nd
biggest steel producer and 4
th
largest
steel consumer in the world.

USA(United states of America)
Table 14:Year wise GDP(in dollars) and steel consumption(in million tonnes) for USA(1992-
2011)

1992
8,144,952,402,258.91
84448
1993
8,359,221,277,390.41
90832
1994
8,742,862,763,816.43
103071
1995
9,021,514,506,481.68
99952
1996
9,416,104,851,114.43
106974
1997
9,882,056,318,515.43
113358
1998
10,397,631,027,214.10
119816
1999
10,877,819,051,221.40
116393
2000
11,378,522,933,577.70
120012
2001
11,500,534,662,531.90
106164
2002
11,620,126,348,829.20 107253
2003
11,877,371,982,076.70 100847
2004
12,337,518,900,457.20 117371
2005
12,756,500,000,000.00 105380
2006
13,193,858,274,058.80 119601
2007
13,259,006,490,048.10 108285
2008
13,154,770,896,921.00 98409
2009
12,648,490,908,603.10 59206
2010
13,151,554,078,833.60 79897
2011
13,374,334,167,190.80 89144

GDP to Steel Consumption elasticity: (-) 0.03
R Square: 0.0013
Explanation:
1. US economy entered high growth phase from mid-30s to mid-70s. The 1st half of this
development period was dominated by massive investment in infrastructure and from
defense and armament industry coinciding with decline in European dominance. Europe
got weakened during 2
nd
world war period.
2. The second half of US economic high growth period was dominated by major growth in
Farm sector, consumer goods, high technology including defense and armament industry.
This period was dominated by high consumption growth fueled by baby-bloomers
period. During this period US also became financial capital of the world.
3. Next 20 years, till mid 90s, saw US slipping in manufacturing with manufacturing
shifting from US to first Japan and Korea and then to China. In mid 90s, US economy got
major boost from Computer hardware & software and internet industry.
4. During the period 1992-2011 of our study, the US economy was dominated by services
industry with major decline in manufacturing industry due to shift to China, hence, we
find that there is no co-relation between GDP growth and Steel consumption.

GERMANY
Table 15:Year wise GDP(in euro) and steel consumption(in million tonnes) for Germany(1992-
2011)

1992
1,907,814,216,816.80
34539
1993
1,892,501,671,291.05
28121
1994
1,930,009,813,764.33
34210
1995
1,964,469,416,858.75
36515
1996
1,982,824,494,942.14
30699
1997
2,005,738,422,635.77
34251
1998
2,047,207,178,614.57
35830
1999
2,088,911,536,218.76
34547
2000
2,126,531,951,633.11
37314
2001
2,156,433,442,278.44
35412
2002
2,168,361,403,964.47 35255
2003
2,179,128,665,082.56 35393
2004
2,244,606,490,630.27 36053
2005
2,249,590,000,000.00 35958
2006
2,339,012,998,240.01 39264
2007
2,412,597,892,087.24 42898
2008
2,407,917,281,378.14 41608
2009
2,352,976,701,769.50 27470
2010
2,418,115,767,516.71 38413
2011
2,459,498,583,418.61 39871

R Square: 0.33
Explanation:
1. Germany has reputation of manufacturing finest machines be it cars or any other
machinery. During the period of our study 1992-2011, Germany has gone into various
phases.
2. In early nineties, West Germany and East Germany united and the historic Berlin Wall
was broken. East Germany, due to more than 40 years under USSR was culturally and
economically very different from West Germany. This caused initial hiccups for united
Germany and took them 7-8 years to recover.
3. Under Euro regime, Germany became the fulcrum of growth for whole European union
and in later part of 1
st
decade of 21
st
century, some of the European union nation started
feeding off Germany. Due to better technology and work ethics, Manufacturing started
shifting towards Germany in initial years of European union and export started to raise,
however, some of the other countries of the Union suffered due to above shift.
4. As there are lots of industries in Germany which use steel as raw material, steel
consumption has some linkage to overall GDP growth. Being Developed country, there is
not much infrastructure development in the country. Hence, overall relationship of GDP
with steel consumption is weak.

SOUTH KOREA
Table 16:Year wise GDP(in won) and steel consumption(in million tonnes) for South Korea
(1992-2011)

1992
505,532,457,209,076.00
21820
1993
539,042,722,292,065.00
25246
1994
590,911,961,025,528.00
30510
1995
649,628,426,276,320.00
35529
1996
679,077,361,727,843.00
37583
1997
693,776,883,095,988.00
38146
1998
640,449,241,557,121.00
25009
1999
696,138,965,955,856.00
34035
2000
714,153,952,183,210.00
38500
2001
736,586,334,740,303.00
38300
2002
792,303,114,029,071.00 43713
2003
814,120,605,652,340.00 45371
2004
846,831,470,192,677.00 47218
2005
864,427,407,389,685.00 47124
2006
897,901,993,308,256.00 50174
2007
940,149,490,755,866.00 55203
2008
932,671,411,218,165.00 58571
2009
945,072,573,721,200.00 45411
2010
995,907,973,709,769.00 52390
2011
1,009,774,917,550,730.00 56391

R Square: 0.90
Explanation:
1. South Korea is, basically, an export based economy with highly developed Capital Goods
and shipping industry which extensively uses steel.
2. A very good R Square value of 0.90 shows that steel consumption is highly linked to
GDP growth. The per capita steel consumption at approx 930 kg is highest in the world
against world average of 220 Kg.
3. A GDP to Steel Consumption elasticity of 1.31 signifies that the steel related industries
are driver for growth.
4. Another factor affecting high steel usage in Korea is high degree of urbanization.

ITALY
Table 17:Year wise GDP(in euro) and steel consumption(in million tonnes) for Italy(1992-2011)

1992
1,189,713,698,323.12
23264
1993
1,172,632,422,375.82
19403
1994
1,193,559,119,197.92
23181
1995
1,224,441,017,216.59
27904
1996
1,250,220,312,933.30
21706
1997
1,280,212,414,777.02
26241
1998
1,306,945,429,414.62
28679
1999
1,331,077,904,353.86
28407
2000
1,355,207,194,123.96
29225
2001
1,384,521,963,907.85
29411
2002
1,396,648,076,264.23 29489
2003
1,402,113,376,103.05 31258
2004
1,429,130,131,957.37 32385
2005
1,436,795,264,263.00 31059
2006
1,459,879,396,351.73 36059
2007
1,483,024,915,460.44 35798
2008
1,442,082,909,332.18 32559
2009
1,392,515,491,184.96 18186
2010
1,403,233,982,129.25 24866
2011
1,392,226,779,377.66 26927

R Square: 0.49
Explanation:
1. After Germany Italy is the second biggest manufacturing hub in Europe. It has proximity
to Asia and Africa and all weather port.

2. The cost of living in northern part of Italy is cheap and lots of manufacturing facilities are
available in that part making Italy a relatively cheaper source of machineries. However,
the economy is dominated by Services, particularly, tourism.

3. The average R square value of 0.49 shows that steel is not highly correlated with GDP
which can be explained by the fact that there is hardly any growth in infrastructure
development and steel intensive products do not make major contribution to the
economy.

FRANCE
Table 18:Year wise GDP(in euro) and steel consumption(in million tonnes) for France (1992-
2011)

1992
1,342,358,633,298.32
14387
1993
1,339,301,419,711.86
12360
1994
1,365,263,603,680.77
14364
1995
1,391,043,103,842.82
15291
1996
1,411,683,085,907.19
13827
1997
1,448,025,551,850.51
15457
1998
1,503,876,904,109.97
17413
1999
1,566,111,310,250.58
17265
2000
1,610,125,944,049.07
18596
2001
1,639,763,057,589.37
16585
2002
1,651,309,590,899.65 17201
2003
1,671,155,996,836.63 15875
2004
1,715,181,017,254.36 17376
2005
1,744,921,800,000.00 15744
2006
1,784,601,058,873.28 16782
2007
1,830,613,449,271.22 17867
2008
1,826,126,364,717.85 16580
2009
1,782,384,075,546.02 11490
2010
1,807,315,609,556.40 14438
2011
1,827,641,309,770.72 15207

R Square: 0.09
Explanation:
1. France as a country is not known to be of manufacturing country and overall contribution
of manufacturing in the economy is not significant which can be seen from a very low R
square value.

2. Steel intensive industries also do not make major part in overall manufacturing.

3. Like any developed countries, the usage of steel in infrastructure development is also
low.

SPAIN
Table 19:Year wise GDP(in euro ) and steel consumption(in million tonnes) for Spain(1992-
2011)

1992
598,598,830,760.47
10127
1993
593,465,200,231.77
9015
1994
597,625,888,385.86
10700
1995
623,384,116,168.21
12500
1996
636,834,103,739.50
11600
1997
660,450,149,268.59
13700
1998
692,297,694,912.35
15600
1999
724,836,226,966.83
17500
2000
756,240,777,555.25
17400
2001
781,793,948,773.28
18900
2002
809,517,307,323.52 19690
2003
840,256,930,265.72 20959
2004
864,828,045,276.98 21112
2005
896,385,000,000.00 20895
2006
931,141,013,475.95 23641
2007
958,486,159,564.60 24500
2008
958,817,997,891.46 17997
2009
940,366,341,737.77 11876
2010
938,205,863,164.53 13068
2011
926,529,839,898.24 13114

R Square: 0.39
Explanation:
1. Like France, Spain is also not known to be a major manufacturing country which can be
seen from less than average R square value.

2. Like all other developed countries, the usage of steel in infrastructure is also low and the
economies dominated by services - mostly tourism.

CANADA
Table 20:Year wise GDP(in candian dollars) and steel consumption(in million tonnes) for
Canada (1992-2011)

1992
837,056,918,960.51
9700
1993
851,341,212,680.89
11000
1994
885,994,678,727.59
13300
1995
917,954,470,138.64
12800
1996
938,090,124,049.87
13300
1997
976,621,992,160.25
15400
1998
998,150,526,028.97
15800
1999
1,054,854,984,110.91
16200
2000
1,135,056,485,757.32
17800
2001
1,147,514,548,518.49
15200
2002
1,175,377,907,059.72 15904
2003
1,225,970,259,125.28 15510
2004
1,288,937,197,423.82 17383
2005
1,348,097,000,000.00 16843
2006
1,404,301,961,110.64 18119
2007
1,447,315,735,463.23 15511
2008
1,483,230,730,327.04 14676
2009
1,388,846,252,593.40 9532
2010
1,457,409,097,448.21 14090
2011
1,517,434,908,290.15 14172

R Square: 0.12
Explanation:
1. It is also one of the developed countries, having very minimal infrastructure
development.

2. Compared to the size of the country, the urbanization is very low mostly on account of
very low population.

3. Oil is major industry in Canada.

BELGIUM
Table 21:Year wise GDP(in euro) and steel consumption(in million tonnes) for Belgium(1992-
2011)

1992
236,564,425,810.11
3483
1993
238,654,151,734.55
2858
1994
247,835,876,780.89
3527
1995
253,126,814,831.86
4684
1996
256,204,916,688.56
3308
1997
265,731,579,877.24
3626
1998
271,970,437,284.91
4920
1999
279,823,362,919.21
3025
2000
287,170,980,524.79
4516
2001
287,780,457,963.67
3116
2002
293,566,348,235.26 4480
2003
295,995,590,431.83 4040
2004
302,402,934,939.65 4760
2005
305,423,000,000.00 4600
2006
312,415,314,102.44 5500
2007
322,461,752,849.02 5600
2008
320,513,439,678.64 5400
2009
313,817,930,393.84 3900
2010
325,752,253,726.44 4450
2011
325,039,613,179.03 4520

GDP to Steel Consumption elasticity: 1.24 &
R Square: 0.41
Explanation

1. Belgium is comparatively a small country with higher level of urbanization, but both the
countries are is quite developed in terms of infrastructure, hence, there is hardly any
infrastructure development.

2. Belgium has a history of engineering industry but as compared to Germany and Italy, it is
not very significant.

SWEDEN
Table 22:Year wise GDP(in krona) and steel consumption(in million tonnes) for Sweden(1992-
2011)

1992
1,940,461,500,626.70
2283
1993
1,866,498,199,340.05
2493
1994
1,979,968,278,374.34
2838
1995
2,078,927,020,087.70
3310
1996
2,110,306,825,728.87
2870
1997
2,174,327,608,603.72
3120
1998
2,279,912,174,954.38
3520
1999
2,375,690,706,518.36
3530
2000
2,470,251,416,503.41
3640
2001
2,488,041,161,623.11
3080
2002
2,538,294,725,049.05
3265
2003
2,641,423,865,824.14
3566
2004
2,705,125,749,612.77
3999
2005
2,789,270,000,000.00
4102
2006
2,920,609,827,693.47
4469
2007
3,067,909,277,207.85
4856
2008
3,079,388,209,188.99
4339
2009
2,886,424,061,138.81
2569
2010
3,072,591,934,886.59
3640
2011
3,169,472,446,126.70
3861

R Square: 0.54
Explanation:
1. Sweden is historically known to be a quality steel producer. Its steel industry is 5-6
centuries old. In 14-15 century they used to provide quality steel bars which was
primarily used for making tools. Later on steel from Sweden was used for constructing
Eiffel Tower of Paris.

2. Today, Sweden economy is mostly dominated by financial sector and tourism along with
dairy products.

3. The low R Square value shows that steel consumption is not highly related to GDP
growth.

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