The Magnates of Steel: Who’s “Steeling” My Pie
April 2019
Supply of steel have seen a staggering production of 1.8 billion tonnes of crude steel to the global market, a marked increase of 8% from 2014, with China as the main driver behind the increase supplying around 51% to the global market. The steel industry may be large, however in terms of dominance, there are over 270 players in the steel market with the largest producing company ArcelorMittal only supplying around 5% of crude steel to the market. In this month’s feature article, AME takes a view on the top few steel producing companies as well emerging companies who will be looking to “steel” their share of the pie.


The Major Players in the Market

Rank number one for steel supply is ArcelorMittal producing approximately 93 MT of crude steel in 2018 from 43 steel mills across 18 countries in the world. They have major presence in the Brazilian, European and US market and are actively involved with strategic mergers and acquisition of steel assets. They have recently completed the acquisition of Votorantim’s long steel business in Brazil and Ilva S.p.A in Italy. They are also actively seeking to break into the Indian market and have attempted to acquire Essar Steel India Limited in partnership with Nippon Steel and Sumitomo Metal Corporation Group. ArcelorMittal has a healthy net debt to EBITDA ratio of 1 and is expected to continue to dominate the steel market.

Rank number two is Hebei Iron and Steel, the largest producer of steel in China narrowly edging over Baoshan Iron and Steel, producing approximately 50 Mt of Crude Steel in 2018 from its 11 sites across the Hebei province in China, 1 in Henan province in China and 1 in Serbia. Hebei Iron and Steel, along with all steel mills in China, face government and environmental pressures to limit their steel production capacity as well as face problems from trade tariffs with USA. The company is expected to eventually reach a production ceiling despite a growing steel market.

Rank number three is Nippon Steel and Sumitomo Metal Corporation (Now Nippon Steel Corporation) producing approximately 47 Mt of crude steel in 2018 across their 12 steel mills in Japan and 1 in Brazil. Nippon Steel Corporation aims to bolster its overseas operations especially in the fast-growing India as they face shrinking demand at home in Japan. Nippon Steel Corp has recently joined forces with ArcelorMittal in submitting a bid to acquire Essar Steel India Limited. Nippon Steel Corp has been facing issues at their current mills including ageing facilities and a lack of skilled labour. They primarily cater to the automobile and construction sector. The company is expected to continue to be one of the large steel producers in the steel market.

The fourth ranked steel producer Baoshan Iron and Steel or Baosteel produces approximately 44 Mt of crude steel in 2018 from four major steel across China.  Similar to Hebei Iron and steel, they face government and environmental pressures to limit their steel production capacity and problems from trade tariffs. Like Hebei Iron and Steel, production is expected to plateau.

POSCO is ranked fifth in steel production with approximately 43 Mt in 2018 which includes their domestic and foreign operations. Their strategy includes improving cost and sales through technology and innovation. They have invested into various joint ventures overseas with Indonesia, Brazil and China advancing their steel business base on their organically developed technology. POSCO is expected to remain one of the leaders in steel production with their strong position in the steel market.



Companies to Watch

Several companies have been experiencing high growth in recent years and are projected to dominate the steel market in the long term. Unsurprisingly the majority of them come from India with the Indian Steel demand on the rise as a result from the “Made in India” initiative. Other than India, Vietnam has also been observed to have a high growth rate in steel production with Formosa Plastics Group (from Taiwan) heavily investing into developing Vietnam’s FPG Ha Tinh project.

Formosa Plastics Group’s has seen the highest growth in steel supply with FPH Ha Tinh expected to climb 250% from 3.86Mt in 2018 to produce 13.3Mt of steel to the market by 2021. They operate two blast furnaces with a total production capacity of 7.5Mtpa and produces flat steel, rebar and rolled steel.

Jindal Steel & Power Limited from India comes second with steel production increasing by over 2.6 times between 2014 to 2018 to produce 8.6Mt of crude steel in 2018. They are projected grow by another 64% supplying around 14Mt of crude steel to the market.

JSW Steel from India is third with steel production expected to grow by 64% from 16.8Mt in 2018 to supply 19.7Mt of crude steel to the market. JSW Steel has been active with foreign investments and owns mining assets in United States, Chile and Mozambique.