Steel Market Research Articles

Factors of enterprise value - the privatization of ‘Sidex Galati’ Romania (case study)

Abstract The enterprise value is central in business transactions (i.e. mergers and acquisitions, entrance of new shareholders or exit, bank loans), privatization of state-owned companies, etc., when the seller and the buyer confront each other’s business valuations trying to identify as many weaknesses as possible on the other side. Such important value as the enterprise’ is not an exact figure that can be calculated with precision at a certain date for a certain company, but an approximation that both buyer and seller may consider in each other’s attempt to close a good deal for himself/ herself. The valuation approach in this paper is a market method for business investments and comparable sales. This retrospective analysis of a major privatization in the Romanian steel industry - when the industry’s 'giant' was sold by the Romanian State - aims to identify key factors of the enterprise value in the context of international transactions. This was a high-profile privatization of great significance for the European steel industry and this analysis aims to understand enterprise value in order to model it. For this purpose, the article takes into consideration the information available regarding the privatization of Sidex Galați, the relevant literature and the author’s experience, supplemented by the information from the post-privatization evolution of the Romanian steel enterprise. As a result, the article draws lessons and concludes on determining factors of enterprise value, such as assets, solvency, company's history, cash flow, taxation etc., while the price transaction in the case of the privatization of Romanian steel enterprises was also influenced by exogenous factors, such as the steel market, the State's need for revenues, the controlling package of the company sold, etc.

World steel industry: current challenges and development trends (analytical overview)

The paper devoted to the definition of the key global challenges and trends in the world steel industry. The relevance of this analytical overview is due to the fact, that metal is one of the most used materials in the world. Therefore, the sector significantly affects the development of related and steel consuming types of activity. In the process of work, the role of metal in providing human life and the main end use markets (construction, automotive, metal products) are identified. The paper summarized the leading world and regional organizations, engaged in the study of the steel industry’s development at the international level. The world leading steel-producing countries over the last twenty years, releasing more than 80% of its output, are revealed. The dynamics of production, consumption, overproduction and trade of metal products in the world are analyzed. As a result, revealed unprecedented growth in the volume of steel production against the background of the constant metal surplus and the expansion of steelmaking capacity even in times of crisis. The technological structure of steelmaking on a global scale and by regions is considered, as well as the possibility of the industry to generate and implement innovations, including support for the development of the circular economy, is explored in the paper. It is determined, that the key current challenges for the industry are the overproduction of metal due to the continuous growth of steelmaking capacities, the instability of metal products’ trade, the need to improve the environmental friendliness and resource efficiency of production and ensuring labor safety and social protection of workers. The paper revealed that international experts mainly connect the basic directions of overcoming these problems by eliminating distortions and increasing the transparency of the steel market through the refusal from subsidies and measures of state support and introduction of long-term innovative development. The author investigated the changes in the geographical structure of world production and consumption of steel products. As a result, it was revealed, that there had been a shift in the centers of steel production and trade in the rapidly developing countries of Asia, North Africa and the Middle East, where China gained undoubted leadership.

Volatility Spillover in Chinese Steel Markets

This paper examines volatility spillover in Chinese steel markets by comparing spillover effects before and after steel futures market established and finds some interesting change. Volatility spillover method based on multi-GARCH model are proposed. The results show that there is significant proof for spillover effects from B2B electronic market to spot market, and two-way effects between futures and spot market. Market policy planners and practitioners could make decisions according to the master of spillovers. We also find that B2B e-market and futures market can both provide efficient protection against steel price volatility risk, B2B e-market offer a broad-based platform for trading steel commodities over time and space since e-market role in information flow process is dominant.

Broadening the Steel Markets by Direct Application of High Quality ESP Strips

The flat steel feed stock for the final fabrication of steel products is mainly covered by cold rolled and final annealed or galvanized strips. Depending on the thickness and surface demands, also conventional hot-rolled batch processes can serve a certain but truly very limited ratio. The Arvedi ESP Technology is giving new impulses to this market. With this game changing technology, it is suddenly possible to serve feed stock for numerous applications which cannot be directly produced by hot rolling until now. Thinner and at the same time wider steel strips can be produced and replace a high number of cold rolled steel strips. Joint development efforts by Rizhao Steel and Primetals at recently started up ESP lines are setting new standards to cover also even more critical products for higher applications. The paper gives an overview of results and products developed for direct applications.

Future Challenges in the Steel Industry and Consequences for Rolling Plant Technologies

This paper provides an overview of recent steel market developments considering also the global steel oversupply as well as the installed and planned capacity as recessions in some emerging economies. Especially the enormous Chinese investments combined with their actually decreasing demand are a major reason for the deterioration on the steel market. The general steel demand also declines due to slow growth or even reductions in technology fields like ship building, thermal power plants, infrastructural needs, or even the automotive industry. Nevertheless, environmental and energy-efficient production routes are of primary interest, partly handled by thin strip production processes. TMCP (thermo-mechanical controlled processing) remains a main research field for many applications. Increased demands are expected regarding enhanced strength for light-weight design, improved toughness to ensure safety in case of earthquakes and fires, or improved formability to overcome geometrical limits. New steel grades like bainitic steels, nano-crystalline materials, TWIP-steel or grain-oriented electrical sheet metals have led to advanced quality criteria also for rolling plants. Furthermore, steel has to stay competitive against lightweight metals, CFK, and plastics. Some examples of recent innovative processing optimizations are described requiring not only process monitoring but also model-based simulation and real-time online control. Finally, the article states that new holistic strategies are necessary to overcome future challenges.

The Steel Market in Mexico: 1980-2015

The Steel Market in Mexico: 1980-2015

State of the Art Technology in Slab Continuous Casting:

Over the last 50 years, numerous slab continuous casters have been widely installed all over the world to take advantage of the enhanced productivity, yield, energy efficiency, and cost efficiency. To meet a variety of product quality demands from the steel market, the slab continuous casting process has been diversified into several types. In the 1960s, 200–300 mm thickness slab casters opened the continuous casting era by substituting the ingot process widely applied at that time, and now the major part of slab production is for the hot strip rolling. The thick slab of 400–600 mm thickness casting process with a casting speed range of 0.2–0.6 m/min was introduced to guarantee the internal quality of heavy gauge plates for the energy industry and shipbuilding applications. For the ultra-thick, over 600 mm, the semi-continuous casting technology with a casting speed of 0.05–0.2 m/min has been developed as an alternative way to replace the ingot process, with higher yield and productivity compared to the case of the ingot process.

Торгово-политические аспекты развития мирового рынка стали

Торгово-политические аспекты развития мирового рынка стали

An analysis of industrial districts and Triple Helix of innovation – a regional development experience in the south of the state of Rio de Janeiro

This work consolidates a research effort to analyze 70 years of economic development in the region of the Paraíba do Sul River, in the south of the state of Rio de Janeiro, Brazil. The paper follows the trajectory of the leader company, steelmaker Companhia Siderúrgica National, and its relations with other local actors, such as government and universities. The research question investigates if the steel market is still the company's core business and its evolution in the competitive global production network. This work introduces a different exploratory approach, analyzing productive networks using an industrial district typology and the linkages based on the Triple Helix of university–industry–government. The literature review and case study show the first transition, after the privatization process in the nineties, transforming a state-owned company with a focus in the national market into a transnational corporation with business on four continents. The second transition, from the steel market to a globally integrated production chain of mining and steel is underway. The region's configuration migrated from a company town in a state-centered model to a central-radial arrangement. The second migration to a satellite platform is in progress. Regarding technology development, the company's strategy changed from in-house research and development to buying technology. There is a recent effort to recreate interaction space with universities.

Steel, metallurgical coal, and coke: Markets and innovations. A review of presentations at Eurocoke Summit 2017

This review analyzes the economy of the European Community, the market for steel, metallurgical coal, and coke, and price trends. Successful coke producers are identified, and information is provided regarding the repair of coke batteries, research topics, and the curtailment of CO2 emissions in coke production.

Trade specialisation patterns in major steelmaking economies: the role of advanced economies and the implications for rapid growth in emerging market and developing economies in the global steel market

This study examines the steel-related export structure of the 15 largest steelmaking economies in 2015. The study provides a broad view of linkages between steel-related export structure, steelmaking technologies, and the level of economic development of each economy. To shed light on exporters’ patterns of specialisation, indices of revealed symmetric comparative advantage are used, indicating that patterns of steel exports differ widely across economies. In addition, this study focuses on the difference between steel exports in volume and value terms amid growing debate over the issue of value creation caused by excess capacity in the steel industry. This study concludes that the choice of steelmaking technologies and the level of economic development are significant determinants of trade specialisation patterns in major steelmaking economies. Although emerging market and developing economies have played a significant role in volume terms in the global steel market, advanced economies still have a crucial role as key suppliers, especially for high value-added products.

Challenges and solutions for ship recycling in China

The world ship recycling centre has shifted from developed countries to developing countries in Asia. However, Chinese ship recycling companies are experiencing a recession in the ship recycling market and intense price competition from South Asian countries. In this study, Chinese economic environment is analysed, including depressed recycled steel market and price, non-preferential tax policy and high investment cost of ship recycling yards. This paper presents Chinese major laws and regulations related to the ship recycling industry for environmental protection and the workers’ health and safety. From the comparison between Chinese laws and international conventions, we find that no specific enforcing mechanism exists in the Chinese ship recycling industry. However, Chinese large-scale ship recycling yards have been taking advanced practices including site environmental protection, dismantling procedures and technologies, and safety management. Arising from this study, several strategies and solutions for Chinese ship recycling facilities are recommended.

ТЕНДЕНЦИИ РЫНКА МЕТАЛЛОПРОКАТА В 2015-2016 ГОДАХ

The analysis of the rolled metal market shows that major market players can predict further pricing changes stipulated by challenging political and economic situation in the world. This article focuses on the main factors that influenced the cost of metal at the end of 2014, 2015 and early 2016 and contributed to further price fluctuation. In the new economic environment the world metal market faces dramatic changes. There arise new pricing reforms aiming diversion from a speculative component to a real market price. On the results of 2014, deflation of prices on metal made, by different sources, 12-15% compared to prices at the beginning of the year. Thus, the outlining tendencies force major Russian steel traders (e. g. EVRAZ, MMC, MIC etc.) to redirect their sales from the territory of the Russian Federation to abroad (Europe, Asia, America). According to steel output, in the first quarter of 2015 Russia remained the fifth country in the world. In the nearest future forecasts about steel production in the leading countries-producers don’t estimate any significant growth. The only exception, according to the experts, is a steel market in India, which is actively developing. Domestic product consumption in this sector defines growth rates of metallurgic industry in the mid-term perspective, according to the facts presented by the Ministry of Economic Development.

Steel Wars: A Battle for the Future of American Steel

Studies the impact of tariffs, subsidies, and quotas on the U.S. steel market. Focuses on “winners” and “losers” from different policies. Applications to the events in the U.S. steel market in 2001 illustrate the impact of these policies.

From a traditional steel producer towards an industrial product-service systems provider in the German offshore wind market - a system-oriented practical case study

Globalisation and overcapacities lead to increasing competition within the steel market. Hence, steel producers are forced to enter promising markets like the offshore wind market. Moreover, they have to offer innovative products like industrial product-service systems (IPS2). Both entering the offshore wind market and offering IPS2 are challenging (each aspect per se is ambitious and above all the combination) since these two aspects demand for a shift of the steel producer's existing business model. Especially, the adaption of the key resources within the business model is challenging. In particular, the steel producer needs to acquire new competencies. Against this background, there is an urgent need for an integrative analysis of the decision-making problem concerning the acquisition of these competencies. For this purpose, the system-oriented and holistic approach of system dynamics is used within a practical case study.

钢材市场定价效率、主导性及价格发现功能研究

本文将事件研究方法应用到中国钢材交易市场现实情境，研究4个重大事件下钢材市场定价效率、市场主导性，以及价格发现功能发挥状况。基于历史事件的研究结果，可为发展我国钢材期货及衍生品交易市场提供辅助性参考。研究显示，钢材电子交易市场和期货市场存在着套保、套利空间。钢材电子交易市场在金融风暴爆发区间的市场主导性和价格发现功能表现较好。对于市场上调交易保证金水平这一行为，电子交易市场和期货市场反应不一。市场主导性与价格发现功能实证结果可能不一致。 This research employs event study method, discusses the pricing efficiency, price dominance, and price discovery of Chinese steel trading markets for four great events. The conclusions based on analysis of steel market price discovery during great events, can be used by the policy planner to develop steel futures market and B2B electronic market to some extent. The results show that steel B2B electronic market and futures market exist hedging and arbitrage opportunities. The results also show that steel B2B electronic is found to be sounder in terms of dis-counting new information than spot market during financial crisis. Steel futures price and B2B electronic price react differently to the event of raising margin level. Our results show that price dominance and price discovery are two different terms, thus their empirical results may be different.

MODERN TENDENCIES OF INNOVATIVE DEVELOPMENT OF DOMESTIC IRON-AND-STEEL ENTERPRISES

The current state of development of domestic iron ore enterprises and the situation regarding the introduction and use of innovative measures are analyzed. The situation of out-dated technologies, which are used at domestic iron ore enterprises, in particular, the use of converters and open-hearth furnaces at metallurgical enterprises, is considered. It is determined that the use of outdated production technologies causes significant damage to the environment and predetermines low energy efficiency of production. The characteristics of the participants of the world steel and iron ore market are described. The dynamics of M & A deals on the world steel market is explored. On the basis of the main indicators dynamics data of the innovation activity of the mining and metallurgical complex, we have discovered that its innovation and investment development in recent years is characterized by considerable instability.

Downstream Stockpiling of Steel Inventories and Artificial Demand: The Case of Saudi Arabia

This research study has analyzed how downstream stockpiling within the steel industry and its supply channel actually disrupts the efficiency of the supply chain. The premise upon which this study has been approached is one that states that such downstream stockpiling tends to create artificial demand both upstream in the supply chain and in the marketplace. This subject is examined within the context of the Saudi Arabia steel industry and how this type of phenomenon resulted in steel shortages within the Saudi steel market. The study’s data found that the Saudi steel market is expected to expand at a compound annual growth rate (CAGR) of some 11.7% over the next several years. Furthermore, Saudi Arabia has experienced a number of periods of shortages in the supply of steel products. These steel shortages were shown to have resulted in spikes in the price of the commodity for supply chain participants and consumers. The data and information in this study all support the notion that a certain amount of volatility within Saudi Arabia with respect to the steel industry and the supply chain exists. The Kingdom has attempted to compensate for supply chain hoarding and stockpiling by increasing its domestic output which can be utilized to smooth out supply shortages within the supply chain. The study found that the actual result of this rationale in developing buffers is that it quickly transitions into stockpiling. This in turn results in further negative outcomes such as bullwhip effects up and downstream in the supply channel. The information that has been studied revealed that this point at which buffer inventories cross over into what is referred to as hoarding territory can be found through a specific formula. This formula was shown to be the EOQ calculation or the economic order quantity. This calculation utilizes real demand times in the supply chain along with re- ordering costs divided by the product carrying cost to arrive at an accurate figure. In practice, if the EOQ finds that the annual total steel expense exceeds the annual carrying costs for the inventory then there is excessive inventory or stockpiling in the supply chain. The study has also found that the Saudi Arabia supply chain requires a more efficient way to organize the product flow through the entire steel supply chain. This more efficient methodology would be a supply chain that is organized through the fast-moving, slow-moving and non-moving methodology. This methodology ensures that slow-moving steel products like crude steel, flats and galvanized steel are assigned to the slow- moving category and inventory these items at much lower levels.

The New World of Hot Strip Rolling – Achievements at Rizhao Steels’s New ESP Complex Setting New Standards

Investing in five ESP lines is one thing, starting up the first three lines after only 20 months within half a year is an extraordinary masterpiece of project management. Since production started, all three lines together have produced and sold already more than three million tons of ultrathin high quality steel by April 2016 and Rizhao steel has faced the saturated Chinese steel market. Already during earliest start-up phase, records have been broken in a row: in the shortest time possible, from first cast to first coil, further to first endless operation and to first 0.8 mm production. Production records like extra-long sequences exceeding 3000t, extra-long work roll life time over 170 km, starting of sequences directly in endless mode thus increasing the yield are listed here just to name some of them. The percentage of ultra-thin production down to 0.8 mm was quickly maximized to follow the high demand on the Chinese and oversees markets.

Symbiosis of Steel, Energy, and CO2 Evolution in Korea

This study looks at the energy intensity of the steel industry and the greenhouse gas intensity involved with the production of steel. Using several sources of steel production data and the corresponding energy sources used provides a time-series analysis of the greenhouse gas (GHG) and energy intensity from 1990 to 2014. The impact of the steel economy with the gross domestic product (GDP) provides indirect importance of the general manufacturing sector within Korea and in particular the steel industry. Beyond 2008, the shift in excess materials production and significant increase in total imports have led to an imbalance in the Korean steel market and continue to inhibit the growth of the domestic steel market. The forecast of the GHG and energy intensity along with the steel production up to 2030 is provided using the auto regressive integrated moving average analysis.