World steel industry striving to pick up

BEIJING, Feb.17 -- Global steel output in 2008 was 1.3297 billion
tons, a drop of 1.2 percent over 2007 and the first-ever decline in the past two
decades since 1998, according to statistics released by the World Steel
Association (worldsteel) recently. Overall, the whole industry is still at an
all-time low and the global demands for steel could contract 10 percent.

In face of low prices and low demands for rolled steel, major global steel
firms trim production, reduce employment and postpone their investment, and
steel production will continued to be slashed in these firms in 2009. So, the
steel industry now has a hard time worldwide. Iron and steel market will shift
from the seller's market to buyer's market in 2009. Annual iron ore contract
prices are expected to end a six-year rising trend and drop by 40 percent, and
contract prices for hard coking likely to decline 72 percent in the year.

An Australian bank had predicted global steel output at 1.22 billions for
2009, or 110 million tons less than preliminarily forecasted last year, posing a
drop of 8.25 percent. Without much change in its production setup, Asia remains
a leading rolled-steel making area, but there can be some changes with respect
to the consumption quantities, principal regions for consumption and the steel
product mix.

INDIA ¨C

Owing to the impact of ongoing global financial crisis, Mittal Steel has to
put off its development plan, said Steel King Lakshmi Mittal in an interview
with People Daily reporters. Since the outbreak of financial crisis, Mittal
noted, his iron and steel group has suffered a total loss of more than 100
million US dollars. Mittal Steel announced that it had to cut production by 35
percent and lay off a large number of employees. The demand at this year's
global steel market would not rise again, Mittal acknowledged.

Mittal Steel will work to further straighten out or integrate its internal
resources, instead of effecting marked changes with its vital development
strategy. Furthermore, the fall of raw materials prices, such as iron ore and
coal, will help cut production in steel firms. As India has put forth economic
stimulus plan to fund extensive infrastructure construction, several Indian
steel firms began to pick up their sales volume in January this year.

THE UNITED STATES ¨C

Steel is the "backbone" of American manufacturing¡­ It is important also for
"America's critical infrastructure and national economic security". The U.S'
iron and steel industry created 1.2 million jobs directly or indirectly, and
produced 350 billion dollars worth of output value each year. Of all steel
products on the American market, 40 percent is to provide for the civil
engineering sector and another 20 percent is to provide for auto industry.

Since the eruption of the subprime crisis in mid 2007, US steel industry
has mired into dilemma. In 2008, its iron and steel output was down 50 percent
and rolled steel prices down 40 percent year-on-year. Large steel makers
suspended production one after another. More than 20,000 steelmakers have
already been temporarily laid off, according to the United Steel Workers of
America (USWA).

Analysts note that U.S. steel industry will benefit from President Barack
Obama's mammoth 787-billion-dollar stimulus package, which includes several
hundred billion dollars to be used in the field of infrastructure development.

Moreover, thanks to the technical upgrading, the energy efficiency for each
ton of steel manufactured in the U.S. has raised 30 percent as compared to the
1990s with an ensuing, apparent remarkable reduction of greenhouse gases
emission. The U.S. would draft an energy efficiency plan up to 2020 along with
efforts of its Asia-Pacific partners.

SOUTH KOREA ¨C

South Korea's POSCO, the world's fourth largest steelmaker, produced 33.1
million tons of crude steel in 2008, and it is expected to turn out anywhere
from 29 million to 32 million tons this year, said Mr. Kim, a South Korea steel
magnate and a POSCO public relations officer.

To cope with global financial crisis, POSCO has worked out or formulated
detailed schemes. In a national effort to expand its domestic market, POSCO said
that it would increase input this year by as much as 53 percent to 7.5 trillion
won, including 1.5 trillion won in investment in overseas resources and steel
firms.

AUSTRALIA ¨C

World steel prices and global demands for steel have declined drastically
since October last year. Australia's steel output was down by 26 percent in the
last quarter of 2008, three Australian mining giants disclosed in January this
year. The Anglo-Australian mining giant Rio Tinto laid off more than 10,000
employees all over the world, and BHP Billiton also revealed its plans to sack
6,000 employees.

Gina Rinehart, 53, daughter of Lang Hancock, who is mining entrepreneur and
Australia's richest woman, said she is currently looking in Asia for investment
partner. A fall in property price provides China with a good opportunity to
invest in Australia, she said, adding that Chinese funds are conducive for
Australian firms to get out off difficulties.

CHINA's IRON, STEEL INDUSTRY

At present, all nations are taking prompt measures to respond to financial
crisis, and infrastructure construction constitutes a useful and forceful way to
help the iron and steel industry phase out difficulties, Chinese expert Hou
Zhiyun explained. The iron and steel industry in China can possibly bottom out
earlier than those in other countries, as the nation has resorted to
macroeconomic measures to stimulate economic growth and expand domestic
consumption.

China outreached other steel making countries in term of gross steel output
in 2008, and it would keep or retain its position in 2009, according to an
Australian bank.

This year "witnessed a drastic slowdown in the rate of growth of steel
demand following the end of post-war reconstruction, said Ian Christmas,
secretary general of the World Steel Association (worldsteel). At present, China
has started to speed up the merging and integration of its steel sector, and
this will help reinforce its status at the global steel market. Newly emerging
market-oriented nations will expand their steel production capacity with a
steady rise in the demand for rolled steel, and their steel firms will surely
shift from the mode of the scale-oriented growth to the mode for value
addition-oriented development.

(By People's Daily Online, and its authors are PD overseas resident
reporters Ren Yan, Guan Kejiang, Mang Jiuchen and Li Yuan, and PD reporters Lu
Hong and Ding Dawei)

(Source: People's Daily Online)