Steel No More Steel

After a lull in steel prices, the market seems to be picking up and a brighter forecast spells a steady rise in the segment. This is also the same with iron ore partly due to the rise in demand from the Chinese market. The demand from China seems to be improving steadily as demands arise from its infrastructure development projects. 

There has been an improvement in steel demands in US and Europe as well. The imposition of anti-dumping duty has also benefited concerns like Arcelor Mittal.  

But the biggest concern in news is the Tata's Steel concerns in the UK. Due to hurdles regarding the pension fund which has created a liability of seven hundred million pounds, it seems a sell-off is unlikely. A potential strategic partnership seems to be a better bet for the ailing business.  But this is a tardy process and is at a preliminary stage.  Another recourse is to cut costs as much as possible. How this will be brought is not clear.     

The problem has arisen due to low prices in the steel market. This was in making as the World was oversupplied with steel. The China-driven demand faced a standoff due to slack in its industries. To make matters worse the local production of Chinese arose significantly. Excess production was dumped outside the country triggering stiff competition from global manufacturers. 

The rising prices have raised some hopes till the Chinese concerns raise their output to offset the gain in prices. 

Made in China

The impact China has made through product exports in recent times is phenomenal. World over Chinese made products rule the roost. Most of the popularity lies in countries like Pakistan, Australia, India, Canada, USA and Europe. For   many countries China is the main trading partner.  

Mass production is the key to this phenomena and the cost matters as well. Hence both factors impel these countries to import. It is a fair game and any country that fulfills these two factors can export in large quantities. But the buck does not stop here quality and precision matters as well.    

Hence rapidly gained markets are fast dwindling as users realize the imperfect products they land up with. Like in India we have experienced the low reliability of many imports from China. Many products have failed quality tests pushing consumers away. 

The Make in India initiative should propel manufacturing in India that is the objective. Will the country be able to achieve excellence in manufacturing and challenge the leader? Well time will tell.