The Grey Chronicles

2008.August.6

Steel Intensity


Through the years, flat carbon steel demanded worldwide was invariably always slightly greater than the available steel produced by various countries. Global steel demand (Christmas, 2003) is expected a continual increase while risk appears more on a downside, unless raw material shortages and shipping problems prevent supplies rising.

Steel consumption can be measured by steel intensity—the ratio of steel consumption to Gross National Product (GNP), the monetary value of the total production of final goods and services (Laplace Conseil, 2007).

The Iron and Steel Institute conceptualized in the seventies the steel intensity, which varies according to the stages of country’s economic development, which are differentiated below:

  • Stage 1: Pre-industrialization. Steel intensity is low and its applications are for exploitation of mineral resources, agriculture and food industry.
  • Stage 2: Industrializing. The country starts to industrialize, thus heavy investments are focused on infrastructure: transportation, power generation and distribution, and telecommunications. Steel intensity gradually rises.
  • Stage 3: Industrialization. The country is already an industrializing one with rapid growth in steel consumption for the machinery and equipment, consumer durable, and shipbuilding industries. Steel intensity accelerates.
  • Stage 4: Transition. The country has already industrialized and has a well-established industrial infrastructure. Steel intensity stabilizes.
  • Stage 5:Post-industrialization. The country already saturated its industrial products. Service-based and sophisticated industries comprise more share of the GNP. Steel intensity declines. (Laplace Conseil, 2007)

Figure 12 is a merged version of three authors as cited below, whereby each complemented the others. Steel intensity for the Philippines from 1984 to 2004, with analysis for the particular period 1994-2000, is discussed later.


L. Conseil, 2007; Taccone, 2006, Goodyear, 2007)

Figure 12: Evolution of steel specific consumption per unit of GDP between 1950 and 2005. (Sources: L. Conseil, 2007; Taccone, 2006, Goodyear, 2007)

In the year 2000, Figure 12, the Philippines was in Stage 1, South Korea in Stage 2, Taiwan was nearing Stage 3 steel intensity. Stage 4’s steel intensity is prominent in Singapore. The U.S.A. and Western Europe would be on the later part of Stage 4 going unto the last stage, evidenced by a shift from manufacturing towards the service industry (Taccone, 2006; Goodyear, 2007).


Notes:

Christmas, Ian (2003), Global Steel Demand Continues to Grow. Proceedings of the 37th IISI Annual Conference, MPT, Vol. 26, No. 6, Düsseldorf, Germany: Verlag Stahleisen GmbH, December 2003. pp 24-26. back to text

Laplace Conseil (2007), View on the Future of the Global Steel Industry. Proceedings of Merrill Lynch Global Metals, Mining and Steel Conference, Dublin: Merril Lynch, May 2007. Powerpoint Presentation. Slide 5. back to text : second text

Taccone, Tony (2006), Emerging from the Dark Period: The Steel Industry in an Enlightened Age. Proceedings of The Steel Industry in the 21st Century: A Trans-Atlantic and Global View, Pittsburgh: University of Pittsburgh, 12 September 2006. back to text

Goodyear, C W (2007), BHP Billiton — Resourcefully Growing. Proceedings of Merrill Lynch Global Metals, Mining and Steel Conference, Dublin: Merrill Lynch, May 2007, Powerpoint Presentation, Slide 5. back to text

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