Requirements for motion control in iron and steel production machinery are challenging, including the need for the highest precision, reliability and productivity, even in harsh environments with high temperature. A wide range of hydraulic and electric products and solutions exist to meet an ever-growing range of some of the most demanding applications on iron and steel production machinery.
Growth Slows In Both U.S., EU Iron, Steel, and Electrical Machinery Sectors under TTIP
According to a recent report by World Trade Online, a study funded by the European Commission suggests that the Transatlantic Trade and Investment Partnership (TTIP) would inhibit the growth of the iron and steel as well as the electrical machinery sectors in both the United States and Europe, while benefiting third countries. Growth in the U.S. iron and steel sector would be at a rate 1.4 percent slower by 2030 than if the deal were not put in place under an ambitious scenario, the study said. Similarly, the EU iron and steel sector would grow at a 2.5 percent slower rate because of TTIP under the same conditions in that timeframe. Under a less ambitious scenario, the U.S. and EU iron and steel sectors would grow 1.9 and 0.7 percent slower, respectively, under TTIP by 2030.
The report also delineates that the electrical machinery sector would face an even more drastic drop off from TTIP, with the U.S. and EU sectors growing 2.4 and 7.9 percent slower relative to a 2030 baseline under an ambition scenario. Under a less ambitious scenario, the U.S. and EU sectors would grow 2.5 and 4.0 percent slower compared to the 2030 baseline. Consequently, the slowed sector growth would also result in fewer jobs in the electrical machinery and iron and steel products sectors by 2030 than would otherwise be present if TTIP were not implemented. This is mainly the result of so-called “direct spillovers”, which is when trade between a TTIP country and a third country increases as a result of TTIP. The study predicts that if the U.S. and EU align their regulations, third countries would also follow suit and that would increase their trade with the U.S. or EU.
The report further states that the increased competition is expected to have a negative impact on both the U.S. and EU. To add, EU exports of iron and steel are expected to rise 12.9 percent under an ambitious scenario and 6.5 percent under a less ambitious scenario when compared to a 2030 baseline. Imports are also projected to rise albeit less rapidly with increases of 1.6 and 0.7 percent under ambitious and less ambitious scenarios, respectively, when compared to the 2030 baseline. The slowed sector growth will also result in greater unemployment in the electrical machinery and iron and steel sectors. The fact that the growth rate of these sectors would be slowed for both the U.S. and EU is indicative that these sectors are not very competitive in the international market.
Global Steel Production
Indeed, the steel industry continues to face the same problems, a glut of capacity throughout the world and high export volumes from China. As a matter of fact, according to Deloitte 2015, over the last 35 years, the iron and steel industry has seen significant changes. In 1980, 716 million tons of steel was produced and the following countries were among the leaders: USSR (21 percent of global steel production), Japan (16 percent), USA (14 percent), Germany (6 percent), China (5 percent), Italy (4 percent), France and Poland (3 percent), Canada and Brazil (2 percent).
According to the World Steel Association, in 2014, world steel production amounted to 1665 million tons. Deloitte also suggests that the list of leading countries has also change significantly, whereas China ranks first and is far ahead of other countries (60 percent of global steel production), followed by Japan at 8 percent, USA and India at 6 percent, South Korea and Russia at 5 percent, Germany at 3 percent, and Turkey, Brazil and Taiwan at 2 percent. At the beginning of 2015, the production of steel decreased by 1.8 percent in comparison with the first quarter of 2014. The production in terms of volume (for January – April 2015) amounted to 536,485 million tons.
Despite the trend towards decreased steel production in the global market, Economist Intelligence Unit (EIU) experts still forecast a rise in steel production over the next two years
As practically China alone was sustaining the positive dynamics in the industry over previous decades, the decrease in global production can be explained by the fall in steel prices and by the sales slowdown in China. On the other side of the fence, Russia is one of the leading producers of ferrous metals. Over the last few years, the Russian Federation has been ranked fifth by steel production in the world after China, Japan, the USA and India. The production of ferrous materials plays an important role in the Russian economy and in its industrial potential. The industry’s share of the country’s GDP is 4 percent and of industrial production around 18 percent.
According to United Metallurgical Company (OMK), the consumption of structural steel members in 2013-2014 in the Russian Federation amounted to 1.8 and 1.9 million tons, which is 20 percent lower as compared to the respective indicator in 2012. In point of truth, the general decline in the economy exerted a negative influence on the financial situation of most companies in the Russian metallurgical industry. The financial position of most of the companies improved in 2014.
The major reason for the strengthening of the financial position of the companies is the ruble devaluation. As the majority of the Russian metallurgical companies’ sales are for export and the expenses are incurred in ruble equivalent, the ruble devaluation yields a positive effect, revenue revaluation and improved competitiveness on the market at large.
A Middle-Eastern Outlook on the Steel Industry
The World Steel Association, headquartered in Brussels, has released its short-range outlook for 2016 and 2017, forecasting that global steel demand will decrease by 0.8 percent to 1,488 million metric tons in 2016 following a contraction of 3 percent in 2015. In 2017, it is predicted that world steel demand will return to growth of 0.4 percent, reaching 1,494 million metric tons.
Emirates Steel, the largest integrated steelmaker in the UAE, warned of the damaging effects of the flow in China’s and Turkey’s steel to the UAE markets, and calls for protective actions to face the increasing competition and falling prices that will affect the UAE’s industrial future development plans. According to Middle East Steel Magazine, HE Saeed Ghumran Al Romaithi, Emirates Steel’s Chief Executive Officer, warned that the inflow of Chinese and Turkish steel imports into the UAE, at prices below an acceptable market value negatively impact production volumes and profitability of UAE steel players, thereby causing damage to both existing and future steel expansion and investment projects and threatening UAE steel sector.
He added that the lack of strong customs protection in the UAE will lead to the escalation of the problem. “If proper measures are not adopted, many producers in the UAE would be at risk of losing capacity, putting the country at risk of losing impetus in diversifying its economy away from dependence on oil as a major source of income”. Besides the introduction of anti-dumping duties, Al Romaithi also recommended that a uniform standard should be introduced to fend off low-quality Chinese imports and force Chinese exporters of steel into the UAE to comply.
A surge in Chinese exports this year has led to anti-dumping investigations being initiated in the U.S., Turkey, Southeast Asia, Europe and other main destinations for the shipments from China. Al Romaithi pointed out to the urgent need to revise import tariffs or to increase duty levels to avoid the threat of cheap imports from China and Turkey, with other traditional exporters also acting aggressively to protect their market shares, citing the 110 percent antidumping duty imposed by the US on Chinese wire rod imports and Turkey raising its import duties to 30-40 percent.