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Market Structure of the Steel Market

Market structure is talking about interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition , extent of product differentiation , and ease of entry into and exit from the market. Market structure have four basic types, those are:

  1. Perfect competition: many buyers and sellers, none being able to influence prices.
  2. Oligopoly: several large sellers who have some control over the prices.
  3. Monopoly: single seller with considerable control over supply and prices.
  4. Monospony: single buyer with considerable control over demand and prices.

In the steel industry, the number of potential customers is limited and the products sold are not well-suited for online sales. ICT and e-business are rather used to support, not conduct, sales processes. The analysis indicates that ICT and e-business can hardly be used to open up new markets, to increase the number of customers and impact on the steel market’s structure.

Each country demand for steel market structure is not same. For example, in china, the concentration ratio of commercial run, compared with developed countries and other industrialized economies are relatively low. One enterprise said: The structure of industrial products of our enterprise, we above the steel market, our domestic demand for steel products structure, if we were top of the domestic steel market, the demand for its iron and steel costs are relatively high level, need to focus on relatively large degree of steel plant products can be produced, it is definitely demand factors will encourage its production to focus on. But if that is our top of the steel market, our domestic steel industry and the current market, it needs itself is more dispersed, small-scale iron and steel enterprises, it can better meet the demand for products produced. So, If the market as it is not such a force pushing it toward higher concentration, which is I think the objective factors, so I do not agree with all of the industry are talking about a target, is to take the developed countries (more than), we would like him in line, do not consider our national objective, I do not agree that this is a relatively low concentration of objective factors. Steel industry is the foundation of china’s national economy and strategic industries to improve their efficiency and economy for the steel industry itself has an important role in stability and development. Some studies show that China’s steel industry market concentration is too low in iron and steel enterprises are too small, unable to achieve economies of scale, is not conducive to business efficiency; other studies reached the opposite conclusion that the scale of China’s iron and steel there is no economic characteristics; business efficiency is not decided by the market structure. On market structure and the relationship between economic performances, summed up the market power hypothesis and the efficiency structure hypothesis. Different hypotheses imply different policy implications. Determine the scale of China’s steel industry, the efficiency characteristics and market structure and efficiency in the industrial policy is the basis for the implementation of the right of great significance. First of all, they used data envelopment approach (DEA) measurements and analysis of iron and steel enterprise technical efficiency, pure technical efficiency and scale efficiency, and then from a business point of view of the system structure of the steel market, steel industry, firm size and the relationship between business efficiency concluded that the scale of China’s major steel companies are not economic characteristics of the existing large enterprises inefficient relative advantages of small businesses; market power hypothesis and the efficient structure hypothesis in the market are not set up China’s steel industry. Enterprises to strengthen management, improve management efficiency and improved production technology is the way to improve efficiency. Production efficiency will help companies achieve higher performance and market share.

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And as America, steel industry is vital to the economy of the United States。Traditionally valued for its strength, steel has become renewable raw materials. With most steel of US now be produced from scrap iron. The steel industry is more than $50 billion enterprise, and additional downstream processing pushes the value closer to $75 billion. Low-cost imports a large number of industries have challenges, however, restructuring, downsizing, and widespread implementation of new technologies, so that greatly increased labor productivity, energy efficiency and productivity. The highest geographic concentration of mills in the Great Lakes region are including Indiana, Illinois, Ohio, Pennsylvania, Michigan and New York. About 80% of U.S. steelmaking capacity is in these countries. The industry employs more than 10 million people in the country. In the United States, there are two methods for the production of iron: ore-based or integrated process, waste, or based on electric arc furnace process. Two different methods for the preparation of semi-finished steel billets: an integrated process, which uses the blast furnace and micro sick, it uses a direct electric arc furnace. Once the semi-finished steel, state, further processing is required in both trace patients, as well as integrated steel-making process.

Global steel industry is experiencing signs of recovery from the recession. Worldwide, the capacities of steel mills are running about 80%, less than 60% drop after the end of 2008. Around the recovery began in mid-2009, has been supporting the government to stimulate consumption and, in some economies, stock rebuilding. Higher raw material prices will be upward pressure on steel prices.

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It was noted that the steel industry’s future will be mainly affected by the occurrence and development of key steel industry. From representatives of the major steel-consuming industries in the steel industry rose about the role of point of view. This growth and these industries how much of steel and what these industries will require production sites in the future the future the question whether there is substantial substitution away from steel, steel, environmental concerns and the needs of more generally on impact discussed . Overall, participants agreed that the steel will remain in the important role of these industries, the whole economy.


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