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Steadfastness and Not Waiting Strategy |
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17/05/2009 13:44:09 The world steel industry has dealt with the global financial and economic crisis, which had strongly shaken the world economy during 2008 and had continued into 2009, with a strategy based on steadfastness and not waiting for what this crisis would impose of outcomes. It looked very clear since the start of the crisis that the steel industry, the prosperity of which is usually connected with the prosperity of the economic prosperity and the downturn of which is also connected with the downturn of the economy, will be at the forefront of the industries which will be affected by this crisis. In spite of the fact that the degree of being affected differs from one market to another and from one industry to another, one of the outcomes of the markets globalization is that the impact was comprehensive , even though different in degree. The steadfastness strategy has required adopting multiple mechanisms to face the risks of this crisis. Of these mechanisms was the resort of most world companies to cutting their production by 20 – 50%. The cutting of production has resulted in increasing the capability of the steel industry to adapt to the recession state undergone by the steel markets, which mainly resulted from the deterioration of the demand caused by the decline in a number of the major steel industry driving sectors at the top of which come the residential and commercial building sector and the automotive sector. This state of the declining demand has forced the major steel exporting countries to curtail their exports. The figures of exports of the largest ten exporters at the world level have shown a drop during the fourth quarter of 2008 amounting to 30% compared to the third quarter of the same year. China׳s exports were the most declining exports. The level of their decline amounted to 53%. This decline has continued during both January and February of 2009 by 54% compared to the same period of 2008. Nevertheless, China has remained holding the first rank among exporters at the world level with a figure of 56.2 million tons during 2008. Despite the declining volume of exports of a number of the largest exporting countries, such as China, Ukraine and Russia, another number of exporting counties have increased their exports. At the head of these countries is Turkey the increased exports of which amounted to 14% in 2008 compared to 2007. Most of these exports were channeled to the Arab markets which are considered open markets for imports from the world markets. The initial data indicate that the imports of the Arab countries had exceeded during 2008 for the second year respectively 30 million tons of various steel products, meaning that they rank second next to the EU 27 countries the volume of the imports of which during 2008 amounted to 39.7 million tons. USA ranked third with an imports figure during the same year amounting to 28.4 million tons. During 2008 the volume of the imports of the Arab countries from only three countries, Turkey, China and Ukraine, amounted to 21 million tons of which 9 million tons are from Turkey, 6,6 million tons from China and 5.4 million tons from Ukraine. These big figures of imports in the past years did not make a source of worry for the Arab steel industry nor even for the producers some of whom resorted to importing steel products to meet the market increasing needs. The absorbing capability of the market was strong and the world prices were approximate to one another. Pricing was made on an international basis with differences which were almost limited. But the global financial crisis and the declining demand in markets have created a state of resentment against imports, especially when admission of imports is made at prices below the prices of the local production and within the policy of supporting exports which have different titles, perhaps one of which is resorting to the devaluation of currencies of the exporting countries. The policy of the open markets adopted by most Arab countries was within the frame of action to integrate the Arab economies into the world economy, proceeding from the confidence in the capability of the local product to compete with the world products, but the circumstances of the crisis will impose a new standing towards imports which should be as a defence line of the right of this industry to protect itself and its capability to compete. Resorting to the strategy of confrontation in the competitive sense of the word ,under the umbrella of the laws which protect competition , is one of the mechanisms of protecting this industry against the negative impacts of the continued flow of imports. This mechanism comes within the title of the right of the state to protect its industry and levy preventive duties against exposing this industry to risks threatening its future and leading to the closedown of its mills, which is the question this industry is still trying to keep away from, in spite of the fact that some companies of this industry have made losses caused partly from the increasing admission of imports at low prices. Application of the right of protecting industry, to which a number of countries in the world have resorted, some of which have even issued instructions to buy only the local product, is one of the mechanisms of the confrontation and steadfastness strategy to face the repercussions of the global financial crisis. Demands to take protectionist actions against imports into the Arab markets and to levy duties on these imports have increased during the past period of this year, especially from Turkey the volume of exports of which to the Arab markets amounted to 1.9 million tons during both months of January and February 2009 compared to 1.4 million tons in the same period of 2008. These demands have met with positive reactions and strong responses, although different in the degree of their strength from one country to another. The standing of the Arab Iron and Steel Union, which comprises 90% of the steel producers in the Arab world, is based on the confidence in the capability of this industry to grow continually through concentration on deepening this industry, reducing the production cost and the necessity of introducing incentive packages to the consuming sectors of the long and flat steel products, but, at the same time, the Union demanded the official authorities to set the necessary mechanisms to guarantee the efficiency of the markets business and firmly stand against the practices injuring the local industry. The Union has reflected this very standing in a memorandum addressed to the Arab ministers of industry and economy about the status quo of the Arab steel industry and the challenges it is facing under the global economic crisis. The Arab Iron and Steel Union sees that the steel industry is drawing the image of the future and that the depressed demand must become behind, with the improvement taking place in the markets situations in spite of the negative repercussions of this crisis. This is made certain through the continued execution of a number of the existing projects, inspiring that recovery is coming and the confidence is the guarantee for the continued growth in the future. Arab Steel |
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