Industry Analysis & Industry Trends
The Iron Smelting and Steel Manufacturing industry has undergone a difficult period of structural change over the past five years. Industry revenue is expected to fall at a compound annual 7.9% over the five years through 2014-15, to reach $10.7 billion. Limited demand from downstream markets, falling steel prices and competition from import markets have led to overcapacity, and caused firms to downsize production. This trend has subsequently resulted in falling steel volumes and contributed to the industry's revenue decline. Falling domestic steel prices are projected to result in a 5.7% drop in revenue in 2014-15. Although price rises can limit demand for steel products, the net effect is generally positive, as manufacturers generate more revenue per product... purchase to read more
Industry Report - Industry Investment Chapter
A medium level of capital intensity characterises the industry. For every dollar spent on labour, an estimated $0.27 is invested in capital. High levels of capital expenditure are required for equipment and machinery necessary to operate in the industry. Depreciation expenses are also high, as steel manufacturing equipment is often highly specialised and tends to have low salvage values. Capital equipment such as electric arc furnaces, blast furnaces, charging buckets and casting machines are very expensive and can be highly customised.
Labour costs are also high, which gives the industry a moderate level of capital intensity. Industry participants require skilled employees to operate equipment and machinery... purchase to read more