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Industry Research Report: Intermediate Steel Products Manufacturers

Autor:   •  August 11, 2011  •  Essay  •  678 Words (3 Pages)  •  1,483 Views

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Industry Research Report: Intermediate Steel Products Manufacturers

Introduction

The target firm is an intermediate steel products manufacturer that supplies steel rods, tubes and sheets used by manufacturers across various industries including but not limited to the automotive, appliances and construction.

This research has been conducted to understand the overall market climate and is accordingly divided into various sections. These include specific sections that focus on a general sector overview, products and services, customers and end markets, distribution channels and geography and ends with Michael Porter’s Five Point Analysis and some suggested strategies to build shareholder in the steel industry.

Sector

Steel is one of the underlying materials used across the entire manufacturing industry. Historically, the construction and automotive industries are the largest consumers of the steel industry, accounting for over half the total steel consumption. Other industries that demand steel as an essential input are the manufacturers of energy, electrical equipment, agricultural products, appliances and containers. Due to the heavy reliance of the target on steel, understanding the value chain for steel products is essential. The following figure illustrates this

The diagram shows how the overall industry is structured. More value is added to the steel products as we move from left to right on the production chain towards the OEM Manufacturers. The final two steps of the process add the most value and are also the most profitable. Many experts believe that companies that are able to shift and/or incorporate the final two steps into their operations would be more suited in achieving sustainable growth.

Production

The following chart illustrates the production of steel the top 5 steel producing countries, China, Japan, Russia, USA and India. China is easily the world’s largest steel producer, producing more than 6 times the total production of Japan, the world’s second largest steel producer, in 2009.

The graph above also shows that the overall production globally has fallen since 2007, and this is due to demand (in certain cases) by OEM Manufacturers switching to substitutes. This will be discussed in greater detail in the section with Michael Porter’s Five Point Analysis. Total capacities have also fallen for Japan, Russia and the

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