Based on globalization trends, technological advances, and economic policy, what are some of the key avenues for growth we might see in metal distribution in the next five years?
Modernization led to increased metal production from 8 Million Tons in 2000 to 1606 Million Tons in 2013 (Research). Despite an increase in production and metal prices, the industry has been experiencing a glut for a period, majorly because of the poor performance of the American in economy. However, 2014 has been different, and the industry is logging positive results.
There is unprecedented urbanization in many developing countries creating a demand for metals, to be used for improved housing. Despite adoption of policies to increase recycling, the demand is expected to remain high as most developing countries especially in the African continent experience economic growth. Studies show that when there is increased per capita income there is a corresponding demand for metals because metals form a major component in infrastructure development.
Capacity utilization is growing steadily, and the glut is reducing. In the next three to five year's capacity utilization is expected to improve dramatically, and the game changer is China accelerating the closure of old plants with high pollution effects. Adoption of anti-dumping laws in most countries has led to several cases being filed; forcing China to slow down on steel exports. As more developing countries legislate on mining and give concessions, new suppliers are expected to join the market, leading to a decline in the cost of raw materials.
Many developing countries are offering subsidies in steel manufacturing to help stabilize prices and spur infrastructure growth, increasing price competition globally. To remain competitive companies are investing in technologies and consolidating operations to achieve better economies of scale.
The outlook for the industry is bright, but discipline in capacity utilization and operational efficiency must be maintained (NASDAQ.com).
Works Cited
NASDAQ.com,. 'Industrial Metals On The Mend - Industry Outlook'. N.p., 2014. Web. 10 Nov. 2014.
Research, Zacks. 'Steel Industry Showing Resilience'. Zacks.com. N.p., 2014. Web. 10 Nov. 2014.
