[miningmx.com] — China’s steel industry is ripe for consolidation in coming years, but the process elsewhere has largely run its course, the head of ArcelorMittal , the world’s largest steelmaker, said on Tuesday.
Lakshmi Mittal told the company’s annual shareholders meeting he expected developing countries to make up 70 percent of global output in four to five years. The developed world would still lead product development.
“Outside China the steel industry is well consolidated. I really do not see major consolidation transactions in the steel industry, albeit there could be smaller opportunities available,” Mittal said.
The ArcelorMittal chief said he believed China, the world’s largest producer, would have companies making an annual 50 to 70 million tonnes in four to five years. China’s largest steelmaker Baosteel shipped some 35 million tonnes in 2008.
ArcelorMittal, with some 8 percent of the world market, shipped 110 million tonnes in 2007 before the economic crisis forced it into production cuts.
Mittal also predicted continuing growth of investment in India, which could lead overall production there to double to some 120 million tonnes.
The World Steel Association has forecast the BRIC countries, the Middle East and Africa will consume about 60 percent of steel in 2010 from about 50 percent in 2007. The developing world made up some 60 percent of global steel output in 2007.
Mittal said that output in the developed world would recover to pre-crisis levels in about three years, but he did not see major growth in volume afterwards.
Steel operations in North America and Europe would continue to lead product development, making steel lighter, stronger and more environmentally friendly.
Mittal said global trends had reinforced ArcelorMittal’s strategy to focus investment on emerging markets as well as to increase its self-sufficiency in iron ore and coal.
The latter has become even more important after a switch to shorter-term pricing by the world’s big three iron ore miners — Vale, BHP Billiton and Rio Tinto.
Mittal said the move from annual contracts meant steelmakers would have to redraw deals with their customers to pass on raw material price changes.
“We are in discussions with our customers that they will have to change their business model too,” he said.