Comments on economics, mystery fiction, drama, and art.

Friday, January 27, 2006

World Steel Consolidation:

And now comes word that Mittal Steel, the world's largest steelmaker (and owner of the northwest Indiana peices that once were Inland, LTV, and Bethlehem), has made a bid to acquire the world's #2 steelmaker, Arcelor. If this acquisition, which Arcelor calls hostile and unwelcome, goes through, the combines company will have about 100 million tons of production capacity. In the context of the global market for steel--apparently 1,116 million tons in 2005--we're not talking a really large share of the market (about 9%), and the steel analysts quoted in the NYT piece don't think the merger will give Mittal much, if any,pricing power.

Nothing's a done-deal yet, obviously, but if this acquisition does go through, we need to ask whether it has implications fot northwest Indiana. At this time, the answer is, "Who knows?" But that might become clearer as things progress.

In a related note, China's output in 2005 rose by 77 million tons; steel output in the rest of the world declined by about 11 million tons. China has gone, in one year, from being a fairly significant importer to being a fairly significant exporter. This has happened much more quickly than I, for one, thought it would.


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