Whether you install pipes and valves for a living, eat with stainless steel silverware, or depend on your car’s exhaust system to safely get you where you need to go, you use stainless steel on a daily basis. You might not think much about where this steel comes from or how it impacts the rest of the world. But since it’s a much-needed commodity, steel is actually a lucrative export that drives economies around the world.
However, the world’s steel industry has undergone some changes over the last few decades. Instead of using American-, European-, or Japanese-produced steel, chances are that much of the steel you use on a daily basis comes from China, which has been the world’s top steel producer for the last several years.
Below, we’ll give you some of the basic facts behind the world’s steel industry, including how China’s rise to steel fame has had global repercussions. By the end of our blog, you’ll understand why the global steel industry is so crucial, how China’s steel industry has impacted the rest of the world, and where the world industry is headed.
How the Steel Industry Helps the World’s Economy
Before we consider China specifically, let’s consider how and why steel drives the global economy. On its own, the steel industry directly employs over 2 million people across the world. Indirectly, it employs over 50 million people, since steel is a key component of the power, automotive, transport, and construction industries, among others.
While the United States and the European Union are still among the top steel producers worldwide, China is the top producer. Countries like Turkey, India, Brazil, and South Korea entered the top ten list of steel-producing countries as they became more industrialized.
Steel isn’t just at the core of multiple economies, though. It’s also one of the mainstays of the world’s green economy. Most renewable energy systems require steel to function, including solar panels and wind turbines. Plus, steel is one of the world’s most recyclable materials—on average, 83% of the world’s steel can be recovered. Just as importantly, the energy steel manufacturers have to expend to produce their product has decreased by 50%, which has made steel production a more energy efficient process.
The Rise and Fall of the Chinese Steel Industry
Until around 30 years ago, most of the steel you used probably came from European Union–affiliated countries, the United States, or Japan. However, more recently, Chinese steel has started to take over the market, creating a few problems along the way.
Pre-1949, Chinese steel development wasn’t very high. In the early years of communist rule, China’s steel production continued to lag behind that of Western countries. However, since the country started incorporating capitalist reforms in the late 1970s, various Chinese industries have grown to conquer the world market, including the steel industry.
However, unlike many other steel industries, China’s steel industry is both massive and state
owned. The central government subsidizes many steel mills, and local governments often have a stake in steel production as well. For three decades, these large, state-owned steel corporations have produced massive amounts of steel, flooding the market with cheaper products.
In the last few months, though, due to oversaturation, China’s steel industry seems to finally have peaked and flattened out. Now, many state-owned mills are facing bankruptcy. Most people are still unsure about the effect this will have on the global market. Bankruptcies will reduce China’s steel output. Some Chinese mills, like the provincially owned Hebei Iron & Steel, are relocating to places like South Africa.
However, the global production of steel will continue to progress. Countries like the Philippines, Taiwan, and South Korea continue to supplement steel from high producers like Japan and Europe. This means many American businesses can still offer competitive pricing on high-quality steel from around the globe.
The Future of the Global Steel Industry
Moving forward, the global steel industry aims to make steel even more environmentally friendly and energy efficient. For instance, the World Steel Association, a non-profit that includes 9 of the 10 largest steel companies in the world, plans several innovations that will keep the global steel industry moving forward.
One of the World Steel Association’s specific improvement involves the use of life cycle assessments (LCAs) to improve steel’s eco-friendliness. Instead of focusing on one phase of a product’s life, LCAs consider all parts of a product’s life, from production to manufacturing and use to disposal. LCAs also assess issues like energy consumption and resource depletion. With LCAs, the global steel industry can enhance steel’s eco-friendliness as a whole, decrease environmental damage, and create a better product.
The next time you use a stainless steel appliance, admire a skyscraper, or open your laptop, take a second to think about how far that steel traveled to get to you. And congratulate yourself for participating in an industry that helps the world economy keep spinning.
To learn more about stainless steel applications in a variety of industries, browse the rest of our blogs.