After China adopted in the late 1970s the policy of economic reforms, its annual output
of major steel products was increasing at high pace, with a particularly pronounced
growth during the 1990s. China's steel industry has been the fastest growing in the world
over the past two decades.
Chinese steel industry includes companies that manufacture and/or distribute steel,
including plates, sheets, strips, rods, bars, and tubing. Pig iron is the main raw material
used in the production of steel. China is the world's largest steel-producing country and
is also a substantial importer.
Directed by the government's macro control policy, the development of China's iron and
steel industry is now in good shape. Steel price hike, a product of the country's decadelong
economic boom, has also drawn large amounts of funds into the industry. Most of
the country's steel giants now are state-owned enterprises.
China's industrialization is the natural driver for its steel industry. The industrialization
process has gradually entered a new era, under which its heavy industry is playing the
dominant economic role, driven by natural market demand forces from industries such
as construction and automotive, rather than by the central government's planned
economy dictates. As the economy of China has grown at the rate of 9.5% per year and
the construction and manufacturing sector have been booming, the demand for steel in
China has increased considerably. Everyone from shipbuilders and container
manufacturers to carmakers and the construction industry need more and more steel.
Aruvian Research analyzes China’s Steel Industry in Michael Porter’s Five Forces
Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive
five forces that determine the competitive intensity and therefore attractiveness of a
market. Porter referred to these forces as the microenvironment, to contrast it with the
more general term macro-environment. They consist of those forces close to a company
that affect its ability to serve its customers and make a profit. A change in any of the
forces normally requires a company to re-assess the marketplace.
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