Steel is one of the basic needs for almost every individual as it is one of the important parameters to measure the development of a particular nation. Steel is being used in almost every physical object that we come across in our day-to-day life. It is observed that per capita steel consumption is more in developed countries in the range of 225 kg per year, while for the developing countries, it is on the lower side in the range of 100 Kg per year. The per capita steel consumption is on the lower side for underdeveloped countries in the range of 50 kgs per year. The only exception is this is China, which has a per capita steel consumption of 590 kgs per year. The prime reason behind such a high amount of steel consumption for China is the enormous infrastructure activity that they have undertaken in their country. The developing countries need to increase their per capita steel consumption gradually every year to graduate themselves to the next level of a developed nation.
The steel-making is not an easy task as it involves many complex processes and is capital intensive sector. It also requires skilled manpower along with a large land area to set up a Greenfield project. It requires mines linkage for uninterrupted supply of iron ore, and a continuous supply of coking coal is also required. You will not find too many large steel producers in any country in the world. In the past, several small capacity steel mills were on the verge of closing down, and as a result, it had to be taken over by the larger steel mills. The larger steel mills have economies of scale, captive mines, and wide dealership network, which help them to keep their production cost low and sell their finished products to the global markets.
The steel price (ราคาเหล็ก, which is the term in Thai) is not fixed at any given point of time, and it almost varies every week depending upon the cost of the input raw materials. The prime cost of the steel-making cost goes towards the procurement of the hard coke and iron ore. The steel market is very cyclical, so there are times of the steep growth followed by a couple of years of a deep recession. Therefore, it becomes extremely important for the steel mills to preserve cash for the downward trend of the business cycle.