2004 was marked by strong global demand for Mittal Steel’s products across all markets as rising consumption in China impacted the supply/demand balance. This led to the perception of supply shortages and sharp price increases. Prices realised by Mittal Steel in 2004 rose by an average of 54 per cent.
To a degree, the rise in prices also reflects a secular shift in the world steel industry.
For many years a volume-driven business in which steel-makers were prepared to accept low prices in order to defray high fixed costs, the steel industry has undergone a major change in attitudes as a result of privatisations, consolidation and other ownership changes. There is increasing evidence that return on capital is beginning to take precedence over production volume.
The geographical distribution of Mittal Steel’s products in 2004 was influenced by the acquisitions in Central and Eastern Europe (CEE) in 2003 and 2004 and the consolidation of Mittal Steel South Africa. These lifted the proportion of shipments from Europe and the Rest of World to 43 per cent and 28 per cent respectively.
Mittal Steel expanded its marketing network further in 2004 with the opening of a fourth sales office in China and improvements to its Eastern Europe sales network. The creation of the dedicated European executive office in Rotterdam also reinforced Mittal Steel’s sales and marketing reach in the region. Elsewhere, a new office was opened in Turkey in 2003 which made its first impact in 2004.
Group policy with acquisitions is to focus first on lifting the unit’s market share in its domestic and nearby markets where it has a natural advantage. In the case of privatisations, financial pressures in the run-up to disposal will often have resulted in a loss of domestic market share. Mittal Steel works to rebuild it quickly. It has achieved considerable success with impressive market share gains in Romania, Czech Republic and Poland since acquisition.
There were a number of moves to broaden and improve the range of products Mittal Steel offers to its customers. The Group’s US operations have long been at the forefront of new developments in advanced high strength steels for the automotive industry and in 2004 launched a number of ground-breaking products. One, DI-FORM T500 offers unique dent resistance and has been adopted by Ford Motor Company for its new Mustang model. Another, TRIP, is a high strength steel that nevertheless offers good ductility in the shaping process.
New acquisitions were also responsible for extending the product range. Both Polskie Huty Stali (now Mittal Steel Poland) and Iscor (now Mittal Steel South Africa) brought new structural shapes and angles that Mittal Steel had not previously marketed. These included wide-flange beams and other special shapes for the construction industry. Mittal Steel Poland and Mittal Steel USA are also a major manufacturers of rails, which were not previously manufactured by any Mittal Steel subsidiary.
Downstream, a series of acquisitions in Romania in late 2003 and 2004 has significantly increased Mittal Steel’s capacity in welded and seamless pipe and tube. The Group is now a major producer of top-quality pipe for a range of industrial and oil industry-related applications.
Moves to improve the product mix bore fruit in a number of areas in 2004 and will continue to do so in the current year. In Romania, Mittal Steel Galati has launched X52 and X60 plate products for high-pressure pipe applications and is moving to
X65 in the current year. Mittal Steel South Africa has developed an X65 product.
A spiral-welding mill under construction in Kazakhstan will allow Mittal Steel Temirtau to also produce pipe-grade steel.
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