Economic uncertainty combined with poor demand outlook means that steelmakers are looking for new ways to accelerate their earning potential. To maximize potential, some key focus areas include broadening product service offerings, focusing on more profitable segments and prioritizing markets in which to compete. With the rise of the rapid-growth emerging markets, it is still important to focus on existing clients.
Within the past two years, reducing costs has been a constant focus of management around the world. To keep their companies competitive, steelmakers are adopting a number of different strategies such as vertical integration, passing on the cost pressure, use of steel derivatives, optimization of capital and strategic cost reduction.
The potential opportunity of a steelmaker is determined by the market it can reach, while its growth is determined by its ability to produce and deploy products or services into the market more effectively than its competitors. The speed at which a steelmaker can respond to changes in the market is a challenge for the supply chain to attain operational agility. To do so, steelmakers need to focus on improving the flexibility of their supply chains, as well as effectively managing capacity utilization.
The economic downturn has increased the perception of risk, and trust has become an issue both internally and externally. During the economic crisis, many risk management systems failed, so now it is more important than ever to regain stakeholder confidence and for companies to put in place new processes to better explain the risks they are facing. Risks to be identified and explained to stakeholders in the steel sector could include political risk, market risk (e.g., price volatility and cyclicality of demand), operational risks and financial risks.