At the last IISI conference of the second millennium, it was fitting that the world's steelmakers should focus on competing materials and the world's macroeconomic outlook. Both will be instrumental in shaping steel's future in the next millennium. Just as the beverage industry was able to cost-effectively move from steel to aluminum, a shift is possible and, quite frankly, probable in the auto industry. Steelmakers complacently assume that automotive steel is safer than aluminum, but steel has no such advantage, warned analyst Raju Daswani. Aluminum and plastics companies have consolidated more than steelmakers have.
Consolidation can add strength but renders the big new company less nimble.
Steel prices are driven by competition with other steel companies in a way that is alien to aluminum and plastics. This drives down steel prices and profitability but helps keep steel the least-expensive material. Aluminum companies tie the cost of their raw materials, including power and alumina, into their prices. They peg finished prices to the LME ingot prices. In plastics, the prices of polymers are set by negotiations between suppliers and producers.