Steel

I got in the office this morning, and someone was talking about steel and the offer from Mittal Steel to take over Arcelor at a compensation of close to USD 25 billion. Steel, its something we take for granted, after all its all around us, why a normal person would value something like that. What is steel after all?

A metal alloy of mostly iron plus carbon, harder than pure iron but malleable when hot. Carbon acts as a hardening agent, preventing iron atoms, which are naturally arranged in a crystal lattice, from sliding past one another.Varying the amount of carbon and its distribution in the alloy controls qualities such as the hardness, elasticity, ductility, and tensile strength of the resulting steel. Steel with increased carbon content can be made harder and stronger than iron, but is also more brittle. Going by the clasical definition though, steel is an iron-carbon alloy with 2.1% off carbon by wieght. An alloy with more than 2.1% carbon are called cast iron. But lately, new classes of steels are being manufactured, ones in which carbon is undesirable.

The major raw materials for steel , like mentioned before, are Iron and Carbon. Iron is , like most other metals, found in the earths crust. Iron is always found in the crust with sulphur or oxygen.Iron is extracted from the ore, and comined with carbon which is generally the preffered chemical partner. From there on, the Iorn pelets are used and alloyed with different metals / chemicals to form different types off alloys, steel bieng the most important one.

Iorn and steel making have a very long history, close to some six thousand years. The first sign off using iron comes from egypt, where small items like the tips off wepons and ornuments were made using an iron-nickle alloy. Also in about 1000 BC, the uncontacted america was known to use metoric iron to make harpoons and other such wepons and were traded amongst the artic people.Ironicly, the ancient people used to call iron the ‘sky metal’ and cocidered suitible for royal ornuments.

Then came the steel age, between 3000 BC and 2000 BC, with a massive increase in the number off smelted iron objects. Iron started bieng used in ornamental wepons, jewelry, wepons , The early Hittites are known to have bartered iron for silver, at a rate of 40 times the iron's weigh, with Assyria. Because off the percived value, iron didn’t replace bronze as the chief metal used for wepon and tool making.

Many countries and civilisations started using iron, China and India included. But the most famous form of steel, Damascus Steel , that was developed around the ninth century by blacksmiths of the Abbasid caliphate. These steel blades were known for their flexibility and sharpness. Sadly, the secret of forging this kind of steel was lost, even in the Middle East, by around 1600. Steel making played a major role in the making of Europe and also facilitated the Industrial Age.

Englishmen, Sir Henry Bessemer (1813-1898) invented the first process for mass-producing steel inexpensively, essential to the development of skyscrapers. An American, William Kelly, had held a patent for "a system of air blowing the carbon out of pig iron" a method of steel production known as the pneumatic process of steelmaking. Air is blown through molten pig iron to oxidize and remove unwanted impurities. Bankruptcy forced Kelly to sell his patent to Bessemer, who had been working on a similar process for making steel. Bessemer patented "a decarbonization process, utilizing a blast of air" in 1855. Modern steel is made using technology based on Bessemer's process. Bessemer was knighted in 1879 for his contribution to science.

The "Bessemer Process" for mass-producing steel, was named after Bessemer.Some other methods off steel production include Crucible technique or puddling ,the original steel making technique, developed in India as wootz, used in the Middle East as Damascus steel and independently redeveloped in Sheffield by Benjamin Huntsman in 1740, and Pavel Anosov in Russia in 1837, Open Hearth Furnace , Basic Oxgen Steel making and the Electric Arc furnace.

In todays world, large companies control the steel markets globaly. The most notable of which are Mittal Steel, Arcelor, Nippon Steel , JFE Steel, TATA Steel, SAIL , Corus , Riva , Pohang Works and quite a few others. Most of these companies were running losses during the ressesion in the steel market during 1997 – 2001 , it was only after this period that steel prices started shooting up due to the increasing demand for steel in China and other developing nations. Increasing costs off production ensured a higher per tonne profit for the producers. Global consolidation is also expected to take place, with about 25 odd mergers and take overs in the iron and steel industry expected to take place by the end off 2007. The latest offer by Mittal Steel to take over Arcelor came as a rude shock to all industry observers.CFO of Mittal Steels , Aditya Mittal , who is also Head off Mergers and Acquisitions , is known to me dynamic and extreemy aggressive. There have been quite a few harsh words been spoken, and a war of words is going on, but like Chuck Norris said, Men are like steel: when they lose their temper, they lose their worth. Most steel firms fear hostile offers from other competitors. Steel prices are meant to be on the rise for quite sometime to come, but a slight correction is expected after consolidation takes place, Those steel prices will, however, still be relatively high by past standards.