The economic impact of the global steel industry
Traditionally, the economic impact of an industry is measured by its contribution to GDP (gross domestic product), that is, the gross value added of the industry - the difference between the cost of production and intermediate costs. Another important metric is the number of people working in the industry. These metrics help describe the direct impact. The iron and steel industry has a gross value added of US $ 500 billion, 0.7 percent of global GDP, and employs just over 6 million people.
But the true magnitude of the impact of the metallurgical industry on society and the economy will be incomplete if you do not take into account the impact that it has in its value chain from both suppliers and end users. It is enormous when you consider how important steel is as a material for many industries. To assess the economic impact of the steel industry on the global economy, Worldsteel commissioned a study from Oxford Economics. The summary of the report can be downloaded here [attachment = 8: oe_executive_summary.pdf].
The impact of the supply chain is called “indirect impact”. In the case of suppliers, this refers to the impact of the metallurgical industry on the economy due to the procurement of resources not only from raw materials, but also from industrial goods, energy and services. Downstream, a wide range of steel sectors such as construction, automotive, engineering, transportation, energy and others rely on steel for their manufacturing activities.
There are already several studies that assess the impact of different sectors of the economy on a particular national or regional economy, such as the recently published report of the American Iron and Steel Institute (AISI) for the US and EUROFER for Europe. A general background approach to such an assessment is to use I /O tables that provide detailed information on interactions with the relevant sectors. There are some differences in the methodology used, which are mainly related to the definition of the metallurgical industry and the way of handling inter-regional connections.
Worldsteel research differs from existing national research by taking a global approach. Trade and impact are not limited to national boundaries and take into account global supply chains and steel sectors. This underlines the complexity of the role that the steel industry plays in the global economy.
The steel industry has a combined impact of $ 2.9 trillion in value added and 96 million jobs worldwide.