EXCESS CAPACITY AND GOVERNMENT INTERVENTION - STRUCTURAL ADJUSTMENT IN THE STEEL-INDUSTRY

Four critical remarks to Prof. Rahmeyer's paper (1992) on adaption problems of the steel industry are presented. First it is shown that steel demand fluctuates much stronger than GDP and this causes severe forecasting problems for the steel companies. Second, these forecasting problems are normally by far more responsible for the creation of overcapacity than market phase (product cycle) considerations. The third point of criticism is on neglecting market structure consequences of the rise of steel mini mills. Fourth, Rahmeyer seems to overrate the influence of cartelisation on steel prices for the steel companies.