After the Second World War, the US steel industry continued its leadership position which it had acquired over the decades. There was hardly any import of steel as the steel firms in Germany and Japan were destroyed during the war. US Steel industry exported a significant amount of the steel produced. However, by the late 1950s, Japanese and European steel industries recovered from the war and started exporting to the US. While the domestic production of steel increased by 48% between 1950 and the end of the 20th century, imports grew by 37% during the same period. The dominance of the US Steel industry seemed to be over by 1970, and domestic players became increasingly dependant on cheap imports. During the same time, the development of electric furnace technology reduced the barriers to entry in the steel industry and the dominant position of the integrated steel players was challenged for the first time.
The structure of the US Steel industry has evolved from being oligopolistic in the 1960s and 70s to a globally competitive one in the late 1990s. In the 1970s, the industry was difficult to classify but it was not highly competitive. US Steel, Bethlehem Steel, Republic Steel, and National Steel, were the four largest firms. These firms had some degree of market power and some ability to use price as a competitive weapon. However, by late 1990s, competition in the steel industry had increased substantially. The competition was not only limited to domestic players but also cheap imports from foreign players.1 The main reason behind increasing imports of steel in to the US was the overcapacity in steel manufacturing in foreign countries. It has been reported that between 1998 and 2000, excess capacity2 in foreign steel manufacturing (NIS, EU, Japan, South Korea, Brazil) was more than twice the average domestic consumption of steel in the US during the same period. The US steel industry alleged that foreign governments and steel manufacturers did not show any interest in capacity reduction. Some analysts opined that the overcapacity in foreign markets put serious pressure on the US market as foreign players tried to offload their excess capacity there. However, according to some analysts, the US steel industry was in trouble not only because of excess capacity of foreign steel manufacturers but also because domestic manufacturers (who catered to more than 70% of the domestic market in 2000) had to pull back their capacity from 95% in 1999 to 65% in 2000 because of falling demand for domestic steel. As the steel companies had high overhead costs, operating at low capacity was unprofitable.
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