Low+demand,+supply+constraints+deepen+crisis+in+steel+sector+by+Ric

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=TITLE OF EXTRACT:= Low Demand, Supply Contraints, Deepen Crisis in Steel Sector [|http://business-standard.com/india/news/low-demand-supply-constraints-deepen-crisis-in-steel-sector/465192/]

=SOURCE:= Business Standard

=DATE EXTRACT WAS WRITTEN:= Feb. 20, 2012

=DATE CURRENT EVENT WAS WRITTEN:= Feb. 23

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= Demand for steel is decreasing due to the lower share of commodity sectors (primary and secondary sectors) in the GDP growth, and supply contraints for availability for green-field steel plants. Domestic steel industries is losing its traditional saying “availability of low cost and high quality iron ore." Basically, foreign steel industries are taking over; cost of steel is now high, and the quality of the iron, questionable.

=VOCABULARY TERMS AND DEFINITIONS:= > Law of supply: As the price of a good rises, the quantity supplied will normally rise. (The supply curve usually slopes upwards, ceteris paribus).
 * Demand: The willingness and ability of a consumer to purchase a quantity of a good or service at a certain price (in a given time period).
 * Supply: The willingness and ability of a producer to produce a quantity of a good or service at a certain price (in a given time period).
 * Law of demand: As the price of a good falls, the quantity demanded will normally increase. (The demand curve usually slopes downwards, ceteris paribus).
 * Ceteris paribus: An assumption that means ‘all other things being equal’.
 * Consumption: Measure of demand.

=DIAGRAMS:= = = =EVALUATION:= Demand shifts from D 1 to D 2. This may be caused by a change in any of the determinants of demand with the exception of a change in the price of the good itself, which would simply lead to a movement along the demand curve and an eventual return to the equilibrium price. When demand shifts, there will now be a supply of Q 1 at the equilibrium price, but a demand of only Q 3. Thus, there will be excess supply of Q 3 Q 1. This means that price will begin to fall. The process will continue until a new equilibrium is reached at P 2 and Q 2. Less steel will be demanded and supplied at a lower price.