A relatively recent development in the steel industry is the introduction and proliferation of the Electric Arc Furnace (EAF). This method is particularly useful as it recycles scrap steel into new steel products. However, as the only input is low-quality scrap steel, minimills are unable to produce high value-added products. Substitutability is nonexistent, as the quality demands of higher value-added products are beyond the capabilities of the EAF producers.
Due to their limitations, EAF minimills have used the competitive advantages of their simpler and cheaper process to carve out a dominant market share of low quality steel products. Some examples of these products include rebar for construction and wire mesh for roads.
These products do not undergo any sort of gratuitous stress levels, so quality specifications are quite lax.
On the other hand, there are high-grade products that are held to very rigid performance standards by the consumer. Often these products make up the backbone of the most essential infrastructure, especially buildings and bridges, where structural flaws can have catastrophic results.
In essence, the market for steel can be separated into two separate markets; low-grade and high-grade products. Substitutability does not exist between these two markets, so it follows that the maximum market share that either of these producers can realistically reach is limited by the demands of industry at that particular time.