Mr. Ross sold his International Steel Group, a collection of once-bankrupt American steel mills acquired over the past three years, to steel tycoon Lakshmi Mittal for $4.5-billion, essentially doubling his initial investment. The Mittal group had been assembling its own stable of assets in Europe and Asia.

A specialist in turning around distressed companies, Mr. Ross told Fortune magazine this week that the ISG/Mittal merger is a template for the global industry. And, with his private equity firm, WL Ross & Co., getting $2.25-billion in the merged company's stock, he intends to be involved over the long haul.

"I believe this company will create a sea change in the international steel scene, much like the one we created in the domestic," Mr. Ross told Fortune. "We should be able to drive costs down further and help foster the consolidation I think is inevitable in the global steel industry."

Steel analyst John Anton of Boston-based Global Insight said the most critical challenge for the major companies is access to iron ore, which is controlled by three conglomerates. As demand for steel soars from the newly industrializing powerhouses of China and India, competition for those resources could be fierce.

Despite its recent boom, China remains far behind developed countries in terms of steel usage per capita. For example, the United States uses 400 kilograms of steel per capita each year, while China consumes just 160 kilograms. That's double what it did eight years ago but still only 40 per cent of U.S. consumption. India, too, is only beginning to catch up.

Even if China reached only 80 per cent of U.S. steel consumption in the next 20 years, that would add 600 million tonnes of demand to the world market -- nearly equivalent to the total demand that existed 10 years ago. Add an aggressively industrializing India to the equation, and the competition for raw material will explode.

A profound change in the way that national governments regard steel making, Mr. Anton says, should allow for more international consolidation. Until recently, governments regarded their national steel-making capacity as strategic military assets that had to be propped up, protected and, in many European countries, even owned by the state.

"It was assumed that all great countries had a steel industry, and an auto industry, and an airline," he said. But with privatization and globalization, barriers are falling away. Now, governments protect their steel companies more from fear of losing manufacturing jobs than out of strategic consideration.

In addition to Mittal, the top global steel companies include Arcelor SA, a French-Spanish company that is the world's leading producer at 43 million tonnes; Japan's Nippon Steel Corp.; South Korea's Posco; China's Shanghai Baosteel Group Corp. and United States Steel Corp.

Where does that leave Canada's players? Honing their strategies to survive in a tough international marketplace.

Stelco's neighbour and hometown rival Dofasco Inc. has become one of North America's most profitable steel makers by focusing on value-added, high-quality steel, such as hot-dip galvanized sheet for car body panels and other applications for which auto makers are willing to pay a premium.

Algoma, which emerged from bankruptcy protection less than three years ago, now claims to be one of the continent's most profitable companies in terms of net income per tonne of steel produced. Its third-quarter results, issued last month, showed revenue more than doubled from the same period in 2003 to $536-million (Canadian), while profit soared to $122-million from a $22-million loss in the third quarter of 2003.

Mr. Turcotte said the company is not adopting a "poison pill" that would prevent a takeover, but wants to ensure that it is not the target of a creeping acquisition that would leave most shareholders out in the cold. Although the coming upheaval in the global industry will leave far fewer major players, the Algoma chief believes smaller companies should be able to find profitable niches.

"There's always room in any market for the small, nimble, more entrepreneurial operations that have high-quality, low-cost, excellent service," he says. "We stay very close to the market and can serve the market like no massive company can."

Perhaps. But at the same time, Mr. Turcotte is looking to his own global alliances to shore up market power. Algoma has entered into an arrangement with Argentina's Exiros SA that helps companies manage their supply chain through joint global procurement.

Despite prevailing optimism, steel executives are wary about projections that assume current growth rates will continue indefinitely. With one eye fixed on global consolidation, companies need to maintain discipline. Otherwise, they may revisit steel's ugly past, when inefficient firms were forced to either lock their gates or be taken over -- inflicting pain on employees, creditors and shareholders alike.