Like shopkeepers fearing the approach of a mob of hooligans, the world’s steelmakers are bringing down the shutters with a resounding crash. The scale of ArcelorMittal’s planned cutback, up to 35 per cent for the third quarter, is astonishing. But the speed and severity of the downturn among steel consumers is truly frightening. Since August, the price of steel billets traded on the London Metal Exchange has fallen from $1,100 a tonne to less than $300.

Violent price swings are nothing new in steel, a commodity that follows the ups and downs of the construction sector. What is novel is the response from steelmakers, which has been fast and furious. It shows a degree of confidence and self-reliance that is encouraging in an industry once known for its dependence on state handouts and tariff barriers to solve problems of overcapacity and production.

We may, in the end, see some of the latter reemerge over the next 12 months if this downturn proves to be severe. Americans have just elected a President and a legislature that are likely to be more interventionist and protectionist. Nevertheless, there is no doubt that the industrial landscape has changed dramatically compared with previous recessions.

ArcelorMittal is the product of an extraordinary decade in which rusting mills were bought, sold, closed and reborn. From the shores of Lake Erie to Romania on the Black Sea, steel plants were bought out of insolvency and restored to life. This process of near-death and resurrection has made steel production much more efficient.

Emerging market producers with access to ore and cheap power bought companies with access to markets in Europe and America. Steel is now a bigger business, one that is international and more able to fight its corner with suppliers, such as iron ore producers and with customers, such as the motor manufacturers.

The question lurking in the background is whether this downturn will expose further weakness in heavy industry and generate more mergers. Motown in America is in a state of living death and consolidation among the car manufacturers is almost certain. There is weakness in the petrochemical sector. As we reported last week, private investors, such as Ineos and Lyondell Basell, have built chemical empires financed with debt at the top of the business cycle. The recent coincidence of tumbling commodity chemical prices and the credit crunch is now taking its toll on some of the more aggressive dealmakers.

There will be casualties over the next year in the industrial sector but that will afford opportunties to companies that stood out of the dealmaking frenzy and kept their powder dry.

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