The iron and steel industry forms the backbone of the industrial development and its location is determined by various factors such as:

Raw material:

• Near iron ore mines: To reduce the transportation cost, Industries are located near mines with Iron ore, manganese, limestone, dolomite deposits. For example: Rourkela in India and Kuznetsk Basin in Western Siberia.
• Near coal Fields: Inefficiency of railway engines during the Industrial Revolution times made it cheaper to transport iron ore to coalfields not vice versa. For example: Appalachian-Pennsylvania in USA, Wuhan in China.

Transportation: Location near coastal regions reduces the cost of transporting raw material (usually imported) from port to factories. For example, Chicago in USA, Vishakapatnam in India.

Modern Technology: such as electric smelters, Open hearth system etc. have helped in shifting of steel industries away from coal and iron-ore reserves by making efficient use of scrap metal & also reducing energy requirement. For example, Bhushan steel plant in Ghaziabad.

Industrial Inertia: Industries continue to be located in the same area despite decline of locational advantages e.g. depletion of raw material. For example, Ruhr in Germany; Pittsburg in the USA.

Developmental policies of government for backward regions: For example, Bhilai and Salem plants in India.

Strategic reasons: After WWII, the USA and the USSR adopted a policy to not allow the concentration of the industry in one region. Thus, in the USA some plants were setup in the western region such as California and the USSR in the eastern side towards Pacific coast.

Over time, Iron and Steel Industry started shifting towards coastal regions such as steel industry in OsakaKobe, Japan, Steel plant at Vishakhapatnam, Ratnagiri, and the coastal cities of the USA such as Cleveland, Detroit and Chicago. The reasons are:

• Depleting coal resource in mainland changed economics of cost of transportation of raw material versus that of finished product.
• Near ports, steel can be exported and raw material can be imported with ease.