Materials are physical substances used as inputs to production or manufacturing. Raw materials are first extracted or harvested from the earth and divided into a form that can be easily transported and stored, then processed to produce "semi-finished materials". These can be input into a new cycle of production and finishing processes to create "finished materials", ready for distribution and consumption.
An example of a raw material is cotton, which can be processed into thread, which can then be woven into cloth, a semi-finished material. Cutting and sewing the fabric turns it into a garment, which is a finished material. Steelmaking is another example—raw materials are mined, refined and processed into steel, a semi-finished material. Steel is then used as an input in many other industries to make finished products.