High Strength Steel Market Size Forecast to Reach Around $47 Billion by 2025

High Strength Steel Market size is forecast to reach around $47 billion by 2025, after growing at a CAGR of 8% during 2020-2025. High strength steel is a type of steel that provide better mechanical properties and greater resistance to corrosion than other carbon steels. The ability to undergo plastic deformation without being damaged and ease in weld ability are the major factors driving the growth of high strength steel market. Surging demand of high strength low alloy steel (HSLA) from automotive industry for manufacturing vehicle body frame is boosting the growth of market. The growth in building and construction sector in emerging nation is also driving the market growth.  As high strength steel uses in building and construction activities offer varies benefits like ability to withstand shock and vibrations and has high impact strength. However, increasing environmental concerns due to the release of carbon dioxide during the production of high strength steel is restraining the growth of market.

Key Takeaways

  • The U.S. Commerce Department has imposed duties of up to 141% on Chinese structural steel and up to 31% on Mexican structural steel. Thus, trade war between the U.S and China has impacted the growth of high strength steel market.
  • Government policies such as National Steel Policy 2017 (NSP 2017) is likely to aid the growth of high strength steel market.
  • China has shown significant growth in the high strength steel market. According to International Trade Association (ITA), China exported 62.0 million metric tons of high strength steel which was about 15 percent of all steel exported globally in 2019.

Process- Segment Analysis

The hot rolling process holds the largest share of more than 50% in the high strength steel market in 2019. The hot rolling process is preferred over cold working as they require less energy and are cheaper. This rolling process takes place above the recrystallization temperature thus making the steel easier to bend and shape. Because hot rolled steel is allowed to cool at room temperature, it’s free from internal stresses that may arise from quenching or work-hardening processes. Besides, hot rolled steel is less suitable for precision applications owing to the need for the cold working process. In addition, precipitation hardening is used to increase the yield strength of high strength steel.

Grade- Segment Analysis

Based on the grade, 690 MPa is the fastest-growing segment with a CAGR of around 9.5% in the high strength steel market during the forecast period. High strength steel with the minimum yield strength of 690 MPa enables to save weight in the final structure. Furthermore, due to very low sulphur and phosphorus contents, 690 MPa grade has easy forming and weldability properties making is suitable for use in the automotive industry for the construction of machine frames, LPG vessel, penstocks, and offshore cranes, etc.

Type – Segment Analysis

High strength low alloy (HSLA) steel segment holds the largest share of more than 25% in the high strength steel market in 2019 owing to surging demand of high strength low alloy steel from automotive sector. High strength low alloy steel reduces the overall weight of vehicles which in turn increases the engine efficiency and reduces the greenhouse gas (GHG) emissions. Growing demand of electric and hybrid vehicles is escalating the use of high strength low alloy steel. According to International Energy Agency (IEA), global stock of electric passenger car increased by 63% and reached 5 million in 2018, which in turn boosted the growth of high strength steel market. Furthermore, department of heavy industries had launched Faster Adoption and Manufacturing of (Hybrid &) Electric vehicle (FAME India) scheme which further aids the growth of high strength steel market.

End-Use – Segment Analysis

Based on the end use, the building and construction segment holds the largest share of more than 30% in the high strength steel in 2019. High strength steels have greater strength to weight ratio and are resistant to corrosion and abrasion. Because of its ability to withstand extreme load without being deformed, they are extensively used in beams and columns to provide structural support to the buildings.  Increasing construction activities around the world is augmenting the growth of market. Institution of Civil Engineers (ICE) forecasted that construction output will grow by 85% to $15.5 trillion worldwide by 2030, and three countries China, US and India will lead the way and account for 57% of all global growth.

COVID-19 proved to be a nightmare for the high strength steel market. The outbreak of coronavirus has disrupted the supply chain and postponed the deliveries of steel and other raw materials from yards, due to lockdown and shortages of staff. Industries are shuttered all around the world. Decrease in purchasing capital of people has a direct impact on the automotive, construction and aviation industries, which in turn lowered the demand of high strength steel and hampered the growth of market. According to the Society of India Automobile Manufacturers (SIAM), passenger vehicle sales declined by 51% to 143,014 units in March 2020 whereas the sales of commercial vehicles crashed 88% to 13,027 units.

Also International Air Transport Association (IATA) has estimated that global airline passenger revenue will drop by $314 billion in 2020, a 55% decline compared to 2019.

Geography – Segment Analysis

Asia Pacific dominated the high strength steel market with a share of more than 35% in 2019 followed by North America and Europe. The rapid industrial expansion and exponentially growing population is driving the growth of high steel market in APAC region. Additionally, surging construction activities in emerging country like China and India further boosts the growth of high strength steel market in APAC region. According to Indian Brand Equity Foundation (IBEF), India’s steel production capacity rose to 138 million tones in FY19 from 106.5 MT in 2018. The gross value added (GVA) by the construction sector increased from $183.5 billion in 2018-19 to $192 billion in 2019-20 in India. Additionally, rise in demand of electric vehicles has also fueled the growth of high strength steel market. According to the International Energy Agency, China’s electric vehicle demand rose by 6% in 2018 with approximately 45% of global electric cars accounting for 2.3 million.

Drivers – High Strength Steel Market

  • Government policies and investments on infrastructures

Government’s focus on reforming and construction of infrastructures such as dams, highways and bridges are driving the growth of high strength steel market. For instance, the New Steel Policy 2017, which is an effort of Indian government to steer the steel industry to achieve 300MT of steel-making capacity by 2030 is likely to aid the growth of market. Moreover, the Smart City Mission and Indira Awaas Yojana which aims to bring the most innovative construction technologies to India through a competitive platform also boosts the high strength steel market. The budget allocated for the Smart Cities Mission in the Union Budget 2018-19 was US$ 29.2 Bn. In addition, British government’s ENABLE Build Programme launched in 2019, provide financial support to the smaller house builders so that they can contribute to the infrastructure development of the nation. Furthermore, the projects such as California High Speed Rail and Boston Harbor Dredging Project also contributes to the growth of high strength steel market.

  • Growing demand from Aviation sector

High strength steels not only provide strength and durability to aircrafts but also reduces its overall weight which in turn increases the performance of engine. High strength steels are widely used for critical parts such as landing gear components, control surface hinges, and helicopter transmissions. According to National Investment Promotion & Facilitation Agency, India is the fastest-growing aviation market and is expected to cater to 520 million passengers by 2037. Expansion of aviation industries boosts the demand of high strength steel for component manufacturing. In 2019, Air Bus anticipated that air traffic will grow at 4.3% annually, requiring some 39,200 new passenger and dedicated freighter aircraft over the next 20 years, which may augment the growth of high strength steel market. Construction of Beijing Daxing International Airport which is the largest airport in China also augments the growth of high strength steel market.

Challenges – High Strength Steel Market

  • High Carbon Dioxide Emissions and Volatility in prices of raw material

High amount of carbon dioxide is emitted during the production of high strength steel. The steel industry generates between 7% and 9% of direct emissions from the use of fossil fuel globally. Increasing global concerns due the harmful effect of carbon dioxide on ecosystem is restraining the growth of high strength steel market. According to World Steel Association, on an average 1.85 tons of CO2 were emitted for every ton of steel produced in 2018. Additionally, strong demand from China have driven iron ore prices which in turn hampered the growth of the market. For instance, in 2017, in China, the iron ore price for 62% Fe CFR grew at the beginning of the year and reached around $90/MT by mid-March. Besides, in March 2018, Supreme Court banned all the mining activities in Goa (India), involving iron ore extraction. Thus, ban of mining operations also affects the growth of high strength steel market.

Market Landscape

Technology launches, acquisitions and R&D activities are key strategies adopted by players in the high strength steel market report. In 2019, the market of high strength steel has been consolidated by the top 10 companies accounting for xx% of the share. Major players in the high strength steel market industry outlook are, Voestalpine AG, POSCO Group, ArcelorMittal S.A., Nippon Steel Corporation (Japan), Tata Steel Ltd., Steel Authority of India Limited, United States Steel Corporation, Baosteel Group Corporation, Severstal JSC, ThyssenKrupp AG, JFE Steel Corporation, Nucor Corporation, and JSW Steel  Ltd., among others.

 Acquisitions/Technology Launches

  • In November 2018, Tata Steel expanded Kalinganagar’s crude steel capacity to 8mn tones/year from 3mn tones/year in late-2018. This addition in the capacity of the plant enhanced the steel production of the company.
  • In August 2016, AK Steel Corporation has launched Nexmet 440EX high-strength steel, which provides improved ductility, strength, and formability for automotive application. Nexmet 440EX is engineered for automotive light-weighting in all types of structural and exterior parts.