Steel Industry Materials Market size is forecast to reach $850 billion by 2025, after growing at a CAGR of 1.69% during 2020-2025, owing to the rising usage of steel industry materials in various end-use industries such as automotive, aerospace, building & construction, and more due to the extensive set of characteristics of steel such as flexible design, cost-efficient, affordable repairs, high tensile strength, stiffness, fracture toughness, abrasion resistance, lightweight, puncture resistance and durability. Also, the steel industry uses advanced technologies and techniques to increase production yield rates, reduce its energy requirements, and facilitate the use of by-products, which is anticipated to drive the steel industry materials market substantially during the forecast period.
Key Takeaways
- Asia Pacific dominates the steel industry materials market, owing to the increased construction activities initiatives such as 100 smart cities and Housing for all by 2022 and various government initiatives in the sector such as the introduction of Steel Scrap Recycling Policy aimed to reduce import and imposition of 30 percent on the export duty for iron ore to ensure supply to the domestic steel industry.
- According to the National Renewable Energy Laboratory (NREL), wind power is the fastest-growing energy technology in the world today. Since wind power can reduce electricity and fossil fuel consumption. Steel is the main material used for manufacturing the onshore and off-shore wind turbines. Almost every component of a wind turbine is made of steel, from the foundation to the tower, gears, and casings as steel provide the strength for taller, more efficient wind turbines. The increasing wind power sector will further increase the steel industry materials market during the forecast period.
- In India, the National Steel Policy, 2017, has envisaged 300 million tonnes of production capacity by 2030-31. The per capita utilization of steel has increased from 57.6 kg to 74.1 kg during the last five years. With the increasing utilization of steel, the demand for steel materials will also increase, which will boost the steel industry materials market growth during the forecast period.
- The raw materials of steel such as Iron ore and metallurgical coal quality have shown a significant deterioration in quality in recent times. This has put huge pressure on the efficiency and the environmental performance of the global steel industry’s raw materials processing operations, which may restrain the steel industry materials market growth during the forecast period.
- Due to the COVID-19 pandemic, most of the countries have gone under lockdown, due to which operations of various industries such as automotive and aerospace have been negatively affected, which is hampering the steel industry market growth.
By Type – Segment Analysis
The monolithic refractory form segment held the largest share in the steel industry materials market in 2019, owing to the progressively increased share of the world’s gross monolithic form refractory production. The market share of monolithic refractories in the steel industries has increased over the last 20 years and will continue to do so. The monolithic refractories have many industrial applications across the non-ferrous metallurgical, steel, cement, petrochemical, and waste disposal industries. They are quick to install which decreases the downtime of a particular application and decreases the manpower needed in their installation. The extensive characteristics of monolithic refractory such as chemical inertness, thermal shock resistance at high temperatures, abrasion resistance, and mechanical integrity, are anticipated to boost the demand for monolithic refractory form during the forecast period.
By Application – Segment Analysis
The building and construction application held the largest share in the steel industry materials market in 2019 and is growing at a CAGR of 4.3%. Due to the increasing population and increasing per capita income of individuals, the need for buildings and infrastructure is growing worldwide at a lucrative rate. According to the US Census Bureau, in February 2020 total construction of the United State was at a seasonally adjusted annual rate of 1,366,697 which is 6.0 percent above the February 2019 rate of 1,288,951. Steel manufacturers around the world are increasingly providing construction solutions that enable energy-efficient and low-carbon neutral buildings. For example in the HAMK Sheet Metal Centre – near Zero Energy Building (nZEB), steel solutions reduced the cost of electricity and district heating to €5,200 per annum from €12,400 (reference building). Also, steel is affordable, readily available, and safer, its intrinsic properties, such as strength, versatility, durability, and 100% recyclability allow for improved environmental performance across the entire life cycle of buildings. Moreover, there is an increasing demand for steel for construction applications such as offshore oil rigs, bridges, thermal & hydroelectric plants, civil engineering machines, rail carriages, pressure vessels, nuclear, and interior ducting. The increasing demand for steel materials for various building and construction activities is anticipated to propel the steel industry materials market during the forecast period.
By Geography – Segment Analysis
Asia Pacific region held the largest share in the steel industry materials market in 2019 up to 38%, owing to the growing infrastructural activities such as building, roads, bridges and dams constructions in the countries such as India, China, and Singapore due to economic reforms, infrastructural development, and rising per capita income of the individuals. These infrastructural activities require high strength steel for increased tensile strength and stiffness during their construction. Also, the population growth is resulting in the need for more residential and commercial sectors. The Indian government has initiated projects, such as ‘100 smart cities’ and ‘Housing for All by 2022,’ which are expected to drive the Indian residential construction market over the forecast period. According to the Australian trade and investment commission, the Singapore government spends at least S$2 billion on public infrastructure each month. Also, the government projected Singapore’s average construction demand for 2018 and 2019 between S$26 billion to S$35 billion. According to the International Trade Administration (ITA), the construction value of China in 2018 was USD 893.58 and it is forecasted to reach USD 968.06 by 2019. Also, the Chinese construction industry is forecasted to grow at an annual average of 5% in real terms between 2019 and 2023. Government of India established the National Steel Policy (NSP) 2017, to create a globally competitive steel industry in India. NSP 2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kg per capita steel consumption by 2030-31. Such investments and initiatives by the government in the APAC region are anticipated to drive the steel industry materials market in the Asia Pacific during the forecast period.
Drivers – Steel Industry Materials Market
- Rising Demand For Steel Materials
The demand for steel materials is substantially increasing due to which steel industries are showing a significant increase in their production rate. According to the World Steel Association, the steel output increased by 3.8 percent to 1,690 million tonnes and steel consumption increased by 5.1 percent to 1,693 million tonnes globally. The steel industry is expanding at a lucrative rate in Asia Pacific regions such as in India. India is the world’s second-largest steel producer, and its steel production capacity has expanded from 106.5 million tonnes in 2018 to 137.975 million tonnes in 2019. The growth in the Indian steel industry has been driven by the domestic availability of raw materials such as iron ore and cost-effective labor in the country. The World Steel Association estimated that the global steel industry uses about 2 billion tonnes of iron ore, 1 billion tonnes of metallurgical coal, and 575 million tonnes of recycled steel to produce about 1.7 billion tonnes of crude steel. According to the United Nation’s COMTRADE Statistics Database, global exports of iron ore in 2017 amounted to around 1.5 billion tonnes, representing the second-largest commodity trade volume globally, behind global crude oil exports. The steel industry is also showing a significant increase in the North American region such as in the United States. During the North American Free Trade Agreement (NAFTA), the U.S. monthly steel consumption indicator increased by 3.7% from January to August 2018, year-on-year. Steel consumption also increased in Argentina (1%) and Ecuador (4%) during January-November 2018. The rising demand for steel and steel-related products acts as a driver for the steel industry materials market during the forecast period.
- Increasing Automotive Production
Advanced high-strength steels (AHSS) are being widely used for nearly every new vehicle design. AHSS formulate up as much as 60% of today’s vehicle body structures to make the vehicle lighter, to optimize vehicle designs that enhance safety, and to improve fuel efficiency. Steels are being extensively used in the automotive industries for manufacturing car components such as panels, doors, trunk closure, wheels, fuel tanks, steering, braking system, and more, which is expected to increase the demand for steel during the forecast period. According to the International Trade Administration (ITA), China is the world’s largest vehicle market and the Chinese government is expecting that automobile production will reach 30 million units by 2020 and 35 million by 2025. According to the China Association of Automobile Manufacturers, in 2018 over 27 million vehicles were sold. In 2017, according to the International Trade Administration (ITA), 1.2 million new passenger cars, SUVs, and commercial vehicles were sold in the Australian market, an increase of 0.9% from 2016. Also, according to OICA, the production of light commercial vehicles has increased by 10.2 % in 2018 in the APAC region. Thus, increasing automation production will require more steel for manufacturing various automotive parts, which will act as a driver for the steel industry materials market during the forecast period.
Challenges – Steel Industry Materials Market
- Volatility in Raw Materials Price
Raw materials of steel have always shown significant volatility in their prices that reflect temporary shortage or surplus conditions in the markets. For example, in 2017, coking coal prices increased in April when the tropical cyclone Debbie hit Queensland in Australia, damaging the major railway carrying coal to ports; and then it increased again in December when prices went over USD 240 per tonne due to delays in shipments from Dalrymple Bay, a coal terminal in Australia. These increases were also triggered by the limitations of coking coal production in China. Iron ore prices stabilized at around USD 72 per tonne as of 31 December 2018, up from USD 64 in June 2018 but well below their high of USD 83 per tonne in March 2017. Coking coal prices have stabilized at USD 196 per tonne as of 31 December 2018, after a volatile 2016-2017 period. Scrap prices decreased steadily during 2018, reversing most of their 2017 gains, falling to USD 264 per tonne (FOB Rotterdam) as of 31 December 2018. Thus the volatility in the raw materials of steel due to various factors may hinder the steel industry materials market growth during the forecast period.
- Covid-19 Impact On The Steel Industry Materials Market
The COVID-19 pandemic outbreak has impacted the imports and exports of steel raw materials such as iron ore, coking coal, ferrous scrap, nickel, and others as Governments of the leading producing countries have imposed export restrictions which are significantly disrupting with the supplies. According to the Ministry of Steel, the Indian steel industry witnessed a bleak situation. The steel production reduced by 23% over February, export-import drastically reduced and even consumption of steel reduced by 6.6%. Also, since the industries which require steel for the production process such as automotive and construction are shut down, due to which the demand for steel has disruptively fallen, which is affecting the steel industry materials market negatively.
Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the steel industry materials market. In 2019, the market of steel industry materials has been consolidated by the top five players accounting for xx% of the share. Major players in the steel industry materials market are Evraz Dmz Petrovskogo, Metinvest mining & metals group of companies, Casting, Byelorussian Steel Works, and Tata Steel Group.
Acquisitions/Technology Launches
- In November 2018, Evraz Dmz Petrovskogo started upgrading the Tashtagol ore mine. The project will enhance the company's self-sufficiency in raw materials, increasing ore production at the mine from 2.2 mtpa to 3.25 mtpa. The total investment in the project is expected to be approximately RUB 6.8 billion.
- In September 2019, the Metinvest mining & metals group of companies increased its steel production by 3% i.e. 7.6 million tons y-o-y. The Group’s steel production grew mainly due to an increase in its Ilyich Steel output production of 321 thousand tons due to the commissioning of its new continuous casting machine.
