Published on: December 12, 2019
Steel refers to an alloy comprised of iron and carbon, and other elements. Steel finds high applications in industries such as construction, manufacturing, automotive, and defense, owing to its low cost and high tensile strength. The global steel market includes producers of iron and steel and related products, including metallurgical (coking) coal mining used for steel production.
Carbon steel dominates the global steel market by type, owing to its high application in the construction industry. APAC dominates the global steel market by region. Factors such as the growth in a number of infrastructural projects in countries such as China and India and the high demand for steel from manufacturing industries are expected to drive market growth in the region during the forecast period. Additionally, trends such as the growing prominence of 3D printing in steel casting and forging are expected to characterize the growth of the global steel market during the forecast period.
Many factors are expected to influence growth in the global steel market during the forecast period. Our analysis identifies the following factors to be driving the growth of the global steel market:
Aerospace and defence are the prominent end-user industries that use considerable amounts of steel. Several major aircraft manufacturers are expected to increase their production capacities in the coming years. The prevailing low crude oil prices are encouraging an increase in domestic air travel and airline operators are looking to expand their fleet to leverage this increase in passenger traffic and maximize their revenues. Companies that manufacture aircraft use specialized high-strength and lightweight alloys to manufacture aircraft parts and bodies. Sheet metal processing machines such as laser cutting machines are deployed in these industries to cut such parts with high precision and efficiency.
The investment in railway line projects and the expansion of railway networks around the world will be the primary demand driver for steel products during the forecast period. Several national and international railway projects are currently under planning, development, or construction, especially in the APAC and European regions. Thus, the increasing demand for steel products in railway infrastructure would drive the growth of the steel industry.
The number of new constructions in several emerging and developed countries is on the rise after a period of depression in the global construction market. The demand for steel is likely to rise, especially in APAC and EMEA regions. The countries in these regions, such as India, China, Saudi Arabia, United Arab Emirates (UAE), Malaysia and Indonesia, are witnessing an increase in income levels and rapid urbanization, which is shifting a considerable share of the population towards cities and towns. The transition of the population from rural to urban areas will require significant investments, for developing new public infrastructure, which is expected to present a major opportunity for growth of the steel industry. Moreover, governments in these countries are also taking various initiatives to ensure the fast-paced development of their infrastructure.
Meanwhile, the vendors operating in the market face numerous challenges in increasing their sales and improving profitability. Some of those challenges are:
The decline in mining activities and investments and fewer mining developments have decelerated the growth of the mining industry. China devalued its currency to reduce imports into the country, which has resulted in the closure of mines in foreign countries that were dependent on China to buy their minerals. The excess supply of commodities has resulted in a decline in the prices of minerals. Mining companies have also cut down on capital investments in new mines. Many debt-ridden miners have started consolidating and reducing their capacity in the hopes of cutting costs and regaining profitability. The performance of the mining industry is expected to continue to decline during the next few years, which will adversely affect the demand for steel and the growth of the steel industry.
Metals such as bronze, brass, aluminum, silver, and lead can be used in casting processes as an alternative to steel. One of the commonly used options is aluminum. The use of aluminum is gaining popularity in the automobile industry as it exhibits low specific gravity, which plays a critical role in reducing the average weight of automobiles. Most automobile manufacturers such as Ford Motor Co., Daimler AG, and AUDI AG, are inclined toward the replacement of steel with aluminum in automotive components such as chassis and extruded aluminum tubing in heat exchangers. The increasing production yield of aluminum will drive the demand for alternative metals in casting processes, which will have an adverse impact on the growth of the global steel casting market during the forecast period.
Pig iron is used as a raw material for steel production. Pig iron, also called crude iron, is used to manufacture pure iron by the smelting process. In 2018, pig iron prices saw rapid fluctuations due to changing iron ore prices. Such fluctuations in iron ore prices will directly impact the prices of steel during the forecast period. The increased price is attributed to the high costs of raw materials and secondary materials, such as supplies, electricity, and fuel. Other manufacturers are also planning to increase steel prices due to these factors, which will hinder the growth of the global steel casting market during the forecast period.
The global steel market has been segmented into the following:
The global steel market is moderately concentrated with the presence of a limited number of international and regional players. We provide a detailed analysis of around 25 vendors operating in the global steel market, including some of the prominent vendors such as ArcelorMittal SA, Nippon Steel Corp., Hebei Iron and Steel Group, China Baowu Steel Group Corp. Ltd., and Wuhan Iron and Steel Corp. Mergers and acquisitions, and investments in facility upgrades are among the strategies adopted by manufacturers in the global steel market.
Backed with competitive intelligence and benchmarking, our global steel market research is designed to provide entry support, customer and M&A assessment, as well as go-to-market strategy support.
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