Global Steel Market Analysis
The global steel market is expected to witness rapid growth owing to the rising standard of living and strong demand from different sectors. Rapid industrialization and urbanization in the Asia Pacific and South American regions are expected to drive the overall iron and steel market.
Moreover, the infrastructure initiatives undertaken by governments in the developing economies is predicting strong growth for the steel market. The end-user industries such as construction and automotive are one of the major reasons for such predictions.
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Steel Market Analysis based on Different Sectors
Buildings and Infrastructure
This the most prominent area for the steel market as half of the steel produced across the world goes into infrastructure. The rise in the world population by 2.7 billion in the next 30 years (2050) accompanied by urbanization will need construction solutions that can enable energy-efficient and low-carbon-neutral buildings.
Transportation services form an integral part of the globalized economy. Over 15% of the total steel produced is used to meet transportation needs. Also, it essential for related infrastructures such as roads, bridges, and airports.
The use of conventional steel has taken a backseat as new vehicle designs are using Advanced High-Strength Steels (AHSS) to reduce vehicle weight. This will require the steel industry to come with innovations to meet the demands of the automotive sector.
Energy is critical for development and steel is essential for supplying the world with energy. Irrespective of the form of energy, steel is necessary for production, distribution and storage of energy. Also, steel has a major role to play in improving the efficiency of these energy resources.
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Key Steel Market Challenges
Despite playing a vital role in different industries and being economically important, the global steel market is looking ahead at the challenges that are just over the horizon. Steel manufacturers and builders will have to adapt themselves to new innovations due to the demand for durable, lightweight designs.
Slow Demand Growth in the Steel Market
Although the steel demand has increased by 2.1% in 2018, still the slowing global economy and uncertainty surrounding trade policies suggest a possible moderation in the steel market. The growth of the circular economy, together with changes in consumer preferences, is not a very positive sign for the global steel market.
Downward Venture Capital Spiral
Lighter and stronger steels reduce the mass of steel required in a given application, which reduces the relative value of steel. This is creating problems for producers as they fail to generate adequate returns on these steels. Moreover, this value consuming spiral is expected to the demand growth in the steel market till the time steel is priced by ton.
Disruption in Industry Scale Economies
The circular economy and climate change is leading to a proliferation of reduced-scale plants that are sized to match low-carbon production processes. In addition, the improvement in manufacturing technologies to produce high-cost alloys is creating further disruption in the global steel market.
What are the Latest Steel Market Trends?
Rise in the Utilization of Iron Scrap
Countries are expanding the utilization of scrap iron to decrease their carbon footprint. The reusing of scrap not only improves the business’ economic viability but also lessens the ecological impact by eliminating the requirement of iron ore extraction for steel generation.
This is forcing companies to focus on reusing scrap to reduce carbon dioxide, save energy and decrease air pollution. On average, for each tone of scrap steel almost 1.787 tons of carbon dioxide is saved. That’s why the use of iron scrap increasing and is driving the growth of the stainless steel market.
Steel is heavily utilized as a part of pre-engineered buildings (PEB) for structural framework. It ensures the safety of buildings in adverse ecological conditions. The PEB market is estimated to surpass almost USD 15 billion by 2020.
Moreover, the automotive, logistics and warehouse, and quick moving consumer products offer immense development chances to the worldwide PEB advertise. Many PEB producers have joint efforts with coordination organizations or built their own logistics capabilities showing a positive sign for the growth of the steel market.
Rationalization of Capacity
China owns the biggest excess steel capacity in the world and sets the tone for conditions in the industry worldwide. As per the Chinese government, the Chinese Steel Industry will be shifting towards a new financial model in the coming years to address excess steel capacity. Also, it aims to increase capacity utilization impacting the global steel market.