Making Steel in the 2020’s
Dr Khalil Khan
11 September 2020
Both the steel industry and steel as a product play an important role as a stimulus to national development, and an economy booster to the industrial development of a country. The industry serves as the backbone of industrialisation of our country and many others.
Firstly, let us consider the ongoing trends in steel, these include urbanisation, motorisation (in this case it’s the car ownership of vehicles per 1000 people), globalisation and industrialisation.
Urbanisation is growth of the population, expansion of cities, bridges etc. and the construction industry accounts for a large share of the global steel economy.
Next, motorisation, the automotive industry accounts for 12-15% of global steel demand. The automotive industry has demand for auto sheet and wire rod, used for exhaust pipes and inner and outer automobile panels.
A component of globalisation is the shipping industry, particularly shipbuilding. The shipbuilding industry, as well as other transportation and the energy industries account for 12% of global steel demand. Whilst these industries consume only a few types of steel product, they do so in large amounts.
Another large steel-consuming industry is the machinery industry, and the metal products/domestic appliance industry, which consume about 15% and 14% of global steel, respectively.
The steel industry has been sustained by these four main drivers or the ongoing trends. Megatrends identified include Global Climate Action and the Fourth Industrial Revolution both of which will affect the future of the steel industry.
At the 2015 United Nations Climate Change Conference in Paris all 196 parties agreed to adopt the Paris Agreement. It created a legally binding framework for coordinated international efforts to tackle climate change, and since the global climate action has accelerated. To meet the goals set by the Paris agreement, global greenhouse gas emissions are to be reduced to 55% below 2010 levels by 2050. Climate change action will have a long-term impact on the steel industry in terms of demand, products and production process.
The Fourth Industrial Revolution is based on key technologies such as IoT, big data and AI. With the progression of these technologies, companies have the opportunity to evolve themselves into smart enterprises, pursuing smart factories and smart management.
As a result, new industries and services such as smart cars, smart energy, and smart buildings will all gain ground. This will bring about profound changes in the steel industry by both direct and indirect means: an indirect impact on steel demand through steel-consuming industries and a direct impact on steelmaking process. For smart factories, production costs will be reduced due to increased work efficiency, reduced waste, and swifter decision-making.
Changes in the mentioned trends will influence both product/investment demand and steel content, the ‘steel intensity’ in respective industries. The ongoing and megatrends will in combination change the landscape of steel-consuming industries and ultimately impact the entire steel ecosystem.
Read more here.
This story is adapted from material from Asian Steel Watch, with editorial changes made by the METaL Project.