LONDON--(BUSINESS WIRE)--Technavio’s latest report on the global stainless steel market provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
Chandrakumar Badala Jaganathan, a lead analyst from Technavio, specializing in research on metals and minerals sector, says, “The global steel market is driven by the automotive, infrastructure and construction, mechanical machinery, metal products, electrical equipment, and domestic appliances industries. Of these, the infrastructure and construction industry consumes more than 51.53% of the global steel production. The automotive and mechanical machinery industries are the other two major consumers of steel.”
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The top three emerging trends driving the global stainless steel market according to Technavio chemicals and materials research analysts are:
- Rationalization of capacity
- Declining iron ore price: Demand factor for scrap
- Pre-engineered buildings: A new wave in the market
Rationalization of capacity
China has the largest excess steel capacity in the world. According to the draft released by the Chinese government, Steel Industry Adjustment Policy (2015 Revision), the Chinese steel industry will be moved toward a new economic model in order to deal with the excess steel capacity in China. It also aims at achieving 80% capacity utilization by 2017. To reach this level, Chinese steel sector will need a closure of 112.5MT of capacity per year keeping the production same. Currently, the steel capacity utilization is below 70% in China.
In EU, there was a temporary closure of capacity after the global financial crisis. However, only 5% capacity has been permanently closed since 2009. According to OECD, there will be a decline of around 2MT of capacity from 2013 to 2017 in the region. Steel plants in Europe are running at lower capacity utilization. TATA Steel is planning to close its loss-making steel plants in Europe. The European government is planning to impose stricter anti-dumping measures, especially against Russian and Chinese steel players.
Declining iron ore price: Demand factor for scrap
Countries like India and China are increasing the use of scrap iron in order to reduce their carbon footprint. The recycling of scrap improves the industry's economic viability and also reduces the environmental impact by eliminating the need for iron ore extraction for steel production. This reduces carbon dioxide emissions significantly, saves energy and water consumption, and also reduces air pollution. On average, 1.787 tons of carbon dioxide is saved for each ton of scrap steel. This shows the steel industry's commitment to conserve energy and natural resources. Due to these efficiencies associated with steel scrap, it has become a choice of raw material for steel producers (and in turn, stainless steel). Thus, the concern toward global warming by the steel industry is driving the growth of the global stainless steel market.
In addition, a ban on nickel ore exports is also expected to increase the use of steel scrap for stainless steel production. Nickel ore is widely used for steel production in China, one of the largest consumers of steel.
Pre-engineered buildings: A new wave in the market
Stainless steel is widely used in pre-engineered buildings (PEB) for buildings systems, roofing, etc. It protects the building system in adverse environmental conditions. The global PEB market was valued at close to USD 9 billion in 2015 and is expected to exceed USD 15 billion in 2020, posting a CAGR of close to 12%.
The automotive, logistics and warehouse, pharma, fast-moving consumer goods, and retail sectors provide significant growth opportunities for the global PEB market. Many PEB manufacturers have collaborations with logistics companies or have developed their own in-house logistics capabilities. “The global PEB market is registering robust growth worldwide, thus triggering the demand for stainless steel,” says Chandrakumar.
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