Global Steel Industry

Part
01
of three
Part
01

Global Steel Industry - Overall Industry Trends

Four current trends related to the global construction-grade steel industry include the increasing use of prefabricated steel buildings, the application of automation which improves quality and efficiency, production capacity and profits, and the utilization of digital technologies to address labor shortages.

FOUR latest trends in the global construction-grade steel industry

1. Prefabricated steel buildings

  • With the ongoing rise in the number of special economic zones (SEZs) across the globe, new corporate offices are being constructed. Prefabricated steel buildings are preferred in such zones because they are easy to construct and have an easy setup.
  • Moreover, with the strong growth in construction activities across the world, construction companies are looking for convenient alternatives to conventional construction.
  • The convenience and simplicity offered by prefabricated steel buildings are the primary reasons why prefabricated buildings are among the top steel industry trends.
  • Pre-engineered steel building kits are versatile and can be constructed quickly.
  • Prefabricated steel buildings are also reasonably priced.

2. Automation to improve quality and efficiency

  • Automation is becoming increasingly important in every area of fabrication.
  • Computer-managed automated production has been resulting in a higher quality of welding, improved speed, and general efficiency.
  • Equipment such as the Ficep beam line enables construction companies to deliver remarkable results within a shorter time period, thereby, resulting in an improved capacity.
  • Further, the structural steel industry is expected to reap the benefits of prescriptive analytics as it results in improved scheduling, logistics, and upgrade selection, among others. These improvements enable construction companies to further increase their productivity and decrease the cost of structural steel.

3. Production capacity and profits

  • The growth of the Chinese economy during the early 2000s was a profitable period for steelmakers. The global construction steel industry significantly expanded its production at an average rate of 4.9% per year between 2004 and 2013.
  • China's growth, however, has recently been slowing down and the global construction steel industry is facing the typical post-boom challenge of excess supply.
  • Although the demand for steel peaked in 2013, the capacity continued to expand up to 2016 due to "inertia of capital investment." Between 2013 and 2016, the global capacity increased with an additional 60 million metric tons despite the decreasing demand.
  • As a result, since 2016, the global steel industry has fallen into a severe crisis with numerous plants producing excess steel relative to diminishing demand. This has resulted in lower profits for the majority of players in the industry.

4. Digital Technologies and labor shortages

  • The structural steel industry has been embracing digital technologies in response to labor shortages and competitive pressures.
  • The structural steel fabrication industry has been using 3D model-driven technologies to decrease waste, streamline shop fabrication, and improve quality.
  • The use of digital technologies has enabled structural steel industry to not only deal with labor shortages but also become more cost-effective and scalable to meet client demand.

Research Strategy

We commenced our research by gaining an understanding on the types of steel used in the construction industry and found an article mentioning that the three most common types of steel used for construction are structural steel, carbon steel, and rebar steel. Armed with this information, we started to search for the latest trends around these types of steel. We were able to find reports and articles identifying trends in prefabricated buildings, automation in the steel industry, the impact of the Chinese market on the industry, and the use of digital technologies in dealing with labor shortages. These trends were chosen because they reflected recent changes or addressed challenges in the steel industry. For instance, the growing popularity of prefabricated steel buildings is a recent development and impacts the operations of companies in the industry and adopting digital technology addresses labor problems.

In our search, we came across other trends in the areas of 3D printing technologies, distribution channels, and supply chain management. As these areas were being addressed in other requests, they were not added to the trends in this brief.



Part
02
of three
Part
02

Global Steel Industry - Trends in Supply Chain Management

The top six trends in global steel industry's supply chain management include the US steel tariffs, digital supply chain, the increased demand in consumption, steel and raw materials value chain management, the growth of the LATAM steel industry, and the growth of new markets.

Global Steel Industry — Trends in Supply Chain Management

1. Impact of US Steel Tariffs

  • China is considered the top steel producer globally, they hold approximately 49.6% of the total market value.
  • US is considered the biggest importer of steel globally.
  • In 2017, US imported around 32.6% of the global steel production.
  • Even though China is the top steel producer, the US only gets 2% of the Chinese steel production.
  • The US imports steel predominantly from Canada (16%), Mexico (9%), Brazil (13% steel), and South Korea (10%).
  • These countries had also received temporary tariff exemptions but the agreement ended on June 1, 2018.
  • President Trump also announced that the government will exempt all US companies importing steel and aluminum products from tariffs.
  • The tariffs have made a great impact on the global steel market.
  • The US-China trade war has affected the global supply chain by increasing tariffs and other measures since 2018.
  • China's steel exports also declined by 26%.
  • Most business faced difficulties with the customs mitigation processes.
  • Price increases of steel have affected the construction industry the most because they are the biggest users of steel and aluminum products.
  • This also affects employment in the industry as manufacturers are paying more on domestic and imported steel products.

2. Digital Supply Chain

  • While some business were greatly affected by the tariffs, other business have decided to transform their business.
  • Almost 53% of steel companies are now allocating 5-15% of their revenue for innovation and 19% of steel companies are already planning to do the same.
  • 52% are planning to train their workers because they are now using advanced equipment and machines.
  • Companies in the steel market started using cloud computing, IoT, and big data to improve their supply chain. This gives transparency and efficiency in the supply chain distribution.
  • They replaced manual trackers and bar codes with smart sensors and actuators to track the inventories and shortages of raw materials to settle the demand-supply discrepancies.
  • Forecasting techniques help manufacturers check supply chain information in real-time.
  • Cloud technology gives transparency when it comes to connecting with the suppliers, transport companies and distributors. It eases the procurement process and will help build a better relationship with their clients.
  • Fourth Industrial Revolution were also used to ease the supply chain management.
  • Large enterprises, primarily multinational corporations (MNCs) and large domestic firms, are using 4IP to optimize their systems.

3. Demand in Consumption

  • The demand for steel has been increasing.
  • The market is expected to reach $865.5 billion in 2020.
  • The rapid urbanization and industrialization of countries has rapidly increased the demand for construction steels, including long steels and flat and galvanized construction steels.
  • The growing manufacturing industry is also one reason for the increase in demand for flat steels.

4. Steel and Raw Materials Value Management


5. Growing Market of Latin America Steel Industry

  • In 2018, LATAM produced almost 65.1 million tons crude steel and 53.7 million tons of rolled steel. They have used 67.0 million tons of apparent steel.
  • It is also reported that, in 2018, Latin America has recorded a 10% decline in steel imports and an 8% decline in steel exports.
  • Brazil still is a leader in the LATAM steel market.
  • For crude steel, LATAM and Caribbean produced 65.1 million tonnes, a 3.4% increase compared to 2017.
  • Brazil contributed 53% of this production (34.7 million tonnes) or 1% more than 2017.
  • For finished steel, LATAM produced 53.7 million tonnes of finished steel, 2% more than 2017.
  • Brazil produced 43% of LATAM's finished steel products (23.1 million tonnes).
  • Due to the decrease in inflation decreased, the production of crude steel has increased by 8% in January 2019 compared to the previous month, to 5.4 million tonnes.
  • Experts are expecting that the growth of the LATAM steel industry carries into 2019 and 2020 because of the growing demand from domestic consumption and exports.

6. Finding New Markets

  • The Turkish steel industry is growing rapidly despite the recent trade war conflict.
  • Their steel exports increased by 35.2% in the first 10 months of 2018.
  • Their export figures in LATAM are as follows: Chile with $103 million, Panama with $80 million, Colombia with $70.3 million, Peru with $48.2 million, Jamaica with $46 million, Costa Rica with $44.5 million, Mexico with $44.3 million, Haiti with $36 million, Brazil with $34.2 million, and the Dominican Republic with $29 million.
  • Turkish steel Industry was preferred by most companies because of their good quality steel and reasonable price.
  • LATAM is reported to have annual steel imports reaching to $31 billion.
  • Turkish steel's market share has increased to 12% in LATAM.
  • The Indian Steel Market has also recorded a lot of growth.
  • In 2017, it grew by 6.2% because of the increase of demand and reduction of inventories.
  • India also increased their exports by 6 million tonnes in 2017.
  • The decline in China exports also helped with the Indian steel industry growth.
  • In 2018, they increased their steel production by 5%, making them the 2nd largest steel producer in the world replacing Japan.
  • India is preferred by most companies because of their quality of steel, their location, and their reasonable price.


Part
03
of three
Part
03

Global Steel Industry - Trends in Distribution Channels

After an extensive search through credible sources, we were not able to provide the latest trends in distribution channels of the global construction-grade steel industry. However, the research team pulled together other relevant insights on structural steel, a type of steel which is widely used for construction purposes. We have presented them below, together with the details of the team's research strategies to find the required information.

KEY PLAYERS OF the STRUCTUAL STEEL MARKET

  • ArcelorMittal S.A.
  • Nippon Steel & Sumitomo Metal Corporation
  • Hebei Group
  • Baosteel Group Co.
  • POSCO
  • Wuhan Group
  • Bohai Group
  • Tata Steel Limited
  • Anshan Iron & Steel Group Corporation
  • Anyang Group Co. Ltd.

DISTRIBUTION CHANNELS

Common types of distribution channels include:
  • Direct sales (e-commerce)
  • Brokers and Distributors
  • Wholesalers and Retailers

Insights on structural steel AND ITS Distribution channels

  • Structural steel is the type of steel which is widely used for construction purpose across the globe.
  • The other types of construction steel include carbon steel and rebar steel.
  • As per Nippon Steel, which is a key player of structural steel, steel is distributed either by tied sales or retail sales.
    • A tied sale is based on customer order, where the products are delivered to customers as per the specification mentioned.
    • In a retail sale, the company sells its products through retailers and trading firms who in turn sell to customers.
  • Tata Steel Thailand PLC, another key player of structural steel, is planning to strengthen its local distribution channel to meet customer demands.
  • By means of automated collaborative technology in structural steel distribution, manufacturers can track and interact with different retailers and vendors which reduce the miscommunication and have real-time access of manufacturer and customer.
  • In China, the e-commerce distribution channel of the steel industry is booming. The number of e-commerce platforms doubled in 2015 compared to 2014.
  • Digital platforms are likely to become a significant mode of distribution over the next 10 years.

Research Strategy:

The information on the latest trends in distribution channels of the global construction-grade steel industry is not available in the public domain. There is very limited information on distribution channels of the construction-grade steel industry to triangulate further. To find this information, we initially checked various steel industry market reports and articles on trends of construction-grade steel industry but most of the information with respect to distribution channel is behind paywall in sources such as Transparency Market Research, Pioneer Reports, Grand View Research, Stan Mutsers, Microfinance Post, PR Newswire, Deloitte, and Technavio among others.

Next, we took a different approach and searched for information on the type of steel used in construction and found structural steel. We further searched for key players of the structural steel industry and dived deep into each company for information on distribution channels to derive the latest trends. In their websites, there was very limited information on distribution channels and no information on the latest changes/adoptions to derive as trends in the distribution channel.

As our last resort, we expanded the scope of search beyond standard 24-month timeline for reports or case studies of certified distributors, global steel industry associations, and sub-segments of construction-grade steel such as carbon steel and rebar steel companies. This is done to garner information on the adaptation of distribution channels which were in the “planning stage” assuming that those might be the latest trends. We only found information about the e-commerce distribution channel in the China steel industry and nothing was specific to global and current trends.

As all these above-mentioned strategies failed to yield information on the latest trends in distribution channels of the global construction-grade steel industry, we still included relevant insights and paid reports which might be helpful for this request.

Sources
Sources

From Part 01
Quotes
  • "Structural steel is a type of metal used for making construction materials. It is categorised into shapes, each with their own compositional properties which make them ideal for certain uses in construction."
  • "Carbon steel is steel that contains between 0.12% and 2.0% carbon and is the main interstitial alloying constituent. "
  • "Rebar steel is shorthand for reinforcing steel. It is commonly used as a tensioning device to reinforce concrete and other masonry structures as structural reinforcement. "
Quotes
  • "There has been a significant rise in the number of special economic zones across the globe where new corporate offices are being constructed. Prefabricated buildings are preferred in these zones for their ease of construction and easy setup."
  • "Moreover, with robust growth in the construction activities across the globe, builders are looking for convenient alternatives to conventional construction. "
  • "The consequent demand for prefabricated buildings in the industrial and institutional sectors is providing a thrust to the market growth. "
Quotes
  • "Imagine selecting the type of building you want for your home or business and then having a professional team deliver it to your site. "
  • "This convenience and simplicity are primary reasons prefabricated steel buildings are among the top steel industry trends this year. "
  • "Pre-engineered building kits are versatile"
  • "Pre-fab steel buildings are affordable"
  • "Pre-engineered steel buildings go up quickly"
Quotes
  • "Automation grows increasingly important in every area of fabrication, with computer-managed automated production matching or surpassing the quality of manual welding and improving speed and general efficiency. "
  • "Equipment like the Ficep beam line allows Swanton Welding to deliver incredible results in less time, greatly improving our capacity. With the multiplicative effect such technology offers a savvy team, a few beam lines can completely transform a shop’s ability to handle structural steel."
  • "Like many fields, we see potential in so-called prescriptive analytics, which would allow data-driven systems to propose mathematically sound improvements in logistics, scheduling, upgrade selection, and other areas of our business—which would in turn improve our productivity and reduce costs to the customer for structural steel."
Quotes
  • "The early years of the new millennium were a profitable period for steelmakers, largely driven by the surging Chinese economy. Now, with China’s growth slowing, a new reality has set in."
  • "The global industry, which had dramatically expanded production to meet perceived demand from Asia – at an average rate of 4.9 percent a year between 2004 and 2013 – now faces the typical post-boom challenge of excess supply."
  • "While the steel industry had reached its demand peak in 2013, capacity continued to expand all the way up to 2016 due to inertia of capital investment, adding another 60 million metric tons of worldwide capacity against a backdrop of falling demand."
  • "As a result, by the beginning of 2016, the industry had fallen into a severe crisis with too many plants producing too much steel relative to dwindling demand, and industry profits plunging to zero or into negative territory for the majority of players."
Quotes
  • "The structural steel industry has responded to labor shortages and competitive pressures with full force by embracing digital technology more than any sector."
  • "In fact, the structural steel fabrication industry has spent the last two decades using 3D model-driven technologies to streamline shop fabrication, reduce waste, and improve quality. "
  • "This has truly made the steel industry more cost effective, BIM-enabled, and scalable to meet client demand, but there is still room to go."
From Part 03
Quotes
  • "Structural steel is a category of steel construction material that is produced with a particular cross section or shape, and some specified values of strength and chemical composition. Structural steel composition, strength, size, shape, strength, and storage are controlled in most advanced countries. "
Quotes
  • "A comprehensive analysis of the Structural Steel Market including market sizing, market share by competitor, market share by distribution channel, drivers, restraints, product pricing trends, industry quotations, company profiles and market forecasts to 2024 for global market. "
Quotes
  • "Tied saleCustomers's order contents (price, volume, specifications, etc.) are informed to steelmakers, and those steel products conforming to the order content are produced for the specified customers. Contracts are made between steelmakers and trading firms and between trading firms and customers in this sales form"
  • "Retail saleSteelmakers sell steel products to retailers and trading firms without end users being specified, and the retailers and trading firms stockpile the steel products which are purchased at their responsibility and risk and then sell the products with their own sales efforts, taking into account the market and other conditions."
Quotes
  • "The company plans to bolster its local retail distribution channel to expand its steel products and maintain overall sales amid uncertain demand."
Quotes
  • "Whether it’s the interaction between different shops, between shops and their vendors, between third party engineers and shops, or between customers and shops, collaborative technology offers a wealth of benefits to the future of structural steel. No more mistakes born of confusion and miscommunication; instead, we’ll see real-time access on both ends of every chain, allowing everyone involved in your project to stay on the same page."
Quotes
  • "In 2015, the number of participating platforms in steel e-commerce in China and trade volumes have almost doubled from 2014’s statistics, characterizing the exponential rise in online steel sales."