The crude steel market was valued at over 1,700 million ton in 2020, and the market is projected to register a CAGR of around 4% during the forecast period (2021-2026).
In the COVID-19 pandemic, the construction and transportation industry has experienced a huge decline. Currently, the outbreak of COVID-19 is likely to bring several short-term and long-term consequences in the construction industry, which is likely to affect the demand for crude steel. Whereas the shutdown of automotive manufacturing facilities had highly reduced the production of vehicles in 2020, drastically reducing the demand for crude steel. Additionally, the consumption of crude steel has declined in automotive components production and frame manufacturing.
- Over the short term, extensive usage of steel beams and pillars in the construction sector is stimulating the demand for the crude steel market.
- The construction and automotive sector are expected to be the dominant segments, in terms of demand, over the forecast period.
- The top steel-producing countries are China, Japan, India, and the United States, with China holding the largest share for crude steel production in the global market.
- The Asia-Pacific region is expected to dominate the market across the world, with the largest consumption from countries such as China and India.
Key Market Trends
Increasing Demand from the Building and Construction Industry
- Steel, along with its alloys, is one of the most common metals used across the world in the construction sector, accounting for more than 40% of world steel demand.
- Steel is used in the buildings and construction industry, owing to its superior properties, such as durability and ductility, thus making the buildings earthquake-resistant.
- The increasing rate of high-speed trains in countries like China, Japan, and India has led to the construction of special railroads, which has led to increasing consumption of carbon steel, enhancing the crude steel demand over the forecast period.
- The global spending on the construction sector is expected to reach USD 14 trillion by 2025, which is further likely to enhance the demand for crude steel. The Asia-Pacific region is expected to dominate the construction market with a CAGR of over 8% by 2023, thereby stimulating the demand for crude steel in the region.
- According to the International Monetary Fund (IMF), the construction industry witnessed a decline of 4.9% in 2020 in the developed economies such as The United States, Germany, France, Italy, the United Kingdom, Canada, and others, and these developed economies are expected to register a collective growth of around 4.3% in 2021. At the same time, the construction industry in developing economies such as China, India, Russia, Brazil, and others registered a collective decline of 2.4% in 2020, and the industry is expected to grow by 6.3% collectively in 2021.
- The slowdown in the construction industry had a key role in making the demand growth harder to achieve for crude steel in 2020.
- Due to this reason, the impact can be seen negatively for the short term, but will reduce and result in significant growth in the midterm period.
- Owing to the aforementioned factors, the crude steel market is projected to grow at a moderate rate during the forecast period.
The Asia-Pacific Region to Dominate the Market
- The Asia-Pacific region has experienced favorable growth in the crude steel industry in countries like India, China, and South Korea, holding almost half of the consumption share. Japan crude steel market growth is driven by civil engineering activities such as the building of schools, residential and commercial constructions, railroads, etc.
- The demand for steel in countries like India and China is around 50% more than in countries like Germany and the United Kingdom. The construction sector in India is expected to witness a strong CAGR of over 5% due to FDI (Foreign Directed Investment). It is projected that by 2021, India and China will contribute to around 40% of the global construction industry.
- The automotive industry is growing in ASEAN countries like Malaysia, Thailand, Indonesia, and Vietnam, which have propelled the demand for crude steel. Advanced High Strength Steel (AHSS) is now being used in nearly every new vehicle as it enables flexible and creative designs with properties, such as ultra-high strength and better bending capacity. AHSS makes up around 60% of the new vehicle body structures.
- The aerospace materials market has diversified, which has increased the demand for steel alloys in the manufacturing of aircrafts both for commercial use and for defense as military aircraft. Governments of India and China have emphasized increasing the budget on the defense of their countries and thus have enhanced the usage of steel products which has fueled the demand for the crude steel market.
- Major companies in the Asia-Pacific region include Arcelor Mittal SA, China Baowu Steel Group Corp., and Tata Steel.
- In addition, auto sales drive crude steel's demand. However, due to the COVID-19 pandemic, the demand in 2020 was not up to its mark. The impact is seen from both sides, i.e., production and consumption. The sudden outbreak of COVID-19 and shutdown of automotive manufacturing in the region reduced the demand for crude steel, constraining the market growth.
- Owing to the aforementioned factors, the crude steel market is projected to grow at a significant rate during the forecast period.
The crude steel market is highly fragmented with the top five players accounting for a minimal share of the market. Major companies in the market include ArcelorMittal, China Baowu Steel Group Corp., HBIS Group, POSCO, and NIPPON STEEL CORPORATION.
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