Global Market Outlook on Refractory Products

Rapid growth in infrastructure projects across the globe is projecting exponential growth in the cement and glass industries, which are aiding in minimizing the negative impact on the refractory demand.

  • Constant cost pressure has been pushing the steel manufacturers to reduce the specific consumption of refractories in the processing of steel, and this is projecting a negative impact on the future demand
  • Demand of refractories is expected to grow at a CAGR of 3.5–4 percent during the forecasted period to reach 53 MMT by 2020, owing to demand from developing economies in the APAC region. Supply situation is expected to improve, owing to restart of plant activities around the globe
  • Steel would continue to dominate the end-use industry up to the end of 2020
  • Client could sign long-term contracts with tier one suppliers, such as Vesuvius, to reduce supply risk
  • Switching to tier 1 suppliers having presence in India or China in cost savings
  • However, procuring from China or India could increase the lead times

Market Drivers and Constraints

Drivers

  • Non-mining Sectors Glass, cement, energy, and chemical sectors drive the demand for refractories. In 2016, these sectors contributed to 40 percent of the refractory demand. Growth in these sectors is expected to increase their net market share by 4–6 percent in 2018.

Infrastructure/Demand for Cement

  • Demand for cement and lime is ever increasing, due to the infrastructure growth in emerging countries, which, in turn, drives the demand for refractories in cement processing.

Mineral Processing Output

  • Increasing steel, non-ferrous and mineral output processing, and beneficiation, due to growing demand for commodities, drives the demand for refractory usage. Rising commodity prices of steel, aluminum, and other non-ferrous minerals impact the global mineral production, which, in turn, would help in increasing the value of demand for refractories.

Constraints

Reduction in Specific Consumption

  • The specific consumption of refractory was close to 15–20 kg to produce 1 ton of steel.
  • With increasing cost pressure and development of thermally-resistant refractories, the specific consumption is expected to reduce to as low as 5 kg to produce 1 ton of steel.

Fragmented Market

  • Though the refractory market is close to 46 MMT, the supply market is fragmented with the top 15 players having close to 20 percent of the market share.
  • The marginal differences in annual revenue of these suppliers increase the competition among them and may result in normalizing the price of refractories.
  • Suppliers having a stable research and development facility are expected to be ahead of the competition.

Raw Material – Trend and Forecast

  • As the Chinese silicon carbide supply reduced, due to unexpected plant shutdown caused by stringent environmental regulation, the European silicon carbide 88 percent min 0-10 mm went up and stood in the range € 755–775/t DDP, due to increased demand
  • Price slowly increased by the third week of December to a range of € 805 from € 775 DDP in the first two weeks, as the downstream buyers increased purchasing activity, due to low inventory levels