Stainless Steel Market Drivers

Downstream Demand

Increasing demand from downstream industries, such as agriculture, processing industry, consumer products, construction industry, is expected to be the primary driver of stainless steel industry

Need for Cost Reduction

Increased focus on reducing the total ownership cost of stainless steel-making process has led to the adoption of newer technologies and the use of more energy-efficient fabrication and manufacturing processes 

Technological Advancements

Development of newer technologies is driven by the need to attain lower cycle times in the manufacturing process. Suppliers in emerging economies are rapidly adopting technologies to improve efficiency and increase the production capacities

Stainless Steel Constraints

Lower Profit Margins

For the past 12–18 months, steel suppliers are experiencing lower margins, due to the falling prices. Suppliers are also susceptible to commodity price fluctuations, against which they cannot hedge, due to relatively smaller period of contracts

Logistics Cost

Steel and its products have high logistics costs. The Baltic Dry Index acts as an indicator of measuring logistic costs of dry bulk category, such as steel. Increased logistics cost impacts the import of raw material and increases the domestic and landing cost of steel

Raw Material Supply

The steel industry has been facing a shortage of graphite electrode, owing to paucity of needle coke in China. This is due to stringent measures adopted by the authorities, in order to curtail pollution levels. Around 226,000 tons of electrodes are consumed every year in the EU. More than 60% of the smaller LF-type rods come from China. Consequently, both primary and secondary steel production could be adversely affected in Europe

Mergers and Acquisitions

  • Stainless steel makers are opting for mergers and acquisitions to gain access to new technologies, to reduce the time to market for the services and to enter new markets in terms of geography and service 
  • The number of mergers and acquisitions (M&As) in the global steel industry rose by 19 percent to 115 deals in 2015 from 97 deals in 2014