Stainless Steel
Market, Supplier, Risk and
Competitive Intelligence

Stainless Steel Market Drivers and Constraints

The worldwide stainless steel industry is forecasted to increase from 42.6 MMT (million metric tons) in 2018 to 47.2 MMT in 2021 at a CAGR of 3%. The increase in urbanization and modernization globally are the main reasons for this growth. Moreover, the flourishing automotive industry along with the rising demand for energy and water will likely drive the demand for stainless steel in the near future. 

Further, the stainless steel industry is receiving major impetus from downstream industries such as agriculture, processing industry, consumer products, and construction.

COVID-19 Impact on Stainless Steel Market

• LME nickel price is down in February, amid continued pressure in the base metals caused by the risk-off mood outside China. This is driven by the spread of the COVID-19 pandemic.

• As there is not much demand and less supply because of the uncertainty due to the coronavirus outbreak, prices are expected to decrease in the short term.

With an unfavorable global circumstance, the export-reliant countries seem at risk. The global stainless steel market is redefined by the impacts of this public-health crisis, as a few distributors are either turning off or decreasing their production due to lack of stainless steel demand in the downstream industry.

Global Stainless Steel Industry Analysis 

• Asia would continue to dominate the market in terms of growth prospects.
• China's production of crude stainless steel totaled 26.7 million tons in 2018, higher by 933,000 tons or 3.6% from the previous year.
• In the Americas, the demand for stainless steel was at 3.97 MMT for 2017, driven by higher investments in the automotive and manufacturing sectors.
• Stainless steel production in the US reached 3.28 million metric tons in 2017 and is estimated to increase with a CAGR of 2-3%.
• About 72 percent of the global stainless steel demand during 2017 was from Asia (27.04 MMT). This was driven by robust growth due to solid infrastructure and property sectors.

Stainless Steel - Regional Market Outlook

• The market size in the APAC region was at 27.04 MMT in 2017 and was expected to grow at 3 percent between 2017 and 2019.

• Growth in the consumption of chemical/petrochemical and energy, consumer goods and medical and automotive and heavy transport mainly contributed to the increase in consumption in APAC.

• The growth of the stainless steel industry in America was mainly impacted by the continuation of a strong dollar and weak-exporting demand for the year 2017.

• In the EU, stainless steel consumption was valued at 7.3 MMT in 2017, an increase of 4.4 percent from 6.99 MMT in 2016.

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

• The 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

Upsurge in Construction Projects

The construction industry is one of the major end-users of stainless steel. Several construction and infrastructure development projects need a huge amount of stainless steel to improve corrosion resistance and aesthetic appeal of the buildings.  

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.

Presence of Substitutes

Despite the surging demand for stainless steel in several sectors, the rapid emergence of carbon fibers, particularly in the automotive industry, is critically impacting the market for stainless steel over the coming years. Carbon fiber offers excellent strength, and load-bearing capacities, and is significantly lightweight. The amplifying importance of lightweight automobiles to curb fuel usage will increase the demand for lightweight materials. Carbon fibers decrease the weight of vehicles by nearly 30% thus making it highly preferable in the automotive sector.

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&A) in the global steel industry rose by 19% to 115 deals in 2015 from 97 deals in 2014.
• For instance, ArcelorMittal (AM) and Nippon Steel & Sumitomo Metal Corporation (NSSMC) agreed on the fundamental terms and conditions in March 2018 to mutually procure and supervise Essar Steel India Limited (ESIL).