Megatrends influencing the global steel industry

Megatrends that influence the global steel industry is the topic we propose in this article. When we talk about megatrends, we mean the global processes that gradually change the world in which we live. They affect all levels of society and influence political and economic decision-making, as well as the lives of each of us.

URBANIZATION

We know that urbanization is a migration of the population from the rural to the urban environment. But the term also includes the ways in which society adapts to these changes. In the coming years, urbanization will lead to the physical development of urban areas and the emergence of an increasing number of megacities with over ten million inhabitants.

The share of the global urban population reached over 50% for the first time in world history in the mid-2010s: cities have become the dominant force in the global economy.

And as the cities grow, so does the demand for resources in these expanding areas.

In the changed business environment post COVID-19, the global steel market is expected to reach a revised size of 2.3 billion metric tons by 2030. Construction is estimated to register a CAGR of 2.6%. They will probably reach 1 billion metric tons by the end of this period.

CAGR is the compound annual growth rate and measures the rate of return for an investment.

CLIMATE CHANGES IN THE TOP OF THESE MEGATRENDS

These were evident in global and regional weather patterns from the mid to late 20th century. They are mainly attributed to increased levels of carbon dioxide in the atmosphere, due to the use of fossil fuels. Global CO₂ emissions continue to rise, bringing with them the increase in global temperatures.

Steel production represents 8% of the total global CO2 emissions. Emissions from steel production must decrease for the industry to reach net zero emissions by 2050 and for countries to fulfill their commitments assumed in the Paris Agreement.

The global steel industry should focus on establishing steel as the most important material decarbonisation lever for all steel-using sectors. For this purpose, we will have to combine the inherent superior qualities of steel, such as durability, flexibility, recyclability with a sensitive decarbonization path.

Thus it becomes more and more obvious that we have to change the way we produce steel. Alternative technologies are being developed in the last decades. Natural gas and hydrogen can be used for the direct reduction of iron ore (DRI-EAF). Companies and innovators from all over the world are researching electrolysis technologies and testing carbon capture in pilot projects. However, these technologies have not yet transformed the sector.

TECHNOLOGICAL PROGRESS

It has always been the main transforming force in history. Now it has become much more disruptive due to the levels reached in connectivity and the capacity to store and process data.

The COVID-19 pandemic has given a big boost to the megatrend of technological progress, and we expect the digital transformation of steel value chains to continue to accelerate. Therefore, steel producers will have to develop and implement the right digital transformation strategies. To gradually expand the capabilities of intelligent production, to carefully study the opportunities of building the digital ecosystem and the emerging issues, such as data ownership, responsibility and benefit sharing in such more integrated approaches.