A simple look around us, will reveal just how integrated steel is into our lives. The device you’re reading this article on, is either encased in steel or probably has steel embedded within it; the body of the microwave you heat your food in is made out of steel sheets
©Ritesh Bhatia on Unsplash
Even the vehicles we use to travel from one place to another have most of their framework, coverings, parts made out of different grades and shapes of steel. The buildings we reside in have steel in their structures in different forms, some invisible to the eye as rebars, stirrups, I-sections, and so on. And some in more visible spaces such as railings, door knobs, handles, locks, door frames and various others.
Before we nosedive into the value of Steel today, and it's undeniable market share within the global economy, let us briefly understand what steel is and what makes it invaluable.
‘Steel’ is the colloquial name for a broad family of iron alloys. There are over 3500 different grades of steel depending on the percentage combination of other elements such as carbon, manganese, copper, titanium, nickel and so on.
For the sake of simplicity, we can classify steel into two types of products based on its application due to its shape :
Sheets, plates fall into this category, and are popular not only in the automotive industry but are also widely used in appliances, construction, ship-building, airplanes and aerospace engineering.
Inclusive of bars, sections, pipes, wires and so on. This type of steel is almost synonymous with both the automobile industry and construction.
This pie chart from the RBSA advisors’s independent market analysis of the Indian Steel industry, provides a brief insight on the applications of steel throughout India in terms of industries and their usage percentages.
According to the world steel organisation, India is the world’s second largest producer of crude steel tailing behind China through 2019-20. Within the global context,
TATA steel stands amongst the Top 10 steel producing companies globally at a tonnage of 30.15 million as of 2019.
TATA Group was established in 1868 by Jamsetji Nusserwanji Tata, which turned Jamshedpur into India’s first industrial city. Through rigorous innovation and upholding people centric values, the company has grown immensely over time. They have become a global business conglomerate through rapid expansion into various fields such as agriculture, automobiles, and construction. Today, TATA Steel has expanded their business into Southeast Asia by acquiring Natsteel Singapore in 2004, followed by Europe by acquiring Corus in 2007.
Among their various other accomplishments, Tata Steel bagged both the Deming Application Prize and Deming Grand Prize in 2008 and 2012 respectively, owing to their scaling potential. Additionally they have been recognised as the ‘Global Steel Industry Leader’ in ‘Steel category’ by Dow Jones Sustainability Index (DJSI) in 2018.
The global steel industry has been projected by various market research analysts to have a compound annual growth rate of 6.3% in terms of revenue from 2020 to 2027. However, gravely impacted by the Covid-19 pandemic, the consumption of steel has significantly dropped since 2020.
After compensating for the pandemic, globally the steel industry has been projected to reach an evaluation of USD 963.6 billion by the year 2027.
Covid-19 has caused significant slumps in consumption for both the major industries that use steel owing to long term suspended construction activities and an overall decrease in automotive sales.
In the Indian context, there are 3 main sectors that contribute to the growth of GDP. Agriculture, Industries and Services. It is the combined impacts of three sectors which determine the growth pattern of commodities such as steel.
The construction industry accounts for a little over 55% of the global revenue for steel and its consumption. A major bulk of steel consumption comes from institutional investment into public infrastructure such as ports, airports, irrigation, energy generation, mining and railways. In addition to this, as discussed previously, social sectors such as health, education, water supply and food processing in particular are also major contributors towards driving the steel economy.
Interestingly however, there are spikes of sales in devices which improve the work from home experience. Increased awareness about sustainability and demand for renewable energy sources is projected to drive up the global consumption of steel in terms of hydropower, wind, geothermal and solar energy.
As Ratan Tata once said, “Ups and downs in life are very important, to keep us going because a straight line even in an ECG means we are not alive”. While times have been unpredictable lately, the recent development towards space flight could help revive the steel economy in ways unforeseen.