Understand the Steel Industry Chain and its Market Status
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Understand the Steel Industry Chain and its Market Status

The iron and steel industry are an industrial industry mainly engaged in industrial production activities such as ferrous metal mineral mining and selection and ferrous metal smelting and processing. Including metal iron, chromium, manganese, and other minerals mining and dressing industry, ironmaking industry, steel processing industry, ferroalloy smelting industry, and other sub-sectors. It is one of the country's important raw material industries.
Published: May 10, 2022
Understand the Steel Industry Chain and its Market Status

Introduction to the Steel Industry:

The iron and steel industry can be divided into two categories: "carbon steel" and "stainless steel and alloy steel" according to the material of the finished products, and further divided into upper, middle, and lower reaches according to different market roles.

  1. Upstream of the Steel Industry:
    Supply raw, or simply processed, raw materials. For example, coal, iron ore and scrap steel, etc. In addition, we also supply primary products refined by blast furnace and electric furnace, such as large and small steel billets, steel ingots, etc.
  2. Midstream of the Steel Industry:
    Responsible for processing upstream raw materials into materials that can be used downstream. Examples: steel plate (cold rolled, hot rolled), reinforced steel coil, and various types of steel. (The midstream industry of the stainless-steel industry has more processes such as cutting, processing, and pipe making than the carbon steel industry.)
  3. Downstream of the Steel Industry:
    According to the needs of the application, a wide range of products have been developed. Including metal products, machinery and equipment, transportation tools, molds, screws and nuts, steel wires and cables, industrial facilities, and construction projects.

The above is a rough classification of the steel industry. If it is subdivided according to the nature of its factories, it can also be divided into various industries such as smelting, casting, forging, rolling, stamping, cutting, and welding steel. The steel industry itself is a capital-intensive industry, and Taiwan's steel industry is dominated by various small and medium-sized steel mills.

Steel Industry Supply and Demand:

  • The supply side of the steel industry:
    China is the world's largest steel producer (accounting for 53% of global output), of which Hebei Province is an important steel city, accounting for more than 20% of China's total output. In 2021, China's lockdown due to the COVID-19 epidemic will affect the transportation of steel raw materials and lead to a tightening of market supply.
    To realize the goal of carbon neutrality and carbon reduction, the Chinese government has formulated the policy direction of "resolutely reducing steel production".
  • The demand side of the steel industry:
    In the second half of 2020, the epidemic began to slow down, and downstream industry customers continued to replenish their inventories. In addition, the demand continued to boom, and the market demand for sports equipment, domestic construction, and automobiles continued to strengthen, and the overall demand was still in excess.
    In 2021, China promotes the "14th Five-Year Plan", and China's domestic demand is expected to continue to grow in 2020, which is expected to jointly activate the global steel industry.
    The U.S. government pushed for a $1.2 trillion infrastructure budget, further boosting steel demand.

What is Scrap Steel?

On the production line of a steel factory, other than the steel scrap that can be used as a product, the (quality) unbearable to become a product is called scrap steel. After proper processing (such as shearing, gas cutting, etc.), scrap steel can be used as a direct production material, thereby improving the utilization value of scrap steel, and achieving the purpose of making the best use of it.

Taiwan's scrap steel is mainly imported from the United States and Japan. At present, major steel mills mostly rely on "container scrap" for their imports. In the past, after East Asian containers were shipped to the United States, to avoid the return journey of empty containers, container airlines reduced operational efficiency and would carry some scrap iron and other materials at a low price of 15-20% of the outgoing journey, to generate more revenue.

Standard Conditions for the Iron and Steel Industry:

The iron and steel industry has regulated the industry in six aspects: utilization, technology and equipment, production scale, safety and health, and social responsibility.

Among them, safety, health, and social responsibilities are stipulated. Iron and steel enterprises must have a sound safety production and occupational health management system. Coking, oxygen and related gas preparation, gas production (excluding recycling), and other hazardous chemical production units must obtain hazardous chemicals The production enterprise has a safety production license, and no major safety liability accident has occurred in the past two years.

The Future of the Steel Industry:

Stimulated by the continuous low-interest environment, the steel demand in infrastructure construction and real estate, whether in Europe and the United States or even China and other Asian countries, has further boosted the growth momentum of the steel industry.

World steel forecasts continued growth of 2.2% to 1.9 billion tonnes in 2022. In 2022, the United States has passed the infrastructure project, and the demand for steel in various places is still growing slightly. Under the trend of China's intensified production reduction due to carbon neutrality, although the steel market does not have the momentum of substantial growth, it is still expected to have the possibility of growth.

Published: May 10, 2022 Source :stockfeel

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