Last week, Roskill presented the key narratives of the steel and stainless industry and the outlook for steel alloys over the 2020s. With Chinese steel demand staying strong and the rest of the world recovering following the initial impacts of the COVID-19 pandemic, the steel industry is set to support a strong rebound in steel alloys in 2021 back to their pre-COVID-19 trends. Roskill’s NEW Steel Alloys: Outlook to 2030 report was published in April and provides a unique and comprehensive analysis and 10-year forecast of the steel alloy market, including bulk alloys (manganese and silicon), stainless alloys (chromium and nickel), and noble alloys (molybdenum, niobium and vanadium).
Key developments in the alloy smelting industry have led to varying trends in supply chains of the different alloying metals. Ferromanganese (FeMn) and ferrosilicon (FeSi) have not seen significant changes in output and international trade over the last decade. In contrast, ferrochrome (FeCr), silicomanganese (SiMn) and ferronickel (FeNi) have each grown by over 5Mt in gross weight terms, with FeNi becoming the third-largest alloy market in gross weight terms as of 2019.
For FeCr and SiMn, the growth in output has not been matched by a growth in exports, indicating that the increase in smelting output has been built to supply domestic downstream steel demand. In both cases, this is represented by China’s investment in chromium and manganese alloy smelting capacity based largely on imported ores. The contrast to this trend is FeNi (including the lower grade nickel pig iron – NPI), where the ban on ore exports from Indonesia has caused China’s stainless steel industry to be reliant on imported alloys to meet domestic demand, such that the growth in global output has been matched by growth in exports. Noble alloys are a much more niche market, with each of their trends tracking specific alloy steel markets, rather than fundamentally driven by the overriding crude steel or alloy-intensive stainless steel markets.
Over the last two decades, the growth of China’s steel industry has underpinned the development of steel alloys and again over the 2020s, China is to continue to play a key role. However, in this decade Roskill forecasts that China’s crude steel output is approaching a peak. Based on recent announcements and the country’s 14th Five-Year Plan, the Chinese government is committed to cap China’s steel capacity and will only authorise new facilities if they replace old or shut down operations. With China peaking, the steel industry’s future growth poles will change. Roskill’s forecast growth in steel production from India, Vietnam, Indonesia, Turkey, Brazil and Iran represents about 62% of the forecast crude steel growth in the world ex-China between 2020 and 2030.
While the crude steel industry slows down to a growth rate of below 2%py, stainless steel is forecast to fare much better and China is expected to remain the key growth area alongside Indonesia, which officially commissioned its first stainless steel plant in 2017. As a result, stainless steel will grow to account for over one-third of total steel alloy consumption (in contained metal content). Chromium and nickel as the key alloys in stainless steel are, therefore, set to be the main drivers of alloy growth over the next decade and based on Roskill’s price forecasts, stainless steel alloys will grow to account for over 50% of the steel alloy market value over the second half of the 2020s. Nickel is forecast to become the single-highest value alloy as the main industry value driver, taking over from manganese.
The outlook for supply is open to regionally mixed expansions to meet stainless steel demand. With (1) China reliant on imports of chromium-nickel alloys and ores, (2) an export ban on nickel ores from Indonesia and (3) a struggling South African ferrochrome industry, the alloy industry is open for capacity growth in new regions to fill the gap in demand growth. Regions such as Indonesia and Malaysia have already proven to be successful growth hubs in steel alloy smelting, both in supplying integrated domestic demand as well as for the export market.