The steel industry was already facing a decline prior to the pandemic. Steel manufacturers were having difficulties with navigating new regulations while combating the availability of raw materials. It has been teetering on the edge as the whole global market is facing high demands with little to no way of producing steel end products in time. Specific segments of the industry are being hit harder which may lead to some kind of restructuring in the market. Once the pandemic hit, however, it came very close to being the last nail in the coffin. The steel industry after COVID-19 and during the whole ordeal found itself in a serious decline that was likely to leave lasting repercussions.
Importance of Steel
Steel is an essential material to the way of modern living in the 21st century. The material is used in a number of areas that produce end-user products. This includes construction, oil and gas infrastructure, pipes, automotive, public transport and machine manufacturing. Steel production is reliant on these end-user products. More pressure on those markets leads to more pressure on steel manufacturing.
The construction and automotive markets are the most prevalent segments with construction being the largest. These types of finished steel products are used in foundations, pillars, and second floors for both commercial and residential buildings. Without it construction work would slow down and require other materials which will likely yield undesirable results, at least for now.
Recent Changes in the Steel Industry
COVID-19 has a significant impact on the steel industry. As mentioned, the steel industry was already dealing with a decline before the pandemic hit the world. It was sudden, a bit like a storm that rolled in and changed everything. In 2020 steel production was sitting at 1.7 billion tons. The decline in new automotive vehicles went down during the pandemic and so did the need for new buildings. This number continued to decline until the major break and normal work and shipping could continue.
By then a fair amount of damage was already done and the industry would have to pick up the pieces. It has not been an easy journey. The various lockdowns in different countries and lack of materials lead to shortages which were severe in some cases. On top of the pandemic, other outside forces affected the pricing and availability of materials and so a backlog was created. A backlog in orders and the continued issues with shipping times increasing. In parallel, the oil and gas industries were very hard hit. Both affect the construction and automotive industries just the same way that they subsequently affect the production of steel. However, as we reached the end of lockdowns and pandemic-specific regulations, a way forward was realized. Many companies and individuals began carving out their place in this new COVID-19-riddled future. The projected growth for the market is considered to grow at a compounded annual growth rate of 4.1%. Meaning that steel production could reach 2.2 billion tons by 2026.
The Takeaway
Steel is clearly a huge part of modern city life and it would be a challenge to revert back to more traditional ways on the scale at which buildings are produced today. That means that until a newer way of building that offers the same kind of results, we likely will have steel in pretty much all aspects of our lives in one way or the other.
Yet, because the resources are lessening and regulations change to push for cleaner, or greener, end-user products, the industry will have to adapt. In some places, it will be easier to make these changes. Europe is in a far better situation economically to be able to withstand this kind of change over a few years. Other countries such as South Africa do not have such resources to implement the changes in the same way or to the same level.
The steel industry is not going anyway in my opinion. Well not in my lifetime anyhow. But it does need to adapt to newer ways of metal production. This will increase the price for the end-user as well. We will all need to play a part in adapting sustainably and profitably.