Synopsis:
Global steelmaking capacity has stabilized since 2014, with 124 million metric tons of new capacity set to come online in 2024-2026, according to the World Steel Association. However, carbon reduction initiatives may limit future expansion opportunities, and the geographical shift in new capacity additions from China to India and ASEAN countries poses challenges for the industry's decarbonization goals.
Article:
The global steel industry has entered a relatively stable phase in terms of capacity growth, according to Zhong Shaoliang, Deputy Director General of the World Steel Association (WSA). Speaking at a specialized seminar in China, Zhong announced that 124 million metric tons of new steelmaking capacity will be commissioned between 2024 and 2026.
Last year, global steel production capacity reached a maximum of 2.5 billion metric tons, according to data from the Organization for Economic Cooperation and Development (OECD) cited by the WSA representative. This figure represents a plateau after a prolonged period of fluctuation around 2.45 billion metric tons since 2014.
Despite the potential for future growth, Zhong Shaoliang cautioned that expansion opportunities will gradually narrow due to carbon reduction initiatives. These initiatives aim to curb greenhouse gas emissions from the steel industry, which is a significant contributor to global emissions.
India and major ASEAN countries are poised to become the main suppliers of new global steel capacity by 2026, with blast furnace production totaling 70 million metric tons. This development marks a shift from China's dominance in this role, as the country focuses on reducing its carbon footprint.
Over the next three years, steelmakers in Europe, North America, and the Middle East will develop new electric arc furnace (EAF) capacity, according to Zhong. However, he expressed uncertainty about the potential for a significant increase in the share of steel produced by this route in global production in the near future, as it is currently at its lowest level in 50 years.
The OECD's January report highlighted that the 57.1 million metric ton increase in global capacity last year was the highest annual growth in the last decade. Asia accounted for 30.5 million metric tons, or 53.3% of this figure, underscoring the region's dominance in steelmaking capacity additions.
The gloomy outlook for steel demand, coupled with the upward shift of steel capacity from China to other regions, creates an alarming scenario for the coming years. This shift in geographical distribution of new capacity additions poses a significant challenge to achieving the industry's decarbonization goals, as different regions may have varying levels of access to clean energy and infrastructure to support low-carbon steelmaking.
As the steel industry navigates this global capacity crossroads, it will be crucial for policymakers, industry stakeholders, and international organizations to collaborate on strategies that balance the need for capacity growth with the imperative to reduce emissions and transition towards more sustainable production methods.
Conclusion:
The stabilization of global steelmaking capacity, combined with the geographical shift in new capacity additions from China to other regions, presents both opportunities and challenges for the steel industry. While the moderation of capacity growth may ease pressure on supply and demand dynamics, the transition towards low-carbon steelmaking will require concerted efforts to ensure access to clean energy and infrastructure across all major steel-producing regions. By addressing these challenges head-on, the industry can pave the way for a more sustainable future while meeting the growing demand for steel.
Source: STEELGURU
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