1. The demand factor
Predicted increase in steel demand in developing countries in the coming decades could pose a challenge to decarbonization. Image worldsteel.
worldsteel (formerly known as the World Steel Association) findings suggest a positive medium-term steel demand outlook. Continued urbanization, industrialization and motorization in developing economies, and strong global infrastructure construction activity are likely to support global steel demand in the medium term. Some segments such as electrical steel and steel products used in wind and solar energy generation projects might be expected to see particularly strong growth.
In developing countries (with the exception of China), steel demand is forecast to continue growing strongly over the next several decades, and could pose a challenge to industry decarbonization, in that steelmakers in these countries will need to simultaneously invest in capacity expansion and decarbonization of the installed capacities – a big ask.
The demand outlook for low-carbon steel is also an important factor shaping the decarbonization of steelmaking in different parts of the world.
worldsteel expects steel-using sectors – such as the automotive industry, construction and machinery manufacture – to show rapid progress in decarbonizing their operations and the use phase of their products throughout the second half of the 2020s. From the late 2020s onwards steel-using sectors will increasingly focus on reducing the embedded carbon in their products, driving a surge in demand for low-carbon steel, initially from a low base, but quickly reaching significant volumes.
The combined effect of these demand factors is that the global steel industry should focus on establishing steel as the most important material decarbonization lever for all steel using sectors. For this purpose, we will need to combine steel’s inherent superior qualities, such as durability, flexibility, recyclability, reusability, cost and volume with a sensible decarbonization pathway.
Currently, steel production from iron ore relies on fossil fuels as reducing agents, with blast furnaces being the dominant technology. While modern blast furnaces operate near their efficiency limits, achieving drastic emission reductions necessitates transformative approaches to ironmaking.
