Nerves of steel: Rising global overcapacity will significantly cut into steel prices, hurting industry revenue

The Iron and Steel Manufacturing industry in Canada has encountered difficult operating conditions over the five years to 2019. Steel is a globally traded good and domestic prices are linked to global steel prices, which have been highly volatile in response to global overcapacity and slowing demand during the current period. Revenue growth during the period fluctuated according to the price of steel and market conditions in each year. During the first half of the reporting period, rising global overcapacity, which occurs when global steel production exceeds global demand, significantly cut into steel prices, hurting the revenue and profitability of Canadian steel manufacturers. Over the five years to 2024, domestic demand conditions are forecast to improve...read more.

Industry Statistics & Market Size
Revenue
$14bn
Annual Growth 14-19
0.3%
Forecast Growth 19-24
Profit
Employment
14,450
Businesses
48

Industry Threats & Opportunities

  • Higher levels of corporate profit will prompt investment into more efficient equipment, improving productivity and competitiveness
  • Domestic producers are attempting to increase their competitiveness
  • The nonresidential construction sector has been one of the industry’s major markets
  • Industry Report - Industry Products Chapter

    The Iron and Steel Manufacturing industry in Canada produces pig iron, ferroalloys and steel. Steel product sales generate almost all of the industry's revenue because pig iron and ferroalloys are typically used as an input for steel production, although they can be sold to minimills that do not have the benefit of vertical integration. Ultimately, this discussion will be broken down into inputs for other industries via crude steel and pig iron, and finished products including hot-rolled and cold-rolled steel shapes in addition to coated steel products.Crude steelCrude steel is a primary input for secondary steel manufacturers. Acc...purchase to read more.

    Additional Insights for the Iron & Steel Manufacturing Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Iron & Steel Manufacturing Industry are

  • Ability to pass on cost increases
  • Output is sold under contract
  • Degree of globalization in the industry
  • IBISWorld analysts also discuss how external factors such as World price of steel and Canadian effective exchange rate index in the Iron & Steel Manufacturing industry impact industry performance..

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    What's in this report

    What is the Iron & Steel Manufacturing Industry?

    This industry manufactures pig iron, steel and ferroalloys. Pig iron may be manufactured in a blast furnace or with newer direct-reduction methods. Steel may be manufactured in basic oxygen furnaces (newly made steel) or in electric arc furnaces (recycled steel). The industry also includes operators that manufacture basic steel shapes such as bars, plates, rods, sheets, strips and wire, or form pipes and tubes from steel they have produced in-house.

    Industry Products
  • Crude steel
  • Hot-rolled steel shapes
  • Cold-rolled steel shapes
  • Coated steel products
  • Pig iron for other steel mills
  • Industry Activities
  • Direct reduction of iron ore
  • Manufacturing and converting ferroalloys
  • Producing steel through the use of open hearth furnaces
  • Manufacturing cold-rolled and hot-rolled steel products
  • Manufacturing basic steel shapes, such as bar, plate, rod, sheet, strip and wire
  • Forming pipes and tubes from self-produced steel
  • Manufacturing and converting pig iron
  • Producing steel through the combination of coke and iron ore in blast furnaces
  • Producing steel by melting recycled scrap steel, usually with pig iron, in electric arc furnaces
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • World price of steel
  • Canadian effective exchange rate index
  • Industrial capacity utilization
  • Value of nonresidential construction

  • Current Performance
  • Steel price volatility
  • Changing production and operations
  • Global markets
  • Chart: Revenue Growth

  • Industry Outlook
  • Major markets
  • Industry structure
  • Table: Iron & Steel Manufacturing Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Iron & Steel Manufacturing Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Metal Pipe & Tube Manufacturing in Canada
  • Steel Rolling & Drawing in Canada
  • Ferrous Metal Foundry Products in Canada
  • Car & Automobile Manufacturing in Canada
  • SUV & Light Truck Manufacturing in Canada
  • Truck & Bus Manufacturing in Canada
  • Truck, Trailer & Motor Home Manufacturing in Canada

  • Key Selling Industries
  • Coal Mining in Canada
  • Copper, Nickel, Lead & Zinc Mining in Canada
  • Electric Power Transmission in Canada
  • Iron Ore Mining in Canada

  • Products & Services
  • Crude steel
  • Hot-rolled steel shapes
  • Pig iron for other steel mills
  • Coated steel products
  • Other
  • Cold-rolled steel shapes
  • Chart: Iron & Steel Manufacturing Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Exports
  • Manufacturing
  • Other
  • Wholesale
  • Chart: Major Market Segmentation for the Iron & Steel Manufacturing Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    WagesPurchasesProfitThe Iron and Steel Manufacturing industry in Canada is characterized by exceptionally high fixed costs and relatively high variable costs, resulting in large fluctuations in profit margins from year-to-year. Volatility in the price of steel scrap, iron ore and other key inputs make it difficult for manufacturers to anticipate future costs and optimize production, which constrains industry profitability. This is a major issue for blast furnace operators, which incur significantly higher fixed costs than electric arc furnaces. In 2019, IBISWorld estimates that profit, measured as earnings before interest and taxes, will account for 7.1% of industry revenue, down from 9.0% in 2014.DepreciationMarketingRentUtilitiesOther
  • Chart: Cost Structure Benchmarking – Sector vs Iron & Steel Manufacturing

  • Basis of Competition
    Internal competitionExternal competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Iron & Steel Manufacturing Industry

  • Industry Globalization
    ArcelorMittal SA, Stelco Holdings Inc., Algoma Steel Inc., Gerdau AmeriSteel Corporation,
  • Table: ArcelorMittal SA - financial performance
  • Table: Stelco Holdings Inc. - financial performance
  • Table: Algoma Steel Inc. - financial performance
  • Table: Gerdau AmeriSteel Corporation - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Iron & Steel Manufacturing Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Iron & Steel Manufacturing Industry
    Includes:
  • Industry Revenue (2010-2024)
  • Industry Gross Product (2010-2024)
  • Establishments (2010-2024)
  • Businesses (2010-2024)
  • Employment (2010-2024)
  • Exports (2010-2024)
  • Imports (2010-2024)
  • Wages (2010-2024)
  • Wages (2010-2024)
  • Purchases (2010-2024)
  • Profit (2010-2024)
  • Depreciation (2010-2024)
  • Marketing (2010-2024)
  • Rent (2010-2024)
  • Utilities (2010-2024)
  • Other (2010-2024)
  • World price of steel (2010-2024)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Blast Furnace
  • A furnace used in integrated steelmaking, in which coke and iron ore react together under a hot air flow to form steel.
  • Coke
  • A high-carbon solid produced by heating coal in an oven to drive off volatile components.
  • Electric Arc Furnace
  • A furnace for scrap-based steelmaking, in which scrap steel is melted and recycled.
  • Ferroalloy
  • An iron alloy with a high proportion of one or more other elements that is used in the production of steel as a raw material.
  • Pig Iron
  • The intermediate product of smelting iron ore with coke; usually transferred in molten form to steelmaking furnaces.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Iron & Steel Manufacturing market research report can be used to help you: understand market size and growth potential; major companies; draft business plans and pitch books; and conduct benchmarking and SWOT analysis. Our industry analysis highlights macro industry trends in the overall sector and micro trends faced by companies that do business in the industry. The industry report also provides key industry statistics and 5-year forecasts to anticipate future industry prospects so you can decide with confidence.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
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    This report on Iron & Steel Manufacturing:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Iron & Steel Manufacturing market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Iron & Steel Manufacturing, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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