Prospects for steel production remain strong on infrastructure spending announced by several governments across the globe, which is expected to drive GGBFS production

Despite an estimated decline of more than 2 percent in 2020, crude steel production is expected to witness an increase over the next five years, at a CAGR of almost 1 percent, supported by sustained expansion in Asia, mainly driven by Japan and India, as China slowly sees a decline in production. Almost all markets are expected to see a growth of steel production over the next five years.

In terms of global slag production, there has been no new Blast Furnace (BF) capacity announced, however, new capacities for EAF (Electric Arc Furnace) and BOF (Blast Oxygen Furnace) are expected to be brought online. Even though the BOF process is expected to continue being the dominant source of steel slag production over the next five years, EAF process is preferred as it is more energy efficient and allows for the use of steel scrap to produce new crude steel.

However, prospects for GGBFS market remain bright. Demand for the product, produced as the result of iron ore smelting to form pig iron in the BF, is expected to remain strong and possibly grow on the back of strong construction demand, as the construction industry focuses on climate change.

"The use of GGBFS as a replacement for Portland clinker plays an important role in reducing emissions in the cement production process. With little or no announced additional capacities for BF’s, utilization rates are expected to increase globally, with the exception of China, as it reduces its steel intensity gradually", stated Prashant Singh, Associate Director at CW Group.

Production is forecast to increase at CAGR of 0.5 percent from 2020E to 2025F, while demand is expected to see a slightly higher growth over the forecast period, at a CAGR of almost 1 percent.

But both production and consumption witnessed a much more robust growth at a CAGR of approximately 1.5 percent between 2015 and 2020E.


Prospects on steel production remain strong on infrastructure spending

2021 seems to be more optimistic due to mass vaccination and economic support provided by several countries. China is expected to become again one of the fastest growing economies in 2021.

"All depends, of course, on vaccination. The growth expectation remains pinned on coronavirus vaccination available globally, not only in some markets. New mutations could impact growth prospects, so uncertainty still remains the king", points out Singh.

The future of the construction industry seems strong and robust, which is likely to translate in more demand for steel, therefore, leading to an increase in GGBFS production.

"With steel production being the major driver of GGBFS production, global economic recovery is paramount to ensure sustained demand. And this growth expectation does not account for how demand for GGBFS could be materially affected by legislation. For example, we have a prospective US infrastructure spending bill of more than a USD 1 trillion where a focus on environmentally friendly products could change the scenario", assesses the Associate Director.


Pig iron production to be dominated by India by 2025F

In Asia ex-China, pig iron production is expected to be dominated by India, to reach 9 million tons, and grow at a CAGR exceeding 6 percent over the forecast period, followed by Japan with a production of more than 8 million tons, increasing at a CAGR of more than 5 percent.

Also, in Asia, Vietnam has seen explosive growth, from almost no capacity to almost 20 million tons in a period of five years.

Turkey, in Europe, has been driving Europe's pig iron production and, therefore, GGBFS production.

In terms of GGBFS consumption by region, although we have an estimated decline of more than 1 percent in 2020E on a yearly basis, the drop is decidedly much less severe than expected in the beginning of the year.


GGBFS global market size to see a small decline in spite of higher volumes

GGBFS demand is forecast to see a minor growth from 267 million tons in 2020E to 269 million tons in 2025F.

China is expected to remain the largest consumer in the next 5 years, despite a small decline. In terms of market size China is estimated to have the largest share in 2020E, with an estimated 63 percent market size, and by 2025F it is expected to account for approximately half of the global market size.

Asia ex-China, is estimated to be the second largest region, with a market size estimated close to a USD 1 billion in 2025F. In 2020E, Asia ex-China is set to account for 17 percent of the GGBFS consumption, which is more than twice the demand from Europe.

"Despite consumption levels being twice as big as Europe, prices in the region are much lower which results in a smaller market size. This market is also expected to be a major regional driver for GGBFS consumption in the next 5 years, with major contributions from Japan and India", observes Prashant Singh.

Europe is expected to account for 9 percent of GGBFS consumption in 2025F. Developed economies led by Germany, France, UK, Italy, are expected to see demand recovery to previous levels, while Turkey's demand for GGBFS is set to see a robust growth of more than 10 percent from 2020E-25F.

"Europe market size is expected to be equivalent or slightly exceed Asia ex-China in the forecast period", the analyst said. Over the forecast period, GGBFS consumption is expected to see a minor increase, while the total market size is expected to see a decline from 2020E to 2025F.


This article was based on CW Group’s webinar presented on January 28. Watch the webinar and download the presentation here.

Find out more about the Global Ground Granulated Blast-furnace Slag Market Report and Forecast here.



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