A shift is underway in the steel industry
The steel market has experienced slow but steady year-over-year growth of 2-4% CAGR in recent years. Historically a high-volume and low margin business. At the same time, the commodity value of steel is diminishing. Global impact felt from China has forced slow-downs and underutilized capacity across the industry.
A shift is underway, where differentiation through innovation is beginning, as steel manufacturers introduce lighter and higher strength materials that produce a higher quality product with a higher margin. A recent poll of metals executives, reported by Ernst & Young, indicates that mill productivity is declining, largely due to an inability for mills to integrate. And, the circular economy and sustainability is impacting the steel industry’s demand dynamics.
To combat this, forward-leaning steel mills have placed a focus on improving productivity and margins from within. And this has spurred a movement around digital transformation that is being examined industry wide–the digital mill. The World Economic Forum predicts that, by 2025, digital transformation will create more than $425 billion of value for the metals industry as a whole.