SteelCo.

Ltd
Profitability
Challenge
By: Palak Bansal (Hansraj College)
 Steel Industry

Overview
The steel industry is a vital and foundational sector within the global
economy. It plays a crucial role in various industries and applications,
ranging from construction and infrastructure development to
manufacturing and transportation.

It reflects a combination of cyclical demand patterns,

3.8% economic maturity, efficiency gains, and sustainability
considerations.
CAGR
This is subject to fluctuations driven by factors like
$ 1,599.4 global demand, trade policies, and economic
Bn conditions.
Market size

1.9 Bn The steel industry produced 1.9 billion tons of steel

globally in 2022, reflecting sustained demand for its
tons
applications across various sectors.
Total production
some countries or regions have higher or lower
233 kg levels of consumption based on their economic
activities and infrastructure development.
Per-Capita
Consumption
 Analysing Global Demand Projections (2023)

Asia Pacific Africa and Middle East Europe

Increase by 1.2% in 2023, 4.4% Increase in 2023 1.3% decrease in 2023
stable in China > High growth of construction > Impacted by Russia-
> Rising inflation rates industry Ukraine war
> Positive growth in > Expected surge in Material Costs > Decreased Sales of
automotive production > Increased manufacturing of Automobile
Automobiles
South America
North America
> Fluctuations due to
Increase 1.8% in 2023
inflation, geopolitical
> Supply chain issues and
issues, and economic
pandemic-induced
conditions
supply shortages.
> Challenging to provide
> Rising fuel prices
an average growth rate for
> Boost in construction &
the region.
energy sector.

KEY FACTORS Increased infrastructure Strong economic growth likely

Geopolitical tensions disrupting
developments in emerging
AFFECTING DEMAND global supply chains. to increase production.
markets.
 Global share by Production
China is the world's largest steel manufacturer, with a vast
industrial capacity and high demand for steel.

The European Union (EU) is a 2nd largest steel producer,

emphasizing high-quality steel products.

Fluctuations in the prices of key raw materials, such as iron ore

and scrap metal, are impacting recent production levels.
Industry trends
Sustainability and ESG Focus:
Producers are adopting eco-friendly practices, reducing emissions, and focusing on
recycling and circular economy principles.

Decarbonization Efforts:
Steelmakers are investing in research and development to reduce carbon emissions
through innovative technologies and cleaner steel production methods.

The steel industry is undergoing a 02

transformation, marked by a strong
commitment to sustainability, digital
innovation, and the circular economy, while
grappling with challenges posed by
overcapacity and global trade dynamics.
Trade and Tariff Uncertainties:
Ongoing trade tensions, tariff disputes, and anti-dumping measures were
influencing international steel trade and creating uncertainties.
03
Alloy and Specialty Steels:
The demand for high-value, specialty steels for applications like electric
vehicles and renewable energy infrastructure is on the rise.

Infrastructure Investments:
Increased infrastructure spending by governments in various regions is expected
04
to boost steel demand, particularly in construction and transportation sectors.

Steel Overcapacity:
The issue of global steel overcapacity, with a focus on China's role, is a continued
concern, affecting market dynamics and trade policies.
 Internal Analysis
SteelCo. Ltd
An International Steel Company

Selling 5 Product Across the

groups with globe in these
individual regions
product lines.

Total Sales :-
Revenue - 1,10,54,05,929 Euros Volume - 4,34,53,19 Tonnes

555106752 EUR 550299177 EUR

Analysing Profitability

Varying product mix to be used to increase profitability

 Product wise Sales

MODA is sold in large quantity in North

Dura is sold at highest volume in Asia
America. Yet, THERMA has the highest
Pacific, yet revenue contribution is just
profitability there.
slightly more than Therma.

Core is sold at highest volume in EMEA,

yet Dura and therma have better
profitability. Thus, focus can be on
increasing sales of DURA and THERMA in
EMEA.
 Analysing Profitability

Negative per unit

profitability of
CORE in EMEA To reduce sales
of CORE product
lines EMEA region
and that of DURA
Asia Pacific -
4120 as well.
Highly profitable
in SUPRA
Lowest in MODA

Highest
profitability per
unit in South
America via CORE.

Profitability =
gross margin/ revenue *100
Growth areas
Traditional consumption patterns

New Consumption Patterns

1. Infrastructure projects
2. Renewable Energy
the steel industry's future growth
3. Electric Vehicles lies in sustainability, innovation,
4. Oil and Gas and adaptability, with a focus on
5. Aerospace green steel production,
digitalization, specialty
6. Smart Cities
applications, and global
7. Manufacturing expansion.

01 02 03

Specialty Steels: Global Expansion: Hybrid Steel Production:

Expanding the production Diversifying into regions Combining traditional

of specialty and high- with growing steel steelmaking with
value steels for specific demand namely Asia modern methods, like
applications, including Pacific region, with electric arc furnaces, to
aerospace, renewable demand led by increased achieve both efficiency
energy, and high-tech govt policies related to and sustainability.
manufacturing. development.

*Electric Arc Furnace Production Technology is projected to be in high usage. EAFs use electric arcs to melt steel scrap, reducing the need for
primary raw materials like iron ore. This resource-efficient approach is appealing as concerns about resource availability and cost persist.
 THANK YOU!

SOURCES:

https://www.marketsandmarkets.com/Market-Reports/iron-steel-market-
240207849.html#:~:text=The%20global%20iron%20and%20steel,3.8%25%20from%202022%20to%202027