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The mission of the modern steel industry

In order to succeed one needs to have a mission. Martin Luther King said: “I have a dream”, not “I have a plan”. The modern steel industry needs to redefine its mission as the whole environmental and economic landscape has transformed rapidly. To find the new framework for innovation we must look to the emerging economies.

For example China accounts for 45% of the world steel consumption. And more than half of this comes from the construction industry. This composition is unlikely to change since the switch from investment and export led growth to consumption driven model is not happening as planned. The GDP share of investments is increasing while that of consumption is decreasing. This derives from the fact that the high Chinese savings rates crowd out private consumption as the country lacks universal social security system. These problems are addressed by both the old and new leaders, but the transition won’t be quick.

In emerging economies the steel demand is driven by urbanisation and investments

High urbanisation rates are connected with high per capita steel use. We say that such nation has a high steel intensity. With this respect the core question regarding for example China is that whether the poorer southern and western regions of the country will experience the same growth and urbanisation paths as the coastal China did or will there be a tale of two Chinas in which the national GDP growth will converge to 3-4% towards 2025 instead of 5-6%. The huge regional imbalances are explicitly a matter of the steel industry: a Chinese urban household has 10-15 times higher steel intensity than a rural household.

In order to tackle the issue of climate change the future of emerging economies is of essence given their colossal global economic and demographic impact. In terms of carbon footprint there are two things to consider above all: renewable and non-carbon energy production and sustainable growth model. Energy-efficient steel solutions offer one of the most effective tools in this development.

Special steels are not an option but an absolute necessity

Steel construction in urban environments is the fastest and most convenient way to build in dense urban environments. High-strength steel structures require less material and transportation. Besides that the elegant and modern appearance of steel fits well into urban landscape.

Use of special steels in transport and construction equipment reduces operating costs and CO2 emissions and increases durability of the products. Steel is fully recyclable material and especially the Chinese scrap reservoir is growing rapidly resulting eventually in a wide scrap collection system that promotes sustainability and life cycle thinking. Demanding steel solutions are widely used in solar, wind and wave energy.

Anywhere we look, we see that the energy-efficient steel solutions are a prerequisite for sustainable growth. This is most evident in emerging economies but the same logic fits everywhere in the world. The development and use of these solutions will have an enormous positive impact on the environment. To make this a reality is the biggest challenge and also the mission of the modern steel industry.

Niko Korte, Business analyst, Ruukki

Smart Steel

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