In recent years, there has been rapid innovation in the development and processing of structural metals, particularly for high-performance alloys. Lux has covered high-end metals innovation extensively, much of which has been driven by advances in 3D printing, simulation and modeling software, materials informatics, and novel approaches to alloy design, such as high-entropy alloys. As a result, the development, production, and processing of high-performance metals continues to get cheaper as quality improves.
However, the vast majority of world annual metals production – nearly 95% by weight – is steel, with aluminum constituting the majority of the remainder. Steel and, to a lesser extent, aluminum are in general the default option for metals, with specialty metals filling in the gaps they are unable to meet in terms of performance on any number of metrics. And while falling prices of high-performance alloy parts may eventually compete with advanced high-strength steel on price and performance at the margin, they are unlikely to substantially displace standard steels in commoditized applications. As a result, innovation in the steel industry, in particular, is driven by very different pressures than what high-performance metals face. Overall growth (about 0.9%/year in recent years) is driven by external factors like global economic growth, and companies in the industry largely compete for market share on cost and quality for a given grade.
Nevertheless, the steel industry has seen large-scale, ongoing shifts in recent decades that continue to shape its future trajectory. The performance of standard structural steel has slowly risen over time, with yield strength and tensile strength doubling since the 1950s due to improved process and chemistry control. Since the 1990s, energy intensity of steel production has been falling at about 1.4% per year and is expected to continue to do so. Much of this decline has been because of a shift from mostly primary steel production at integrated steel mills using blast furnaces, to mostly steel made using electric arc furnaces (EAFs). EAF steel uses iron and steel scrap, not ore, as its inputs require only about one third as much energy as primary steel production, with much of that coming from electricity rather than coal and coke. As of 2005, EAF production constituted more than 55% of all steel production, up from 47% just four years earlier. These trends are likely to continue, as the industry faces continuing economic and regulatory pressure toward lower prices, lower energy intensity, and lower carbon intensity.
In the long term, then, energy and environmental factors form a substantial challenge to the future growth of steel. As Lux noted at the 2017 Lux Executive Summit, lowering the carbon intensity of industrial processes that operate at high temperature, like primary steel production, is the most challenging portion of global greenhouse gas emissions to mitigate. In the absence of carbon capture and storage technology, then, long-term trends favor industrial processes driven by electricity rather than combustion, increasing the advantage of EAF steel over primary steel. In addition, aluminum production relies on electricity as its primary energy source, and in terms of cost aluminum is the metal that can most plausibly compete with steel on price in applications that don’t require steel’s higher strength and temperature performance. Fundamental process advances will be needed to enable primary steel production without combustion, such as the molten oxide electrolysis (MOE) process being developed at the Massachusetts Institute of Technology, but these technologies will take time to penetrate the large, mature, and conservative steel industry. Moreover, high-strength steel (HSS) and advanced high-strength steel (AHSS) will likely be able to take some market share from standard steel; because less weight of material is needed for a given application, the carbon intensity and energy intensity per part can be lower.
These overlapping trends suggest that steel production will continue to shift towards EAF steel production, towards electric-driven processes in general, and away from coal. While we noted earlier that the energy intensity of steel production is falling, carbon prices will likely increase much faster. As a result, even over the next 10 years, 1.4% annual reductions will be insufficient, incentivizing steel producers to adopt technologies that can directly mitigate emissions, generate clean energy, and further reduce energy consumption. Energy innovation, rather than materials innovation, will be the most important differentiator in the steel industry. Steel producers will need to look to secure their own supply of renewable energy either through the grid or through on-site generation or waste heat recovery, and will likely need to invest in carbon capture as leading developers like CO2 Solutions are already becoming cost competitive with projected carbon prices over the next five years.
For more on materials, be sure to register for the upcoming webinar: Do You Have a 3D Printing Strategy? by Lux Research.
By: Anthony Vicari
