Increasing Vehicle Production and Material Innovation Propels the Automotive Steel Market Growth

Growing demand for vehicles across the world is one of the major driving factors of the automotive steel market. According to the International Organization of Motor Vehicle Manufacturers, 91.8 million vehicles are produced every year. Due to surging disposable income and a growing economy, the local ownership of vehicles is on the rise, especially in developing economies such as China and India, which have hiked production. According to World Steel, Global Crude steel production was 1.892 million tonnes in 2023. This heightened demand compels car manufacturers to seek out high-quality steel that would yield high standards of safety and performance. Conversely, the automotive steel market records remarkable growth the moment steel manufacturers rise to these increased demands.

Another key factor is the continuous technological changes occurring within the automobile sector. Car manufacturers are constantly attempting to achieve fantastic performance, fuel efficiency, and safe driving. This urge toward innovation increases the demand for advanced high-strength steels, among other tailor-made steel grades, that can deliver better strength-to-weight ratios. Such high-strength steels play a very instrumental role in weight reduction for vehicles to improve fuel efficiency and reduce emissions, meeting even the most stringent regulatory standards on vehicle emissions. With the regulatory framework getting tighter across the world, the automotive steel market will have no choice but to fall in line with materials that answer the changing demands of such regulatory requirements.

This has been evidenced by studies that show the acceptance of AHSS grades in new automotive applications is higher than that seen by competing materials. New car models are entered into the market every year manufactured with lighter-weight, advanced high-strength steel components that provide a cost-effective answer to the demand for increased safety and fuel economy. Projects like FutureSteelVehicle, which brought on board more than 20 AHSS grades, have shown that these newest steel grades, when combined with innovative processing methods and design optimization techniques, enable the steel to achieve a mass reduction as high as 25% in many applications, giving steel almost parity with mass reductions achieved by aluminum. Other examples of AHSS technologies include the front lower control arm that is weight-neutral to its aluminum counterpart but at one-third the cost.

Mass reduction with AHSS not only conserves material but helps reduce greenhouse gas emissions over the full life cycle of the vehicle, including manufacturing, driving, and recycling. Life cycle assessment data shows steel, which makes up nearly 55% of the average North American vehicle, generates fewer manufacturing emissions than other automotive body materials. Vehicles using high-strength steels provide significant reductions in driving emissions, as well as total life cycle emissions. As the industry continues to evolve, these driving factors will remain critical in determining the future trajectory of the automotive steel market.
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Inclination Towards EVs and Increased Demand for Light-Weight Material Fuels the Market Growth

The key opportunity in the automotive steel market is the increasing trend toward electric vehicles. As the automotive sector is shifting from internal combustion engines to electric powertrains, a strong demand for more sophisticated materials with higher strength and lower weight is emerging. This demand has initiated further advancement in steel technology, thereby driving innovation into light-weight high-strength steel. These materials are crucial in overcoming weight from batteries and delivering state-of-the-art performance for the vehicle. As the EV adoption goes up, those manufacturers of steel investing in such advanced development and supply of the material will capture a major market share.

The other good prospects are enhanced focus on the safety and performance of vehicles. Most of the latest vehicles are designed with higher safety standards. Hence, there is a need for high-strength steels (HSS) and advanced high-strength steels (AHSS). These steels deliver value to the manufacturers in the marketplaces by improving crashworthiness and structural integrity. New grades of AHSS and processing technique innovations will drive growth in the automotive steel sector. Companies focusing on research and development to create next-generation steels with superior properties will find ample expansion opportunities.

The requirement for fuel efficiency and lower carbon emissions has given way to huge opportunities. Due to the increase in demand for fuel economy and emission standards imposed by governments all over the world, manufacturers are forced to look toward lighter and more efficient materials. HSLA steels and advanced high-strength steels contribute much in weight reduction that improves fuel efficiency and cuts down on emissions. The continued trend of the automotive steel market into sustainability and greening raises the demand for eco-friendly means of producing steel, including those processes that involve either the use of recycled steel or hydrogen-based steelmaking processes. These sustainable practices also relate well to global environmental goals and appeal to increasingly eco-conscious consumers. Steel manufacturers leading the way in the adoption and promotion of green technologies will be merely bound by regulatory demands but also well placed in the market. Innovation, sustainability, and strategic market growth will enable steel manufacturers to leverage such potential and ensure their growth trajectory and solid positioning within the new panorama of the automotive steel market.

Recent Trends in the Automotive Steel Industry

  • Shift Towards Lightweight Materials
  • Adoption of Electric Vehicles (EVs)
  • Sustainability and Green Steel Production
  • Advanced Coatings and Surface Treatments
  • Enhanced Recycling and Circular Economy Initiatives
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High Energy Intensive Production Process and Carbon Emission Hinders the Market Growth

Various threats arise from several sources which are economic fluctuations, technological challenges, pressures from regulatory bodies, and market dynamics. Among the major threats is the volatile price of raw materials for the automotive steel industry. Key inputs like iron ore and coking coal are major raw materials in the production process of steel. Any fluctuation in the prices of these raw materials greatly influences production costs and profitability. Price volatility may emerge due to geopolitical tensions, disruptions in supply chains, or simply altered global demand conditions. Automotive industries are increasingly concerned about the integration of other materials instead of steel into their automobiles, such as aluminum and composites. They offer a better advantage in reducing weight, which is seriously considered for better fuel efficiency to meet increasingly strict regulations on emissions and raise the performances of vehicles. This rising consumption of such materials threatens the demand for flat steel in automobiles and may hence create a loss in market share for steel manufacturers.

The tremendous pace of technological change within automobile manufacturing is forcing steel manufacturers to innovate and adjust continuously to try to keep up with the ongoing market trends. The threats involve failure to move with current technology along the value chain in the production of steel, including advanced high-strength steels and green manufacturing processes, hence making them stand disadvantaged in the market. Besides, the transformation of the industry towards EVs brings new demands for steel materials, inclusive of properties required by their batteries. With this, steel producers have to therefore keep on investing in R&D, which often is an extremely resource-draining and demanding process.

According to the World Economic Forum steel production is a highly energy-intensive process that produces high levels of CO2 emissions at up to 95% of all its emissions. The current fuel mix is very dependent on fossil fuels, and coal, in particular, as its main supply source, occupies about a 75% share. Dependency on coal has remained consistent between 70-75% over the decade and forms a substantial contributor to steel's absolute emissions. Over the last ten years, however, CO2 emissions from steel increased at an average of 2.5% annually as the production increased due to especially emerging markets demands. Presently, 78% of the steel is produced through primary routes and the remaining fraction through secondary production.

Green Steel Production and Sustainability Accelerates the Market Growth

In April 2024, ArcelorMittal announced the launch of a new content series - The Steel Works -that dives into the latest trends in the steel industry and into the challenges and opportunities that will shape the future of ArcelorMittal.In July 2024, KIRCHHOFF Automotive signed a Memorandum of Understanding with Hyundai Steel Company to supply low-carbon steel products. In March 2023, SSAB and MENETA announced the world’s first automotive brake components and sealing materials produced with fossil-free steel. The CO2 reduction will be achieved through a mixing process of EAF and BOF material (Electric Arc Furnace/Blast Oxigene Furnace), which will then reduce the CO2 footprint for the delivered product by around 20% compared to the steel currently supplied from the blast furnace route.

Other recent developments have been in the form of new grades of AHSS, such as Dual-Phase (DP) steels, Transformation-Induced Plasticity (TRIP) steels, and Martensitic (MS) steels. These newer grades provide even higher strength-to-weight ratios than before, enabling manufacturers to make lighter vehicles without giving up on safety. Such premium steels have helped achieve ambitious targets for crash safety and fuel efficiency. Other current trends involve the move towards methods of "green steel" production. In other words, it's a reduction in the carbon footprint by using technologies like hydrogen-based steelmaking and increased usage of recycled materials. Various companies are experimenting with hydrogen as a substitute for coke as the reducing agent, which would greatly decrease the CO₂ emissions resulting from steel production.
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Improved Material Strength and Fuel Efficiency Boost the Market Growth

With the automobile market continuing to seek out new, innovative solutions for meeting future Corporate Average Fuel Economy (CAFE) requirements, the North American steel industry remains committed to investments in advanced materials and manufacturing technologies that have enabled a wide range of new automotive steels. The steel industry addresses this need by developing new grades of AHSS with unique properties, both in terms of their metallurgy and manufacturability, that will allow the automotive industry to meet the increasing demands affordably.

The Asia Pacific represents a huge hub in the automotive industry, mainly for countries such as China, India, Japan, and South Korea. Automotive steel demand is mainly driven by an increase in car production. The market is further being aided by innovations in the production of steel, including ultra-high-strength steels and advanced high-strength steels. Thus, the materials provide safety and fuel efficiency, which are crucial for modern-day cars. Stringent legislation related to vehicle emissions and safety standards is forcing manufacturers to make use of quality steel. This may alter the steel dynamics as governments within the region begin to promote electric vehicles.

Economies within this region, being in a growth trajectory, urbanize and own more vehicles, feeding demand for automotive steel. Increasing demand for passenger vehicles and imposition of regulations related to the emission of harmful gasses in Europe is expected to drive the global automotive structural market during the upcoming decades and grow with a considerable share in the global automotive structural steel market. According to MEPS International (EU), in the first quarter of 2024, new car registrations rose by 4.4% to nearly 2.8 million units. Due to the existence of precision equipment, passenger cars, and heavy automotive vehicles, the German automotive industry has been an integrated and important part of European manufacturing in the automotive industry for many years.
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The report provides a detailed overview of the Automotive Steel market insights in regions including North America, Latin America, Europe, Asia-Pacific, and the Middle East and Africa. The country-specific assessment for the Automotive Steel market has been offered for all regional market shares, along with forecasts, market scope estimates, price point assessment, and impact analysis of prominent countries and regions. Throughout this market research report, Y-o-Y growth and CAGR estimates are also incorporated for every country and region, to provide a detailed view of the Automotive Steel market. These Y-o-Y projections on regional and country-level markets brighten the political, economic, and business environment outlook, which are anticipated to have a substantial impact on the growth of the Automotive Steel market. Some key countries and regions included in the Automotive Steel market report are as follows:
Regions Countries
North America United States, Canada
Latin America Brazil, Mexico, Argentina, Colombia, Chile, Rest of Latin America
Europe Germany, United Kingdom, France, Italy, Spain, Russia, Poland, Netherlands, Belgium, Sweden, Austria, Slovakia, Hungary, Romania, Czech Republic, Rest of Europe
Asia Pacific China, India, Japan, South Korea, Australia & New Zealand, Indonesia, Malaysia, Vietnam, Thailand, Rest of Asia Pacific
Middle East and Africa GCC Countries, South Africa, Egypt, Turkey, Morocco, Nigeria, Iran, Rest of MEA

Automotive Steel Market Research Report Covers In-depth Analysis on:

  • Automotive Steel market detailed segments and segment-wise market breakdown
  • Automotive Steel market dynamics (Recent industry trends, drivers, restraints, growth potential, opportunities in Automotive Steel industry)
  • Current, historical, and forthcoming 10 years market valuation in terms of Automotive Steel market size (US$ Mn), volume (Tons), share (%), Y-o-Y growth rate, CAGR (%) analysis
  • Automotive Steel market demand analysis
  • Automotive Steel market pricing analysis over the forecast period (by key segment and by region)
  • Automotive Steel market regional insights with a region-wise market breakdown
  • Competitive analysis – key companies profiling including their market share, product offerings, and competitive strategies.
  • Latest developments and innovations in the Automotive Steel market
  • Regulatory landscape by key regions and key countries
  • Supply chain and value chain analysis in the Automotive Steel market
  • Automotive Steel market sales and distribution strategies
  • A comprehensive overview of the parent market
  • A detailed viewpoint on Automotive Steel market forecast by countries
  • Mergers and acquisitions in the Automotive Steel market
  • Essential information to enhance market position
  • Robust research methodology

- Frequently Asked Questions -

What are the main challenges in the automotive steel market?

The main challenges include fluctuating raw material costs, increasing demand for advanced high-strength materials, and the need for continuous innovation to meet stringent safety and environmental regulations.

What are the major types of automotive steel used in the industry?

The major types of automotive steel include high-strength steel, mild steel, carbon steel, alloy steel, and stainless steel, each chosen for its specific benefits in performance, safety, and cost-efficiency.

What factors are driving the growth of the automotive steel market?

The growth of the automotive steel market is driven by increasing demand for lightweight, fuel-efficient vehicles, advancements in manufacturing technologies, and rising consumer preferences for enhanced vehicle safety features.