The Freedonia Group has just issued a new report about the market for refractory materials, “Refractories to 2016,” and, generally speaking, the outlook is good worldwide, including the view on North America and Western Europe, where refractory demand has ebbed and flowed quite a bit over the last decade.
As noted in the headline, Freedonia predicts an average global growth rate—in terms of metric tons—of 3.4 percent per annum to 46.3 million metric tons. The outlook for revenue is even better, with Freedonia predicting that refractory sales will climb 5.3 percent per annum to $46.5 billion in 2016.
Freedonia notes that revenue growth is not as strong as gains registered in the 2001-2006 period, something the research group attributes to “moderation in raw material costs and refractory prices.” However, Freedonia also notes that revenues have and will continue to grow faster than tonnage because of the gradual shift in demand from ordinary iron and steel production (now about three-fifths of the demand) to more specialized and longer-lasting applications that can command more premium pricing. The use of more efficient manufacturing methods is another factor.
Thus, for example, Freedonia points out, “Due to their greater use of more costly, high quality products, the US, Western Europe, and Japan will account for a somewhat larger share of the world refractory market total in dollar terms (19 percent) in 2016 than they will in tonnage (14 percent).”
Freedonia’s report also has good news for North, Central, and South American as well as Western European, which should be welcome information for those getting ready to attend the big refractory ceramics meeting next week (the combined ACerS’ St. Louis Section–Refractory Ceramics Division Symposium) in St. Louis, Mo.
As noted in the charts above and below, while Freedonia predicts that tonnage in North America and Western Europe likely will never return to pre-2006 levels, the group points out that overall sales will continue to grow for producers, again a reflection of the shift to more specialized refractory items.
In the 2011–2016 period, Freedonia predicts, not surprisingly, that the Asia/Pacific region will post the largest tonnage increases. It will be followed by the Africa/Mideast region, Central and South America, and Eastern Europe. Freedonia, in particular, notes continued strong demand in China, which “alone will account for more than seven-tenths of all refractory volume gains between 2011 and 2016, due both to additional growth in its huge steel, cement, and other heavy manufacturing industries and to the use of less sophisticated production methods in steelmaking and other important markets than those utilized in economically advanced nations, resulting in greater refractory use in per unit of output terms.”
As reflected in the top table, Freedonia also makes what I find is a fascinating prediction about Central and South America for the 2016-2021 period, when robust growth in tonnage (4.3 percent per annum) is expected for the region, a rate that may surpass Asia. Freedonia analyst Ken Long explains via email, “Market advances in Central and South America will be stimulated by a strong acceleration in steel production growth and supported by a rebound in aluminum output after a period of decline. Brazil, which accounts for the lion’s share of the region’s metals production, will post the largest refractory sales gains.” He also writes, “construction spending in Central and South America will continue to rise nearly as quickly from 2016 to 2021 as during the 2011-2016 period, boosting regional consumption and output of cement and flat glass… helping to offset slower growth in the metal markets.”
Another interesting takeaway from the Freedonia report is the relative change in the size of the regional markets between 2001 and 2021. For example, it predicts that the percentage of world shipments in terms of dollar value will have shrunk from 16.6 percent to 6.6 percent for North America and 24.1 percent to 11.1 percent for Western Europe—trends that are sure to be grist for the mill at next week’s symposium.