The 4 th Industrial Revolution and Its Impact on the Future Steel Industry and Steel Demand

Transcription

1 OECD Steel Committee Meeting 2017 The 4 th Industrial Revolution and Its Impact on the Future Steel Industry and Steel Demand Yong-doo Cho, Ph.D. POSCO Research Institute Sep. 28, 2017

2 1. Introduction End of 18 th century Start of 20 th century Late 20 th century 2010 onwards Mechanization Mass Production Automation Hyper Connectivity Fusion, Convergence Convergence b/w manufacturing and Service Source: Siemens, Picture of Future, 2013; POSRI 2/22

3 Steel Mill s Response to 4 th Industrial Revolution 1. Introduction 3/22

4 Impact on Steel Value Chain 2. Changes in Steel Industry 4th Industrial Revolution Materials procurement R&D Manufacturing /Process Product Logistics & Service Optimal blending Product Smart tech-based Ultra light, high Rise of steel of material development & diagnosis & control strength & high e-commerce ingredients design using CPS of facilities performance steel platform Change (Fall of traditional SSC) Enhanced Quick compliance with Agile to small Lot Fusion or integration Materials Library recycling of resources raw materials specification and small quantity batch production among materials (Materials solution) (Physical property DB, Provision of machining tech.) Level of impact Source: 4 th Industrial Revolution : Impact on and Implications for the Korean Manufacturing Industry, KIET, June 2017 Low High 4/22

5 Smart Steel Mill 2. Changes in Steel Industry Simulation Adugmen ted reality Data-driven service Automation Smart machines Real-time communication AI-driven Self- Controlled Factory Predictive Quality Control Optimize production through intelligent machines learning best practices IoT & Big Data-based high quality & zero defect operation Predict defects and eliminate them in downstream process Evolved from factory automation A production system with facilities and parts connected and mutually communicated Cost saving Autonomous robots Embedded sensors Real-Time Smart Safety Detect, warn and control dangerous and irregular behaviors $54 bil.(y) Source: PwC Survey, 2016 (Metals Industry) 5/22

6 Smart Steel Mill 2. Changes in Steel Industry Blast Furnace Automatic Control of Blast Furnace Plate Mill Precision Control of Deformation From manual operation to automatic operation through deep learning Furnace temperature deviation cut by 18% Precision control of deformation during quenching through big data analysis and prediction Engineers time for data analysis halved Hot Rolling Mill Optimal Air-Fuel Ratio Control of Reheating Furnace Optimization of air-fuel ratio with sensors measuring the concentration of gas in reheating furnace Fuel unit requirement cut by 5% Galvanizing Mill Automatic Control of Coating Weight Automatic process with AI-based prediction of optimal coating weight Maximum deviation of coating weight: 7g/m 2 0.5g/m 2 6/22

7 Smartization on Biz Platform 2. Changes in Steel Industry Business platform by integrating between suppliers and customers Ex) Status of China s steel e-commerce Agg. Supply Info. Analytics 3rd Party Platforms Platform connection Cloud Social & Mobile Big data Suppliers Steel Industry Platform Customers Consulting firms Venture capitalists Banksteel Zhaogang 28 Mt 32 Mt Connection to other service platforms 3rd Party Logistics Agg. Demand Info. Analytics Steelmakers Ouyeel 10 Mt Source: China s Steel E-Commerce Development Report, May /22

8 Smartization on Value Chain 2. Changes in Steel Industries Internal + External partners + Customers Implicit Knowledge Explicit Knowledge Smart Value Chain Management Raw materials Cost Finance Marketing... 8/22

9 The Flow of Steel Demand Production Smart Factory Machine Learning Sales Product High Strength High Performance Management Meeting customer needs Delivering cost efficient solution Replacing competing-material Product Offerings New Distribution Platform Digitalization of Knowledge Impact on Steel Demand 4th Industrial Revolution Electrification Autonomous Cars Sharing Economy New Transportation Flow Eco Ships Smart Ships Mega Cities Green Cities Smart Cities Changes in Steel Products Product Needs High strength & toughness High corrosion resistance High performance Steel Intensity Steel Demand Plateau? 9/22

10 New Trends Automobile Shipbuilding Construction Electrification Hybrid, Electric, Fuel Cell Vehicle 41mil. Units: 35% of new cars sold in 2040 (Source: BNEF) Autonomous Cars Google, NVIDIA-Audi, Intel-BMW 21mil. Units: 15% of cars sold in 2035 Sharing Economy (Source: IHS Markit) Car Sharing(Zipcar etc.), Ride Sharing (Uber etc.) Absorbing 27% of mobility demand (Source: Roland Berger) New Transportation Flow Natural Gas, CO 2 Storage and Transport New Arctic Routes Eco Ships Energy efficient super container and tanker LNG, Fuel Cell Engines Smart Ships Connected ships Unmanned ships Mega Cities Growing cities Super skyscrapers Super Structures: bridge etc. Green Cities Urban farming Eco-friendly design: LEED* *Leadership in Energy & Environmental Design Smart Cities Digital, virtual, information, intelligent, ubiquitous city IT infrastructures: cables, data centers 10/22

11 Steel Products Automobile Ship Building Construction 11/22

12 Automobile: New Mobility Paradigm Electrification Autonomous Cars Car Sharing Car Sales 30% of new cars sold in % of new cars sold in % of mobility demand in 2035 Source: Bloomberg New Energy Finance Source: IHS Markit, L4~5 vehicles Source: Roland Berger Materials Image credit: Tesla, Bosch, Local Motors, Renault 12/22

13 Automobile: Demand Forecast 1 2 Motorization of emerging countries Share of Autonomous vehicles [Million units] 92 Impact of New Mobility on Automobile Demand CAGR 1.6% 3 Car sharing impact Family-, ride-, car sharing combined with autonomous vehicle effect 4 Increasing mobility Low cost travel, teenagers, elderly (+15% VMT assumed, work on progress) *Vehicle Miles Traveled 2015 Production 2035 On-going trend-based Scenario Source: POSRI based on IHS Markit data *The # of cars includes commercial vehicles (3.2 million units in 2015, 7.7 in 2035) 2035 New Mobility Scenario 13/22

14 Automobile: Steel Intensity Lower Emission CO 2 Emission Regulation [g/km] (by Global Climate Action) 141( 15) 100( 25) 60( 35) 10% Weight reduction every 10 years 100 (1,546Kg) Steel Content Per Vehicle 89-10% (1,391kg) -10% 80 (1,252kg) [2015 = 100] Lighter Steel Content Reduction Lightweight materials (AHSS, Al, CFRP) 54%( 15) 51%( 25) 49%( 35) 54% -3% 51% -2% 49% Curb Weight (kg/vehicle) Steel Content Stronger Higher Safety Standards Med. & High Strength Steel: 18%( 15) 29%( 35) of vehicle total 18% +5% 23% +6% 29% (%) Medium&High Strength Steel (%) Source: POSRI Image credit: Volkswagen, POSCO EVI Forum 2016 * Steel Content: Finished Steel Products, Light Duty Vehicle: Curb weight under 3.5 ton 14/22

15 Shipbuilding: New Era of Global Flows Growing Trade Sustainable Future Ships Growing Economy Larger & lighter ship Global GDP [Trillion US$] Ultra large vessel Export (% of GDP) % Growing Gas Production % LNG related vessels LNG-FPSO (Floating Production Storage and Off-landing) FSRU (Floating Storage Re-gasification Unit) LNG Carrier Eco-ship & Smart ship Efficient fuel (LNG, fuel cell) Connected / Unmanned Ship Autonomous Ship *bcm: billion cubic meter, Mtce: Million tons of coal equivalent, mb/d: million barrels per day Source: IHS Markit, Roland Berger Trend Compendium, WTO, IEA 15/22

16 Shipbuilding: Demand Forecast Global Shipbuilding Demand [mil.gt, Annual Average] 08~ 15 16~ 25 26~ 35 [mil.gt, Annual Average] Bulker Declining coal demand Tanker Slowing oil demand growth Gas Carrier Fast growing gas demand Containership Growing world trade '08-'15 '16-'25 '26-'35 Others Others (Leisure ships, etc.) Source: POSRI based on Clarkson data Source: Clarkson, POSRI Image credit: Wikimedia commons 16/22

17 Shipbuilding: Steel Intensity Larger & Lighter Ship Eco & Smart Ship Ultra large vessel Number of ships Light weight vessel High strength steel Propulsion system Heavy main engine Light electric motor Unmanned/ autonomous ship No deckhouse [2015 = 100] 100 Steel Intensity of Ship s Tonnage Larger & lighter (on-going trend) Change of propulsion system & deckhouse design, etc. (new trend) - considering weightreduction effects Source: POSRI Note: Steel intensity = Steel demand for shipbuilding/gross tonnage (GT) * Effects of on-going trend are analyzed based on Japanese shipbuilding industry data. 17/22

18 Construction: Rising Megacities & Smart Cities 500m Urbanization Growing Cities (Commercial, infrastructure etc.) Mega Cities Super structure (Building & Bridge) Smart & Green Cities IoT connected infra, Recycle, Reuse 4 bil. people among the world s population of 7.3 bil. live in cities ( 15) Image credit: andrewprokos.com 18/22

19 Construction: Investment Forecast 45% 2, Growing Urban Population * World population: 5,742 7,325 8,743 (mil.) 54% 3, Growing Cities * No. of cities over 500,000 population 29 1,039 62% Urbanization rate 5, Megacities 1,536 [trillion US$] Construction Investment Trend 2.0% % % % % % 2.4% 4.7 Plant Commercial Infra 2.5% % 1.8% Residential % 22% 35% 35% Source: UN World Urbanization Prospects, POSRI Source: POSRI based on IHS Markit 19/22

20 Construction: Steel Intensity Urbanization Smart & Green Cities Share of material cost, labor cost Fast-growing lower-intensity sector [2015 = 100] Share of low-intensity sector : Commercial 0.08(tonne/thousand US$), Infra 0.07 Share of high-intensity sector : Plant 0.36 Super Structure (buildings/bridges) High strength steel Steel demand Steel Intensity of Construction Investment Mega- cities Rising share of smartization cost IoT, sensors in intelligent structure Source: POSRI Note: Steel intensity = Steel demand for construction/construction investment 20/22

21 Global Steel Demand Forecast Steel Demand Forecast Automotive Production (mil. unit): ( 15) 92 ( 25) 114 ( 35) 127 Steel Intensity ( 15 = 100): ( 15) 100 ( 25) 89 ( 35) 80 New Ship Orders (mil. GT): ( 15) 79 ( 25) 61 ( 35) 109 Steel Intensity ( 15 = 100): ( 15) 100 ( 25) 97 ( 35) 90 x x [million tonne] Others Shipbuilding Automobile CAGR 1.2% CAGR 0.9% [ 16-35] 1.1% 1.0% 2.3% 0.3% Construction Investment (Tril. US$): ( 15) 9.0 ( 25) 11.5 ( 35) 13.4 Steel Intensity ( 15 = 100): ( 15) 100 ( 25) 91 ( 35) 84 x Construction (Including Energy) % Source: POSRI Notes: Shipbuilding sector includes other transportation; Demand for other sectors is forecast using industrial production index; The demand on energy sector is forecasted to increase by 2.3% per year where the demand is measured by Energy investment and its steel intensity curve. POSRI steel demand n model is calculated based on regional GDP forecasts and Steel Intensity curve, as follows D 21/22 t GDPt Sibi, where Si represents steel demand for i industry and bi illustrates the ratio of value added over GDP for i industry. i

22 4. Conclusion Enhanced productivity and efficiency in steel industry through smartization in steel-making process, e.g. AI, Big Data, IoT, etc, will allow to reduce production costs, affecting the entire steel value chain positively Steel intensity is forecasted to decline, but the growth rate of global steel demand will moderate significantly over the next twenty years - Steel demand for construction and shipbuilding will grow gradually - Steel demand on automotive will not change significantly due to the spread of vehicle sharing and autonomous deriving, despite the rising demand for automobiles in emerging countries Global steel demand will grow by about 1% each year from 1,501 Mt in 15 to 1,857 Mt in 35 To thrive in challenging environment, steel industry must seize the opportunities for new business and demand offered by smart technologies 22/22

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