The nearly $45 billion global refractory market is forecast to see 2.2% annual growth in volume terms through 2023, supported by a healthy outlook for heavy industries worldwide. In addition, price increases driven in part by an ongoing shift toward higher value products will bolster value demand gains. However, with the COVID-19 outbreak disrupting near-term prospects in major markets – particularly China, where metals operations are gradually coming back online – long-term effects are increasingly likely, especially as the number of confirmed global coronavirus cases approaches pandemic levels.
A new Freedonia Group analysis puts the global refractory market into perspective, highlighting growth drivers and restraints in key industries at the global, regional, and national levels. Below are four national trends to watch going forward.
China to account for slightly more than half of demand through 2023
China is by far the world’s largest market for and producer of refractories, supported by its expansive industrial sector (the country produced 50% or more of the world’s iron, aluminum, glass, and cement in 2018) and its vast reserves of refractory raw materials, exports of which the government tightly controls. Among the drivers of China’s market through 2023 will be:
- Continued rapid gains in copper and aluminum production will drive fast growth in the nonferrous metals market.
- Growth in the leading iron and steel market will be driven by a rebound in iron and steel production to meet material requirements for rising infrastructure projects and the expansion of transportation systems.
- A number of other markets, especially chemical and petroleum refining, will also grow faster than average, while continued expansion of the Chinese vehicle fleet will support growth in the petroleum refining market.
US demand to recover as iron and steel production returns to growth
The US has long been a major global producer and consumer of refractories due to its status as a global leader in the production of:
- fabricated metal products, refined petroleum, chemicals, glass, and cement
- steel, aluminum, and copper, all of which are refractory-intensive processes
In addition, US refractory manufacturers have long held a technical edge over foreign competitors. As global refractory demand continues to shift toward higher quality products, US producers have an advantage.
Through 2023, each major refractory market in the US is projected to rebound from losses posted over the last decade, with increased aluminum production and the restarting of temporarily closed copper mines spurring fast growth in the nonferrous metals market, and increased iron and steel capacity utilization creating promising opportunities in the leading iron and steel market.
German market hindered by decline in iron and steel production
Though Germany’s refractory market is large and diverse given its prominent glass, aluminum, copper, fabricated metal, and chemicals industries, many of the country’s key refractory-consuming industries are mature and slow-growing. Between 2008 and 2018, Germany outperformed most West European refractory markets on the strength of the German manufacturing sector. Through 2023, however, continued anticipated decreases in iron and steel production both domestically and regionally will lead to losses in the leading iron and steel segment, which will offset gains in other markets. Nevertheless:
- Growth in the nonmetallic minerals market will be supported by an increase in construction, which will in turn support ongoing cement and flat glass production.
- Nonferrous metals market gains will continue to be boosted by strength in aluminum and copper production.
In addition, like the US, Germany will benefit from the global shift toward more advanced products, as German is a major exporter of high-value refractories.
Rebounds in Russian market aided by industrial recovery after prolonged weakness
Russia was the fifth largest global market for refractories in 2018, supported by the country’s status as a leading global producer of iron, steel, copper, aluminum, glass, cement, fabricated metal products, and refined petroleum. After a prolonged period of weakness in many major refractory markets, rebounds in production activity are expected to support gains:
- Increases in cement-intensive infrastructure projects will support above average growth in the nonmetallic minerals market.
- Gains in car and truck production and construction activity will support advances in the leading iron and steel market.
Nonferrous metals will also continue to account for a large share of refractory demand. Russia is the third largest global producer of aluminum and copper, and a ramp up in aluminum production is expected since US sanctions have been lifted.
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About the Author:
Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.