Steel Billets Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Steel Billets Category Overview

The global steel billets category is anticipated to grow at a CAGR of 3.5% from 2023 to 2030. Steel billets, a key raw material in steel production, are expected to witness growth with the rising use of steel in the automotive, infrastructure, and construction industries. Additionally, rapid industrialization and urbanization in emerging economies are driving infrastructural development, in turn resulting in the growth of the category.

Manufacturers of the category are also focusing on adopting advanced casting and rolling techniques to improve the quality and productivity of the product. Companies are adopting a continuous casting process through continuous casting machines (CCM), which play an important role in converting molten steel into solid billets, blooms, or slabs for further processing.

Moreover, billets also play a crucial role in enhancing the sustainability and efficiency of industrial manufacturing. As a vital element in eco-friendly production processes, they contribute to minimizing material waste and lowering the overall carbon footprint. For instance, McDonald Steel Corporation (MSC) is committed to sustainability by sourcing 93% of the steel billets from recycling facilities and scrap yards. Companies are using machinery such as Electric Arc Furnaces (EAF), which is an energy-efficient and environmentally friendly method of melting scrap steel by utilizing electrical energy. Rolling Mills are used to shape cast steel into various forms, such as bars, sheets, and rods.

The category is fragmented in nature. The supplier landscape mainly consists of two different types of players - pure play steel billets suppliers and integrated steel products suppliers. Integrated players mostly consist of large-scale corporations such as Nippon Steel and Arcelor Mittal, who also produce wire rods, rebars, etc. Buyers of the category can range from steel manufacturing companies (that produce construction, automotive, engineering, or energy/power steel) to direct end-user companies in construction, automotive, and infrastructure. For instance, Tata Steel is a major leader in steel manufacturing that has integrated steel-producing facilities. The company, being integrated, has multiple captive coal mines in India which allows the company to have a very strong hold from mining to supply chain to sales. These large-scale integrated buyers have high bargaining power over steel billet suppliers. For the rest of the buyers, depending on market conditions, the bargaining power can be moderate. Currently, the demand for steel billets is comparatively lower than the supply, thereby allowing buyers to negotiate a better price. Switching costs are also lower for buyers due to limited product differentiation.

Companies are focusing on increasing their production capacity to meet the demand. For instance, in August 2023, Hiap Teck Venture Bhd, which has a 23.7% stake in a joint venture company Eastern Steel Bhd (ESSB), announced that it would increase the production capacity of steel slabs and billets to 2.7 million tonnes per annum. The new production is expected to be exported to markets in North and South-East Asia. It will also help the company serve its customer’s demands.

In manufacturing steel billets, raw materials (steel scrap, iron ore), labor, machinery, energy, land and construction, transportation, and others are some of the cost components in the category. Other costs include legal costs and maintenance costs. The major portion of the cost goes towards the cost of raw materials, labor, and machinery. The prices of the category as of April 2023 were between USD 550 to USD 590 per tonnes. The prices of billets are dependent on the prices of raw materials.

Under sourcing, suppliers can have two types of approaches. Most of the billet suppliers opt for a hybrid engagement approach model. On the other hand, large players such as Nippon Steel or Arcelor Mittal will have complete in-house facilities. However, even these large players in some emerging markets may have approved vendors for certain raw materials or machinery procurement in some long-term contract deals. Steel manufacturing companies opt to have a complete manufacturing assembly line internally, from melting the scrap steel to pouring it into the mold and then converting it into different forms such as sheets, rods, and bars. These companies have all the machinery and workforce lined up internally within the facilities.

While procuring billets, automotive and construction companies purchase billets in large volumes and seek suppliers offering discounts on bulk purchases and the quality of the products (such as British Standard Steel Billet BS 4449:97 Specifications/ American Standard Steel Billet ASTM A615 Specifications). Suppliers also maintain good partnerships with raw material suppliers and have transparent communication with raw material suppliers regarding the requirement of raw materials to meet the customers’ demands. China and India can be the ideal destination for sourcing the category as they are major producers of steel. China produced 79.1 million tonnes (Mt) of steel as of October 2023 whereas India produced 12.1 Mt as of October 2023. Additionally, due to cheap labor, low transportation, and other costs, these countries can serve as sourcing countries. 

Steel Billets Procurement Intelligence Report Scope