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January-2025-What-is-Happening-in-Steel-Today-RSC-ontwerp-Giulia-Nigrini

What is Happening in Steel Today

As of early January 2025, the steel manufacturing and construction industries are navigating a mix of opportunities and challenges, shaped by both global economic factors and industry-specific developments. So let’s take a look at what is happening in steel today:

Global Steel Manufacturing Industry:

Global Supply Chain Disruptions & Resilience
Steel manufacturers have been dealing with ongoing disruptions in supply chains, particularly in terms of raw materials such as iron ore and coal. The rise in energy costs in regions like Europe, especially during the colder months, has strained the cost structures of steelmakers.
However, companies in regions with stable energy prices (like parts of the U.S.) have benefited from increased production, particularly for high-demand segments like automotive, construction, and infrastructure projects.
Green Steel and Sustainability Initiatives
One of the most notable developments is the ongoing push for green steel production, which aims to reduce carbon emissions from traditional blast furnaces. Companies are investing in hydrogen-based steelmaking and electric arc furnaces (EAFs) that are powered by renewable energy.
European steelmakers like ArcelorMittal and Tata Steel have been spearheading initiatives to decarbonize, while SSAB (a Swedish steelmaker) has announced significant investments in hydrogen-powered steel production.
Governments, particularly in the EU, are incentivizing these changes with carbon credits and green energy policies, while challenges remain in scaling green steel processes to meet global demand.
China’s Impact on Global Steel Prices
China remains the world’s largest producer and consumer of steel, and its economic slowdown in late 2024 has led to fluctuations in steel prices globally. The Chinese government’s stricter environmental policies on steel production have resulted in production cuts, which may further disrupt supply chains in 2025.
At the same time, China is increasingly focusing on modernizing its steel sector to align with green production, which could influence future global pricing dynamics.
Mergers and Consolidations
With pressure from fluctuating demand, rising energy costs, and environmental regulations, there has been a rise in mergers and acquisitions within the steel industry. Companies are consolidating to reduce excess capacity, streamline operations, and achieve economies of scale.

Global Construction Industry:

Infrastructure Spending Boom
Across regions like North America, Europe, and Asia, governments have been ramping up investment in infrastructure. This includes large-scale projects such as bridges, highways, airports, and renewable energy infrastructure.
In the U.S., the Biden administration’s Infrastructure Investment and Jobs Act continues to provide funding, supporting construction companies that are bidding for projects in roads, public transit, and broadband development. We will see how this will continue under the new administration.
Labor Shortages and Workforce Challenges
A recurring challenge in the construction industry, especially in developed countries, is the shortage of skilled labor. The pandemic exacerbated this issue, leading to delays and increased costs for many construction projects.
Training programs and apprenticeship initiatives are increasingly seen as necessary to meet the demand for workers in areas like general contracting, electrical work, and heavy equipment operation.
Sustainability and Green Building Practices
Sustainability continues to be a major trend in construction. Many companies are focusing on energy-efficient buildings and green construction practices, including the use of recycled materials, reducing construction waste, and incorporating smart technologies into buildings.
In particular, net-zero buildings, which aim to produce as much energy as they consume, are becoming a focal point for both private developers and government projects. LEED (Leadership in Energy and Environmental Design) certification remains a key indicator of eco-friendly building practices.
Smart Construction Technologies
The industry is increasingly adopting Building Information Modeling (BIM), 3D printing, drones, and AI-driven construction management tools to optimize efficiency, reduce costs, and improve accuracy in project delivery.
In particular, modular construction—in which buildings are constructed off-site in controlled environments and then assembled on-site—is gaining traction as a way to reduce costs and time for construction projects.
Supply Chain and Material Costs
The construction sector continues to face volatile prices for materials like steel, cement, and lumber, especially as demand for housing and commercial properties remains high in many parts of the world.
Steel prices have been particularly volatile, impacting the cost of construction for commercial and residential projects. This has led to more careful project planning and procurement strategies to account for potential price increases and delays.
Housing Market Trends
The housing sector, particularly in the U.S. and Europe, has faced both high demand and supply chain issues. However, rising interest rates (especially in the U.S.) have cooled some of the frenzy seen in the housing market over the past few years.
Despite this, there is still a significant demand for affordable housing, especially in urban areas where populations are growing. The construction of low-cost housing and apartments is expected to remain a priority for developers and government agencies in the coming years.
Key Challenges in Both Industries:
Inflation and Rising Costs: Both the steel and construction industries are dealing with higher input costs, particularly energy and raw materials.
Regulatory Pressures: Stricter environmental regulations are affecting both steelmakers and construction firms, requiring significant investments in sustainable technologies.
Geopolitical Tensions: Ongoing geopolitical risks, particularly in regions like Europe and Asia, continue to disrupt supply chains and trade flows.

How Does This Affect Southern Africa?

Steel Manufacturing Industry in Southern Africa:

Energy and Supply Chain Challenges:
Southern Africa, particularly South Africa, has faced ongoing energy challenges due to load shedding and a lack of stable power supply. This has led to disruptions in steel production, as many steel manufacturers rely heavily on consistent power to operate furnaces and other machinery.
The high cost of electricity and fuel in South Africa continues to put pressure on manufacturers, particularly in regions where energy access is more limited or unreliable. Some companies have started investing in alternative energy sources like solar and natural gas to mitigate these issues.
Recovery from COVID-19 Impact:
The steel sector in Southern Africa, especially in South Africa, has been recovering from the COVID-19 pandemic, during which demand for steel saw a dip. However, since late 2023, there has been a resurgence in demand driven by both infrastructure projects and industrial recovery.
The resumption of major infrastructure projects and increased demand from sectors like automotive, mining, and construction has positively impacted steel production, although production capacity remains constrained due to financial and operational limitations in some companies.
Steel Price Volatility:
Global steel prices have fluctuated in 2024 due to supply chain disruptions, particularly from China and Europe. This has had a significant effect on Southern African manufacturers, especially in South Africa, Zambia, and Zimbabwe. Steel producers have faced difficulties in managing input costs for raw materials like iron ore and coal, which are also subject to global price volatility.
Green Steel and Environmental Initiatives:
Environmental regulations and sustainability remain a key focus in Southern Africa, though the region is still behind global leaders like Europe in terms of green steel initiatives.
However, South Africa has seen early adoption of electric arc furnaces (EAFs), which are more environmentally friendly compared to traditional blast furnaces. The government is considering increasing support for more sustainable manufacturing practices through carbon tax incentives and green funding.
Regional Trade and Tariffs:
Southern Africa’s steel industry is significantly impacted by trade agreements within the Southern African Development Community (SADC). The African Continental Free Trade Area (AfCFTA), which was launched in 2021, is expected to create new opportunities for regional steel producers by lowering tariffs and promoting intra-Africa trade.
However, trade imbalances and the influx of cheap imported steel have created pressure on local steelmakers, raising concerns about dumping and unfair competition in the Southern African market.

Construction Industry in Southern Africa:

Infrastructure Development:
In South Africa, major infrastructure projects are ongoing, with a focus on transport, energy, and urban development. The South African government’s Infrastructure Investment Plan (part of its broader economic recovery strategy) includes significant investments in roads, rail, and energy projects. The National Infrastructure Plan 2050 outlines ambitious long-term projects to modernize the country’s infrastructure and support economic growth.
Projects such as the expansion of King Shaka International Airport in Durban and the Mthombo Refinery in Eastern Cape are expected to drive demand for construction services and materials in 2025.
Several public-private partnerships (PPPs) are expected to play a larger role in the funding and development of infrastructure projects, especially in light of budget constraints faced by the government.
Urbanization and Housing Demand
The urbanization trend continues to drive demand for residential, commercial, and industrial construction in Southern Africa. The high population growth in urban centers like Johannesburg, Cape Town, Lusaka, and Harare is fueling demand for new housing, office space, and retail infrastructure.
However, there is a significant shortage of affordable housing, particularly in South Africa. The government is focused on delivering more low-cost housing to address the backlog of informal settlements. This has spurred increased investment from developers, although financing and land availability remain key challenges.
Mining and Industrial Construction:
Southern Africa remains one of the world’s largest mining regions, with large-scale projects in South Africa, Zambia, Namibia, and Botswana. The growth of the mining sector (especially copper and cobalt in Zambia, and platinum and gold in South Africa) continues to drive demand for construction in terms of mining infrastructure, worker housing, and industrial facilities.
As mining projects become more complex and require specialized construction expertise, there is a growing trend toward modular construction and prefabrication, which reduces construction time and costs.
Sustainability and Green Building:
Sustainability remains a key theme in Southern Africa’s construction industry, particularly in urban development projects. Green building practices, including energy-efficient designs, water conservation measures, and the use of sustainable materials, are gaining traction.
South Africa’s Green Building Council (GBCSA) continues to promote Green Star ratings for buildings, with an increasing number of commercial developments seeking certification. Cape Town and Johannesburg are emerging as regional hubs for green building initiatives.
Labour and Skill Shortages:
The construction sector in Southern Africa continues to struggle with a shortage of skilled labor. South Africa, in particular, is experiencing a significant gap in technical skills, which affects both the steel manufacturing and broader construction industries.
To address these challenges, companies are investing in training programs, apprenticeships, and partnerships with technical schools to develop the workforce for the future.
Political and Economic Instability
The construction and steel sectors are also impacted by political and economic instability, particularly in Zimbabwe, Zambia, and South Africa. In Zimbabwe, inflationary pressures and foreign exchange challenges have hindered the growth of the construction industry, while in Zambia, political shifts and fluctuating copper prices have created uncertainty in industrial construction projects.
South Africa’s political climate, including labour strikes and corruption scandals, continues to present risks to both sectors, though recent efforts to tackle corruption and improve governance could improve the business environment in the long run.
Key Challenges in Both Industries:
Energy Supply: Energy shortages, especially in South Africa, continue to affect both steel production and construction activities.
Material Costs: The cost of construction materials, including steel and cement, remains high and volatile due to supply chain challenges, inflation, and import costs.
Inflation and Currency Volatility: Inflationary pressures and currency devaluation in many Southern African countries (e.g., the Zambian kwacha, Zimbabwean dollar) are driving up costs for imported materials and making financing more expensive.
Labor Issues: Skilled labor shortages and industrial actions, including strikes in South Africa, are impacting both the construction and manufacturing sectors.
Both the steel manufacturing and construction industries in Southern Africa are navigating a challenging environment, shaped by energy and economic instability, volatile material costs, and skills shortages. However, large-scale infrastructure projects, urbanization, and increasing investment in sustainable practices offer significant opportunities for growth. The region’s ongoing integration into global trade, particularly through initiatives like AfCFTA, is also expected to provide long-term benefits.