Iron Age 2.0: The Fourth Industrial Revolution and the Steel Industry

Transcription

1 Iron Age 2.0: The Fourth Industrial Revolution and the Steel Industry Alacero 58 th Annual Conference, Nov. 8 th, 2017 Dr. Jun H. Goh, Managing Director of Center for Economic Research Some materials are brought and modified from POSRI s presentation of worldsteel Board meeting(april 17) and OECD Steel Committee (Sept. 17) The copyright of this presentation belongs to POSCO Research Institute (POSRI)

2 4th Industrial Revolution & Manufacturing 1. Introduction Energy source Coal Electricity, oil & gas Solar & wind power Communi -cation Society Newspaper, book Telephone, TV Internet Hyper Connectivity Mobility Steam engine Combustion engine Self-driving Industrial Revolution 1st Steam power, spinning machine Mechanization 2nd Electricity, conveyor belt 3rd Computer, ICT 4th Big Data, AI, Smart manufacturing Mass production Automation Smartization 1/21

3 Impact on Steel Value Chain 2. Changes in the 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 Agile to small Lot Fusion or integration Materials Library recycling of resources with raw materials specification and small quantity batch production among materials (Materials solution) (Physical property DB, Provision of machining tech.) Level of impact Low High Source: 4 th Industrial Revolution : Impact on and Implications for the Korean Manufacturing Industry, KIET, June /21

4 Smart Steel Mill 2. Changes in the 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) 3/21

5 Smart Steel Mill 2. Changes in the 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 4/21

6 Digital Brain, PosFrame 2. Changes in the Steel Industry Application Smart Factory Apps Smart B&C Apps Smart Energy Apps 1 Connected to various facilities and IoT devices 2 Classifying and integrating data according to domain characteristics 3 Modeling of domain know-how s based on Big Data and AI IoT - based 01 Smart Sensing Execution environment provided for Applications incorporating the models developed Smart Factory Smart B&C Smart Energy All the smart projects are materialized on PosFrame 5/21

7 Smartization on Biz Platform 2. Changes in the Steel Industry Business platform by integrating between suppliers and customers Ex) Status of China s steel e-commerce 3rd Party Platforms Cloud Social & Mobile Big data Agg. Supply Info. Analytics Platform connection Suppliers Connection to other service platforms Steel Industry Platform 3rd Party Logistics Customers Agg. Demand Info. Analytics Consulting firms Venture capitalists Steelmakers Banksteel Zhaogang Ouyeel 28 Mt 32 Mt Mt Source: China s Steel E-Commerce Development Report, May /21

8 Impact on the Steel Industry 2. Changes in the Steel Industry 4th Industrial Revolution Production Smart Factory Machine Learning Sales New Distribution Platform Product High Strength High Performance Management Digital Analytics & Suggestion Product/Investment Demand Steel Contents/ Intensity Needs for Steel Products 1 Steel Demand Global Climate Action Automobile New Mobility Paradigm Shipbuilding New Era of Global Flows Energy Energy Transition Steel Intensity Steel Demand Steel Products Plateau? High strength & toughness High corrosion resistance High performance Source: POSRI Construction Rising Megacities 3 Steel Production Process Eco-friendly steelmaking process Smart factory management 7/21

9 Automobile: New Mobility Paradigm 3. Changes in Steel-consuming Industries 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 8/21

10 Automobile: Demand Forecast 3. Changes in Steel-consuming Industries [Million units] Impact of New Mobility on Automobile Demand Motorization of emerging countries CAGR 1.6% Share of Autonomous vehicles 2 Car sharing impact Family-, ride-, car sharing combined with autonomous vehicle effect Production 2035 On-going trend-based Scenario 2035 New Mobility Scenario Source: POSRI based on IHS Markit data * Numbers of cars include commercial vehicles (3.2 million units in 2015, 7.7 in 2035) Increasing mobility Low cost travel, teenagers, elderly (+15% VMT assumed, work on progress) *Vehicle Miles Traveled 4 9/21

11 Automobile: Steel Intensity 3. Changes in Steel-consuming Industries Lower Emission CO 2 Emission Regulation [g/km] 141( 15) 0( 25) 60( 35) % Weight reduction every years Steel Content Per Vehicle 1,546 -% 1,391 -% 1,252 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 (%) Image credit: Volkswagen, POSCO EVI Forum * Steel Content: Finished Steel Products, Light Duty Vehicle: Curb weight under 3.5 ton Source: POSRI /21

12 Shipbuilding: New Era of Global Flows 3. Changes in Steel-consuming Industries 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 11/21

13 Shipbuilding: Demand Forecast 3. Changes in Steel-consuming Industries Global Shipbuilding Demand [mil.gt, Annual Average] 08~ 15 16~ 25 26~ 35 [mil.gt, Annual Average] Bulker Declining coal demand 27,7 34, ,2 Tanker Slowing oil demand growth 17,0 19,6 54,2 Gas Carrier Fast growing gas demand 4,7 12,2 '08-'15 '16-'25 '26-'35 Containership Growing world trade Others Others (Leisure ships, etc.) 12,7 8,1,4 25,4 Source: POSRI based on Clarkson data Source: Clarkson, POSRI Image credit: Wikimedia commons 12/21

14 Shipbuilding: Steel Intensity 3. Changes in Steel-consuming Industries 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 = 0] 0 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. 13/21

15 Construction: Rising Megacities 3. Changes in Steel-consuming Industries 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 14/21

16 Construction: Investment Forecast 3. Changes in Steel-consuming Industries 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, % Urbanization rate 5, Megacities 1,536 [trillion US$] Construction Investment Trend 2.0% 2.6% 2.0% 2.5% 1.6% % 1.0% 2.2% 2.4% 1.8% Plant 7% Commercial 22% Infra 35% Residential 35% Source: UN World Urbanization Prospects, POSRI Source: POSRI based on IHS Markit 15/21

17 Construction: Steel Intensity 3. Changes in Steel-consuming Industries Share of material cost, labor cost Steel Intensity of Construction Investment Urbanization Fast-growing lower-intensity sector [2015 = 0] Share of low-intensity sector : Commercial 0.08(tonne/thousand US$), Infra 0.07 Share of high-intensity sector : Plant Megacities Super Structure (buildings/bridges) High strength steel Steel demand Smart & Green Cities Rising share of smartization cost IoT, sensors in intelligent structure Source: POSRI Note: Steel intensity = Steel demand for construction/construction investment 16/21

18 Energy: Energy Transition 3. Changes in Steel-consuming Industries Primary Energy Demand by Fuel Type Steel Intensity of Energy Investment Shares of oil and coal decline, whereas those of gas and renewable energy grow fast 81% 13,684 14% 5% 21% 78% 15,341 16% 6% 22% 75% 17,057 18% 6% 24% 31% 30% 28% 29% 26% 24% [Mtoe] Renewables Nuclear Gas Oil Coal Fossil Fuel (%) Steel intensity of energy infrastructure declines while T&D investment will rise with high intensity *T&D: Transmission and Distribution of Energy [2015 = 0] 0 23,226 Source: POSRI Note: Steel intensity = Steel demand for energy sector/energy investment Source: World Energy Outlook 2016, IEA (New Policy Scenario 17/21

19 1 Global Steel Demand Forecast 4. Future of the Steel Industry Automotive Production (mil. unit): ( 15) 92 ( 25) 114 ( 35) 127 Steel Intensity ( 15 = 0): ( 15) 0 ( 25) 89 ( 35) 80 New Ship Orders (mil. GT): ( 15) 79 ( 25) 61 ( 35) 9 Steel Intensity ( 15 = 0): ( 15) 0 ( 25) 97 ( 35) 90 Construction Investment (Tril. US$): ( 15) 9.0 ( 25) 11.5 ( 35) 13.4 Steel Intensity ( 15 = 0): ( 15) 0 ( 25) 91 ( 35) 84 x x x [million tonne] Others Energy Shipbuilding Automobile Construction Steel Demand Forecast CAGR 1.2% CAGR 0.9% [ 16-35] 1.1% 1.0% -0.2% 2.3% 0.3% 1.2% Energy Investment (Tril. US$): ( 15) 1.8 ( 25) 1.7 ( 35) 1.7 Steel Intensity ( 15 = 0): ( 15) 0 ( 25) 98 ( 35) 99 Source: worldsteel, POSRI x Source: POSRI Note: Shipbuilding sector includes other transportation Demand for other sectors is forecast using industrial production index 18/21

20 2 Steel Products 4. Future of the Steel Industry Automobile Energy Construction 19/21

21 3 Smart Transformation 4. Future of the Steel Industry 20/21

22 5. Concluding Remarks Enhanced productivity and efficiency in the 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 Global steel demand will grow by about 1% each year from 1,501 Mt in 15 to 1,857 Mt in 35 - Steel demand growth will fall short of GDP growth owing to falling steel intensity however, steel demand will not peak in quantitative terms for the next 20 years. - Steel demand for construction and shipbuilding will grow modestly, while that of automobiles and energy will be maintained Customer needs for more advanced steel products are rising and steel industry will continuously evolve through: - eco-friendly steelmaking process and smart transformation To thrive in a challenging environment, the steel industry must seize the opportunities for new business and demand offered by smart technologies 21/21

23 Thank you! If you have any comment and suggestion on this presentation, please feel free to send an to 22/21