The competitive position of stainless steel: The first in an ongoing series
Since 1950, the melting production of stainless steel has increased almost fifty-fold, outperforming practically all other major metals and alloys. In the first of this ongoing series, industry insider Peter Cranfield has dug through historical production data–and his own memory banks–to explain this phenomenal and sustained growth. By Peter Cranfield, Consultant, World Bureau of Metal Statistics
Long term historical growth
To this very day the actual origins of stainless steel remain a matter of some dispute. Curious readers might like to peruse a most interesting article available on the British Stainless Steel Association website for more information. However, for our purposes let us just assume it was around 1910-12, give or take a year or two.
What we can confidently state however is that by 1950 global stainless melted production was around 1 million tons (Mt). Main producers were in Europe, USA, and Japan. It is interesting to compare the performance of stainless with other high volume metals shown in Table 1. The striking conclusion is the phenomenal success of stainless from 1950 to the present day. In 2016 stainless melting production reached 46.0 Mt. So it had increased 46 times in seven decades. During the same interval aluminum production rose 37 times higher, crude steel nine times and copper and zinc, the other high volume metals, grew seven times. Stainless averaged seven percent annually which only aluminum came close to matching. Copper and zinc grew at three percent and crude steel at four percent.
Now the fact that stainless outperformed other high volume metals will come as no surprise to most readers who are undoubtedly well aware of its merits. What is impressive is the longevity and the degree of this out performance. In fact the true performance is even higher because we are looking here at melted production. The yields until the early 1980s from ingots were around 65%, current yields from slabs to at and long products are in excess of 80%.
Bear in mind that economic measures such as GDP or industrial production would be around half this growth rate. So the positive substitution or increase in the intensity of use of stainless has been enduring to say the least.
How did stainless perform so well?
One of the advantages of stainless is that it possesses that unique combination of properties. Not only heat and corrosion resistance, but also strength, ductility, hygiene factors, choices of surface finish, and aesthetic appeal among many other qualities. The stainless steel development associations and industry associations for nickel, chrome, and moly have done a lot over many decades to promote the use of stainless in place of competing materials. The merits of life cycle costing are now accepted and applied in many applications both in private industry and the public sector.
Over the years there has been a move to longevity and product quality. In some applications crude steel and zinc coated galvanized steel have been replaced by stainless. Stainless rebar continues to make inroads. As a personal aside, I remember many years ago when I was working in the nickel industry for Inco how a colleague bought a stainless steel spade for gardening. This was unheard of. It was a year or two before I could afford such luxury. Now nearly all the garden tools in my shed are stainless. I also recall at around this time visiting a leading high quality kitchen appliance company to research their materials use. They had switched to stainless for washing machine drums but reported that their dishwashers worked perfectly well and were quieter with plastic door liners. Fortunately their customers preferred stainless so they switched back.
Aluminum has performed well and competes with stainless in some sectors e.g. architecture, building, and construction (ABC), and transportation. On my return to the UK from The Hague some twenty years ago, we bought a house with a typical farmhouse type Aga range. So we needed to buy cookware to t the runners in the ovens. The local Aga dealer explained that he stocked both aluminum and stainless, which were the same dimensions and a similar price, but in his view the aluminum was superior. I don’t remember his suspect logic and can only assume it was to do with weight. Of course I extolled the far superior merits of stainless and explained the error of his ways. Needless to say I did not get a decent discount. On the plus side I still cook with the same stainless cookware today, as good as new. I think it is fair to say that not much of the aluminum growth has been at the expense of stainless but results from applications such as beverage cans and foil for food packaging where glass and tinplate have lost out. The latter affecting crude steel.
Copper is widely used in electrical applications and for water storage, heating and tubing as well as brass (copper/zinc) fittings. Here, too, there has been some substitution by stainless.
Major zinc uses are galvanized steel, brass, and die castings. There are some losses to stainless and in the case of die castings to plastics.
The golden quarter century 1950-1974
This period was the start of the rapid growth in stainless and other metals (see Table 2). Following the depression of the 1930s and the devastation of the Second World War, there was a period of immense reconstruction. In Europe the Marshall Plan stimulated investment and economic recovery. This period came to an end stimulated by a quadrupling of the oil price in late 1973 and lower macroeconomic growth rates, but there were also signs that the intensity of use was slowing. When most households had a stainless kitchen sink, washing machine drum, or cooking hollow-ware these were not replaced for many years. Of course there was still scope for growth outside the (then) large economic powerhouses of USA, Europe, and Japan.
Mid-1970s to mid-1980s slowdown
There was a second energy crisis in 1979, which precipitated a severe recession in 1980/81. In economic terms this inflationary period, triggered by the sharp rise in oil prices, caused a hike in interest rates and restrictive economic policies in Europe and the USA, which were the main stainless consuming regions.
Although it is not apparent from Table 2, stainless production peaked at 6.6 Mt in 1974 and again at 6.9 Mt in 1980, annual growth of less than one percent pa. Underlying growth was higher but there was the usual boom/ bust high inventory building, which turned a bad market situation into a crisis.
And, whilst the “old economies” were struggling, newcomers in the stainless steel arena were keen to grasp sales opportunities....
About the author
Peter Cranfield has a BSc (Econ) from London University and an MBA from Warwick. He started his career at Inco serving as market research manager and also producing the annual publication World Stainless Steel Statistics (in 1986 taken over by WBMS). Later he joined Shell-owned Billiton in The Hague for 15 years working with a number of metals and industrial minerals as well as strategic planning. Peter then moved back to London with BHP Billiton working in business planning and analysis in nickel, cobalt, and stainless. He has regularly delivered presentations on nickel and stainless at conferences around the globe. Since retiring he has consulted for BHPB, the Nickel Institute, and now the UK-based World Bureau of Metal Statistics (WBMS – see www.world-bureau.com for more details).