【Deep Coating Society Industry Analysis】Four barriers to the development trend and competition pattern of special alloy material industry

The steel industry has entered a mature period in the world, the steel industry in developed countries has entered a recession period, and China's steel industry will generally enter a recession period from a mature period
.
Special steel is a typical industrial upgrading in the steel industry, the global special steel industry is still in the growth period, especially the alloy material industry represented by superalloy and corrosion-resistant soft magnetic alloy is in the growth period, and it is expected that with the development of automation and intelligence of social life, the corresponding demand will continue to grow
.

Corrosion-resistant soft magnetic alloy materials are mainly used in electromagnetic automatic control equipment, various solenoid valves, expansion valves, electromagnetic pumps, electronically controlled injectors, automotive rotation sensors, semiconductor production equipment, etc
.
Heat-resistant steel and superalloy can be widely used in the intake and exhaust valves of gasoline and
diesel engines.
At present, the downstream end customers of corrosion-resistant soft magnetic alloys in China are constantly expanding, from traditional household refrigerators and air conditioners to small household appliances, coffee machines, beverage machines and new energy vehicles
.

1.
Industry development trend

In the 80s of the 19th century, Bessemer invented converters for steelmaking in the United States, marking the beginning of
the world steel era.
With the development of the world steel industry for hundreds of years, the main producing countries of the steel industry have changed from the United States to Japan, and now to China
.
The global steel industry's crude steel production also increased from 26 million tons throughout the 19th century to nearly 2 billion tons
in 2020.

The world steel industry has gradually moved from the start-up period and growth period to the mature period
.

China's steel industry started late, and the Hanyang Iron and Steel Plant founded by Zhang Zhidong in 1890 was the predecessor of China's
steel industry.
After the founding of New China, China's steel industry has made great progress
.
In 2020, China's crude steel production exceeded 1 billion tons
for the first time.
China's crude steel production already accounts for more than
half of the world's total crude steel production.

There is no unified concept and definition of special steel in various countries around the world, and it is more difficult
to draw a clear boundary between special steel and ordinary steel.
It is generally believed that special steel is a steel with special composition, special production process, special structure and properties, and can meet special needs, that is, all steels except ordinary steel belong to special steel
.
Compared with ordinary steel, special steel has better strength and toughness, physical properties, chemical properties, biocompatibility and process performance
.

Japan's special steel concepts include alloy steels, medium-high carbon steels, and high-strength steels with tensile strength greater than 590MPa, similar to those in Germany and France
.

Special steels in the United States include stainless steel plus alloy steel (containing carbon, hollow steel, and high-strength low-alloy steel), except for the carbon-manganese system in alloy
steels.
The meaning of British special steel is alloy steel
.
The former Soviet Union did not have a clear division
into the category of special steels.

China's special steels include high-quality carbon structural steel, alloy structural steel, carbon and alloy tool steel, spring steel, bearing steel, high-speed tool steel, heat-resistant steel and stainless steel, superalloys, and precision alloys
.

Source: PwC Youcze

Special steel is a subdivision of the steel industry, for a long time the world's main special steel mainly produced in Japan, Germany, Sweden and the United States and a few developed countries, high-end market has long been monopolized by developed countries, they occupy about 60% of the global special steel production and about 80% of the trade volume
.

Stainless steel as a secondary sub-industry of special steel, because of its corrosion resistance, heat resistance, low temperature resistance and good processing performance is widely used in tableware, white goods, chemicals, energy, transportation and aerospace and other fields, of which tableware and white goods field stainless steel consumption accounted for the highest proportion, corrosion resistant soft magnetic alloy, also known as soft magnetic stainless steel, is a functional material in special stainless steel, belongs to precision alloy.

The overall downstream consumer market is distributed
in a diversified and decentralized trend.

China is the world's largest stainless steel producer, in 2021 global stainless steel crude steel production reached 58.
289 million tons, in 2021 China's stainless steel crude steel production of 30.
632 million tons, an increase of 493,000 tons over last year, a year-on-year increase of 1.
64%.

Corrosion-resistant soft magnetic alloy, also known as soft magnetic stainless steel, is a functional material in special stainless steel and belongs to precision alloy.

2.
Industry competition pattern

(1) Corrosion-resistant soft magnetic alloy industry

Corrosion-resistant soft magnetic alloy materials can be divided into static iron core materials and moving iron core materials
from the functional aspects of electromagnetic control components.
Among them, static iron core materials need to have high corrosion resistance, stable magnetic properties, high thermal conductivity, high air tightness and excellent welding performance due to their high quality requirements
.
At the same time, due to its many steel grades, small batch, multi-specification, and customized characteristics, the input and output of such materials produced by large domestic steel mills are not economical
.
Therefore, for a long time, high-end corrosion-resistant soft magnetic alloys such as static iron core materials for solenoid valves in the refrigeration industry rely on foreign imports
.

With the changes in the global economic pattern and the advancement and deepening of the market economy, in order to break the situation of foreign necks, since 2000, the downstream industry manufacturers of corrosion-resistant soft magnetic alloys have gradually strengthened the cultivation and support of domestic suppliers, and a number of high-end corrosion-resistant soft magnetic alloy producers have emerged, and the static iron core materials for solenoid valves in the refrigeration industry have gradually achieved import substitution
.
After more than 20 years of development, the domestic corrosion-resistant soft magnetic alloy industry has formed a number of production enterprises with strong professional and technical capabilities, but the number of enterprises above designated size is still limited
.
There are relatively many domestic manufacturers in terms of moving core materials, mainly in terms of price and delivery time competition
.

(2) Superalloy industry

At present, China's independent manufacturers mainly include Fushun Special Steel, Shanghai Iron and Steel Fifth Plant, Great Wall Special Steel, Zhongzhou Special Materials, Tunan Co.
, Ltd.
and other special steel enterprises, as well as the General Institute of Iron and Steel Research, Shenyang Institute of Metal Research, Chinese Academy of Sciences, Beijing Institute of Aeronautical Materials and other research bases
.

3.
Industry barriers

(1) Technical barriers

Corrosion-resistant soft magnetic alloy started late in China's research and development, and the national soft magnetic alloy standard GB/T14986-94 version of corrosion-resistant soft magnetic alloy only announced the implementation of 1J36, 1J116, 1J117 three grades of products
.
In the past, soft magnetic materials for solenoid valves mainly relied on imports from Japan, Germany, Italy and other countries.
.
.

(2) Quality management control ability barriers

Downstream enterprises of corrosion-resistant soft magnetic alloys and heat-resistant steel materials have strict requirements for quality, complex production processes, many processes, large use of professional equipment, many production personnel, difficult process control, and production has the characteristics
of "multi-specification, multi-variety, small batch, and customization".
Therefore, enterprises are required to carry out refined and flexible production management in production, and have a relatively high quality management control ability entry threshold
.

(3) Market pre-entry barriers

Corrosion resistant soft magnetic alloy and heat-resistant steel do not require special license to operate, but high technical content and high safety factor requirements determine that the two sub-industries have a high market entry threshold and strict supplier screening standards: new suppliers generally need to go through customer contact, on-site inspection, sample development and selection, sampling testing, small batch trial production, mass production a series of processes, screening suppliers take a long time, in order to ensure the stability of product production generally will not easily change manufacturers
.
Therefore, enterprises with early industry entry and quality advantages will occupy a more obvious first-mover advantage and form market first-mover barriers
.

(4) Financial barriers

Corrosion-resistant soft magnetic alloys belong to technology-intensive and capital-intensive industries, which have high requirements
for funds.
The production cycle of corrosion-resistant soft magnetic alloys is long, there are many grades, and a large number of production equipment and testing equipment need to be invested in manufacturing, and a certain amount of safe raw materials are stored
in reserve.
The raw materials required for corrosion-resistant soft magnetic alloys such as pure iron, chromium, nickel, etc.
are resource metal raw materials, which are generally purchased
in cash spot.
With the advancement of technology and the improvement of product requirements, it is necessary to build new plants, improve production processes, increase investment in research and development, and continue to invest in the purchase of advanced production and testing equipment.

Therefore, there are high financial barriers
to entry in this segment.

4.
Risk of macroeconomic fluctuations

The special alloy material industry is an important industrial component of the national economy, related to all aspects of the national economy and people's livelihood, and the special alloy material manufacturing industry occupies an indispensable position
in the national economy.
Corrosion-resistant soft magnetic alloy materials are widely used in five major fields, including air conditioning and refrigeration, small household appliances, fluid control, automobiles and pneumatic control, which are closely related
to economic life.
If the domestic economic growth slows down and market demand declines in the future, macroeconomic fluctuations may have a certain impact
on the development of corrosion-resistant soft magnetic alloy products.

For more industry information, please refer to PwC Consulting's "2022-2028 Special Alloy Materials Industry Market Research and Development Trend Forecast Report", while PwC Consulting also provides industry research reports, industry chain consulting, project feasibility reports, 14th Five-Year Plan, BP business plans, industry maps, industrial planning, blue white papers, IPO fundraising and investment feasibility studies, IPO working paper consulting and other services
.

Source: PwC

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