Abstract:The market demand for high manganese steel industry is generally showing a steady growth trend, the market price is affected by the fluctuations in the price of upstream iron ore and manganese ore raw materials, and the industry price is also showing a certain fluctuation trend, but the industry scale is growing in the overall demand, the data shows that in 2023, the market size of high manganese steel in the mainland will reach 2.098 billion yuan, a slight decrease from 2022, of which mining, metallurgy and construction machinery account for about 6 percent, supply and demand, In 2023, the output and demand of high-manganese steel in mainland China will be 380,000 tons and 348,100 tons, respectively.
1. Definitions and Classification
High manganese steel refers to alloy steel with a manganese content of more than 10%. High manganese steel, commonly known as "wear-resistant steel", is widely used in many wear-resistant parts in various industries. The original hardness of high manganese steel is very low, and the work hardening ability is very strong, the hardness is increased in use, the faster the deformation speed, the hardening effect is significant, and the hardness is higher. High manganese steel can be divided into wear-resistant steel and non-magnetic steel according to its different uses, wear-resistant steel with high carbon and high manganese content as the main characteristics, such as ZGMn13 series, carbon content between 0.90-1.50%, manganese content up to 10.0-15.0%, mainly used to make parts that withstand high impact and high wear, such as excavator teeth, crusher parts, etc. In contrast, non-magnetic steel focuses on high manganese content and low carbon content, with a manganese content of more than 17% and a carbon content of generally less than 1.0%, which is mainly used to manufacture non-magnetic structural materials, such as transformers, electromagnets, etc. The two types of high-manganese steels have their own emphasis on chemical composition and use, wear-resistant steel emphasizes wear resistance and mechanical strength, while non-magnetic steel focuses on its non-magnetic and application in electromagnetic equipment.
Second, the industry business model
1) Procurement model
The upstream of high manganese steel is mainly iron ore, manganese ore and other mining resources and related fuel resources, etc., and the procurement mode of large-scale iron and steel comprehensive enterprises is mostly price comparison procurement, that is, the maximum procurement limit is formulated on the basis of market research, and the supplier is determined to purchase through comprehensive benchmarking and price comparison in combination with supplier management. For some procurement varieties, some enterprises will also combine the market situation and material characteristics to purchase through bidding or bargaining. For the procurement of raw fuel, which is closely related to daily production and operation, enterprises generally sign a relatively long-term supply agreement with the supplier, and adjust the settlement price according to market changes; For the more important iron ore supply, large iron and steel conglomerates also use investment to lock in resources to reduce the risk of price fluctuations in the upstream of the industry.
2) Production mode
Large-scale iron and steel integrated enterprises have a complete set of production processes from ironmaking, steelmaking to steel rolling, mostly adopting the mass production mode of fixed sales and sales and production, based on the annual plan of the enterprise, according to the product sales contract and various internal and external information to prepare monthly, weekly and daily production operation plans. The stability of customer demand of small high-manganese steel related production enterprises is poor, and most enterprises directly adopt the production mode based on demand, with high flexibility and market adaptability, and can customize products according to customer needs to meet the diversified needs of the market.
3) Sales model
Large-scale iron and steel conglomerates mostly use the combination of dealer distribution and direct supply to end users for product sales, of which dealer distribution accounts for a relatively high proportion, mainly because the steel production capacity is all over the country, the sales difference between regions is low, and local dealers have adaptability advantages. The dealer signs an agreement with the enterprise on an annual basis to clarify the amount of resources in each year, and the customer submits the demand plan to the enterprise on a monthly basis according to the amount of resources determined by the agreement, and the enterprise signs a supply contract with the customer according to the current production situation, and prepays all the payment by the customer before signing the formal contract, after the contract is signed, the enterprise will organize production and deliver the goods according to the contract, and settle with the customer at the end of each month according to the actual delivery. Most of the small-scale high-manganese steel-related production enterprises are concentrated in a certain province or region, with high regional characteristics, and the sales model is mainly direct sales.
4) R&D model
With strong R&D strength and resource advantages, large-scale iron and steel comprehensive enterprises tend to adopt a systematic and forward-looking R&D model, and deeply explore new materials, new processes and new applications of high manganese steel through industry-university-research cooperation and international cooperation, and strive to make breakthroughs in technological innovation and industrial upgrading. Small-scale high-manganese steel-related enterprises pay more attention to practicality and the ability to quickly respond to the market, and flexibly adjust the direction of research and development through the introduction, digestion, absorption and re-innovation, cooperation with large enterprises or scientific research institutions, etc., and quickly transform new technologies into productivity to meet the needs of specific markets.
3. Industry policy
The policy background of the high-manganese steel industry in mainland China shows a diversified development trend, aiming to promote the high-quality development, green transformation and efficient utilization of resources in the industry. In recent years, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other departments have successively issued a series of policy documents to clarify energy efficiency benchmarks and benchmark levels, strengthen energy efficiency guidance and constraints, and guide enterprises to implement energy-saving and carbon-reduction transformation. At the same time, the construction of the intelligent manufacturing standard system in the steel industry has been put on the agenda, aiming to solve the problem of lack of standards and promote the reform of industry quality, efficiency and power. In terms of environmental protection, documents such as the "Opinions on Comprehensively Promoting the Construction of a Beautiful China" require key industries to implement ultra-low emission transformation, promote clean energy substitution, and control total coal consumption. In addition, accelerating the transformation and upgrading of traditional manufacturing industries and building a waste recycling system have also been included in the policy agenda, aiming to promote the development of resource recycling and industrial coupling, and realize the cascade utilization of energy resources and the convergence of industrial circulation.
Fourth, the development process of the industry
The development process of China's high manganese steel industry has gone through four stages from starting to deepening. In the beginning, the industry mainly relied on traditional processes for production, which was applied to the manufacture of simple wear-resistant parts. With the progress of science and technology and economic development, the high-manganese steel industry in the growth period adopts modern continuous casting and rolling technology, which significantly improves production efficiency and product quality, broadens the application field, and gradually increases domestic production capacity and output. Entering the outbreak period, the increase in investment in national infrastructure construction has led to a surge in demand for high-manganese steel, fierce competition in the industry, and brand building and market expansion have become important strategies for enterprises. In recent years, in the deepening period, the high-quality development trend of downstream demand and the strict requirements of policies for environmental protection have prompted the high-manganese steel industry to pay attention to green production and sustainable development, and promoted the green transformation of the industry.
Fifth, the development of the industry is at risk
1) Macroeconomic and cyclical risks
High manganese steel products are steel products, which are greatly affected by the demand for downstream automobiles and infrastructure, and have a strong cyclical nature, which is closely related to the macroeconomic growth rate and the growth rate of fixed asset investment. At the same time, under the premise that the steel production capacity is relatively fixed in the short term, the fluctuation of steel demand will have a significant impact on the price of steel, and the fluctuation of steel price will make the profitability of enterprises in the industry fluctuate.
2) Policy risk
In recent years, the relevant policies of the high-manganese steel industry have focused on environmental protection and high-quality development, aiming to promote the high-quality development of the casting and forging industries, strictly distinguish different production processes, and avoid illegal new production capacity and illegal production. At the same time, the policy on the environmental protection requirements of the steel industry is becoming increasingly stringent, requiring enterprises to adopt green production and sustainable development measures. For the high-manganese steel industry, it not only brings opportunities for transformation and upgrading, but also brings challenges to compliant operations and cost control.
3) Market competition risk
Compared with developed countries such as the United States and Japan, there are a large number of iron and steel enterprises in the mainland, and there is a certain homogenization of industry products, which leads to intensified competition in the industry market. In recent years, the pace of mergers and acquisitions in the mainland steel industry has accelerated, and some large iron and steel enterprises are or plan to greatly enhance their comprehensive strength through mergers and acquisitions.
4) Raw material risk
The production of high manganese steel depends on a variety of alloying elements, such as iron, manganese, chromium, nickel, etc., as well as fuel energy and related production equipment, etc., raw material prices are affected by various factors such as supply and demand in the international market, production costs, exchange rate changes, etc., taking iron ore and manganese ore as an example, the import dependence of iron ore and manganese ore in the mainland is nearly 8 percent, with the continuous change of the international trade situation, the energy value and strategic significance are enhanced, and the volatility of the industry is enhanced. Specifically, the rise in the price of raw materials such as iron ore and manganese ore will directly increase the production cost of high manganese steel and reduce the profitability of enterprises; Unstable supply can lead to production disruptions and affect the normal operation of the enterprise.
5) Global political risks
Factors such as changes in the international political landscape, the rise of trade protectionism, and geopolitical conflicts may lead to an increase in the uncertainty of the international trade environment, which will affect the cost of upstream manganese ore and fuel, as well as the import and export trade of high-manganese steel products. In addition, global political risks may also cause exchange rate fluctuations, affecting the international competitiveness of enterprises, high manganese steel enterprises need to pay close attention to international political dynamics, strengthen international cooperation, optimize supply chain management, and improve the international competitiveness of products, so as to reduce the negative impact of global political risks.
Sixth, the industrial chain
The upstream industries of the high manganese steel industry are iron ore, manganese ore and other raw materials and mining machinery, etc., and the supply of upstream raw materials has a direct and significant impact on the profitability of the high manganese steel industry. The price of major raw materials such as iron ore and manganese ore will directly affect the production cost of high-manganese steel, and the quality level of raw materials such as iron ore will also affect the quality of products in the industry, thereby affecting their sales and market recognition; The midstream is mainly the production and manufacturing of high-manganese steel, mainly including small high-manganese steel-related enterprises and large-scale iron and steel enterprises according to the scale and type of enterprises; Downstream metallurgical machinery, mining machinery, construction machinery, rail transit, automobile and other industries are the direct application fields of high manganese steel, with the rapid development of these fields, the demand for high manganese steel will increase accordingly, and the upgrading of products in these fields will also put forward higher requirements for high manganese steel.
1. Hunan Shaofeng New Material Technology Co., Ltd
Hunan Shaofeng New Material Technology Co., Ltd. has three independent brands of heavy-duty reducer, wear-resistant new materials and metal forging blanks, and has a fully mechanized environmental protection wear-resistant new material production line to fill the blank production capacity in the province, and its products are exported to Vietnam, India, Thailand, Myanmar and other places, with an annual output of more than 10,000 tons of high-manganese steel and carbon steel, and the main products are rolling mortar wall, crushing wall, toothed plate, sand grinding roller, sand dredging ship high manganese steel chain plate, ZQ250 ~ ZQ2500 special heavy-duty reducer and a full range of accessories and other products. Long-term supporting supply for Zoomlion, Sunward, Hengtian Group and other construction machinery industries.
2. HBIS Co., Ltd
HBIS Co., Ltd. is a subsidiary of HBIS Group, is one of the giants of the mainland steel industry, its market share is in a leading position in the industry, the recent operating conditions, the development of HBIS shares show a fluctuating trend, data show that from 2019 to 2023, its total revenue in 2020 after a slight decline in 2020, in 2021 to achieve significant growth, reaching 149.626 billion yuan. However, in the subsequent 2022, the revenue fell back to 143.47 billion yuan. By 2023, the total revenue will further shrink to 122.744 billion yuan, a decrease of 14.45% from the previous year, and the revenue structure of subdivided industries will still be more than 9%. In terms of high manganese steel, in November 2018, HBIS Wugang successfully rolled the first 20mm thick LNG ultra-low temperature high manganese steel in China, and successfully passed the inspection of relevant authoritative departments, and is also the first domestic iron and steel enterprise to realize the industrial production of LNG low temperature high manganese steel.
7. Development status
High manganese steel is widely used in the manufacture of wear-resistant castings that work under impact wear conditions, such as ball mill liners, crusher tooth plates, mortar walls, crusher hammers, excavator shovel teeth, etc. Due to different working conditions, high manganese steels are subjected to different impact and wear strengths. In many cases, traditional high manganese steels often fail to give full play to their impact and anti-wear properties. It is worth noting that in recent years, domestic ultra-low temperature high manganese steel has been recognized as a material for LNG storage tanks, which has further expanded the application of high manganese steel, and may become an important driving force for the rapid growth of high manganese steel in the future. At present, the market demand for high manganese steel industry is generally showing a steady growth trend, and the market price is affected by the fluctuations in the price of upstream iron ore and manganese ore raw materials, and the industry price is also showing a certain fluctuation trend, but the industry scale is growing in the overall demand, specific data show that the market size of high manganese steel in the mainland will be 2.189 billion yuan in 2022, and the market size of high manganese steel in the mainland will be 2.098 billion yuan in 2023, of which mining, metallurgy and construction machinery will account for about 6 percent. In 2022, the output and demand of high-manganese steel in mainland China will be 382,400 tons and 351,600 tons, respectively, and with the fluctuation of market demand such as terminal infrastructure, the production and demand of high-manganese steel in mainland China will decline slightly to 380,000 tons and 348,100 tons in 2023, respectively. Globally, China is the world's largest producer of high manganese steel, accounting for about 20% of the world's total output, with global high manganese steel output of 1.478 million tons in 2014, about 1.758 million tons in 2022, and 1.703 million tons in 2023.
8. Factors influencing development
1. Favorable factors
1) The expansion of new areas such as LNG storage tanks is driving demand growth
In 2010, POSCO and Hanwha Marine began joint research and development of high-manganese steel, and in 2013, they succeeded in developing ultra-low-temperature high-manganese steel thick plates. In 2018, South Korea promoted the International Maritime Organization (IMO) to issue the "Revised Interim Guidelines for the Application of High Manganese Austenitic Steel for Low Temperature Environments", agreeing that high manganese steel should be used in the cargo tanks and fuel tanks of LNG carriers and LNG-powered ships, and in June 2022, the world's first VLCC equipped with South Korea's self-developed high manganese steel LNG fuel storage tank appeared, successfully proving the feasibility of high manganese steel materials applied to LNG fuel storage tanks. In September 2023, POSCO's self-developed liquid ammonia high-manganese steel for cargo tanks and storage tanks and its application technology were officially registered as an international technical standard, and high-manganese steel has better cost-effectiveness and lightweight advantages while having low temperature resistance and corrosion resistance. Domestically, the R&D, production and test of high-manganese steel welding materials of 725 Institute, high-manganese steel plates of Hegang Wugang and high-manganese steel storage tanks of CIMC Hongtu have been successful, laying a solid foundation for the practical application of high-manganese steel in the future, and also providing a practical basis for the mainland to participate in the formulation of international standards.
2) The promotion of environmental protection policies promotes the increase of industry attention
High manganese steel is a kind of steel with high strength, good toughness and corrosion resistance, with the improvement of environmental awareness, the implementation of environmental protection policies by the state has been continuously strengthened. As a recyclable material, the environmental performance of high manganese steel has attracted more and more attention from enterprises. Driven by environmental protection policies, more and more enterprises have begun to use high manganese steel as raw materials to reduce environmental pollution. At the same time, the state has also introduced a series of policies to encourage the development of environmental protection industry, which has promoted the development of the high manganese steel industry to a certain extent.
3) The integration of the steel industry promotes the high-manganese steel industry
With the intensification of market competition, the need for optimal allocation of resources, the urgent requirements for enhancing industrial concentration and international competitiveness, as well as the promotion of national policies and environmental protection standards, driven by factors such as mergers and acquisitions, strategic cooperation and resource integration inside and outside the industry, the steel industry has achieved large-scale and intensive development, bringing broader market space and development opportunities for the high manganese steel industry. The integrated iron and steel enterprises have stronger R&D strength and financial strength, and can invest more resources in the R&D and production of high-performance materials such as high-manganese steel, which not only improves the quality and performance of high-manganese steel products, but also promotes its wide application in more fields.
2. Unfavorable factors
1) Policies on steel production capacity, high quality and environmental protection continue to become stricter
Under the background of the continuous tightening of policies such as de-capacity, high-quality and environmental protection of mainland steel, the market competition is fierce, and the profit margins of enterprises are compressed; The improvement of environmental protection standards requires enterprises to invest more resources in the construction and operation of environmental protection facilities, which increases operating costs; At the same time, the requirements of high quality have prompted enterprises to continuously improve their technical level and product quality, but they have also brought challenges of technical bottlenecks and R&D costs. Under the combined effect of these factors, the high manganese steel industry is facing greater pressure on the road of sustainable development, and enterprises need to strengthen innovation, optimize management and improve production efficiency to cope with the increasingly severe market environment.
2) Excessive dependence on imports of iron ore, manganese ore, fuel energy, etc
The instability of upstream raw material supply and the volatility of costs will directly affect the operation and profit of midstream high manganese steel. Due to factors such as domestic strategy and resource constraints, the import dependence on iron ore, manganese ore, fuel energy and other upstream high-manganese steel is too high, which means that once the international market has a tight supply or price fluctuations, it will be directly transmitted to the domestic high-manganese steel industry, affecting the normal production and operation of enterprises. In addition, over-reliance on imports may also lead to an increase in the safety risk of the industrial chain, and once the import channel is blocked, it will seriously affect the stable operation and long-term development of the high-manganese steel industry.
3) The international competition for the application of emerging high manganese steel has intensified
The continental high manganese steel industry has improved in terms of technical level, but there is still a certain gap in emerging fields and applications compared with the international advanced level. In the field of LNG transportation, there is a clear gap between the mainland high manganese steel industry and South Korea. South Korea has started the joint research and development of high manganese steel since 2010, and successfully developed ultra-low temperature high manganese steel thick plate products in 2013, and then with the support of the International Maritime Organization, high manganese steel has been widely recognized in the application of LNG carriers and power ships, and even realized the world's first VLCC equipped with South Korea's self-developed high manganese steel LNG fuel storage tank. Although the mainland has made significant progress in the research and development, production and testing of high-manganese steel welding materials, steel plates and storage tanks, there is still a certain gap compared with the depth and breadth of the application of high-manganese steel in the field of LNG transportation in South Korea.
and 4) the adverse effects of the impact of the epidemic
The supply chain disruption and logistics bottlenecks caused by the global epidemic have made it difficult to import raw materials and equipment required for high manganese steel, thus affecting the stable operation of the production line and the release of production capacity. Secondly, the epidemic has restricted the flow of people and goods, which has seriously affected the production, transportation and sales of high-manganese steel, and enterprises are facing problems such as reduced orders and delivery delays, which has further intensified the pressure on market competition, and the impact on the global economy has also led to the decline in demand for high-manganese steel, especially the reduction in demand in industries such as construction, automobile and machinery manufacturing, which has further contracted the market demand of high-manganese steel industry. In the post-epidemic era, the mainland high-manganese steel industry is still facing the uncertainty of market demand recovery, the complexity of the international trade environment and the volatility of raw material prices.
9. Competitive landscape
From the current point of view, there are many domestic high-manganese steel production enterprises, and there is a certain homogenization of industry products, which leads to intensified competition in the industry market. In recent years, the current situation of enterprise competition in the mainland high manganese steel industry is manifested in the fact that the decline in prices has led to a decrease in corporate profits, and it is necessary to improve product quality, reduce costs and expand market share to maintain competitiveness. At the same time, the development of construction, mining and metallurgy will increase the demand for high-wear-resistant, high-strength and high-manganese steel, and expand its application range. In terms of the types of competition among industry-related enterprises, state-owned enterprises such as HBIS Group and Anshan Iron and Steel Group occupy a dominant position in the field of high-manganese steel by virtue of their extensive business scope, policy support and financial strength, and at the same time have diversified operations and internationalization strategies; Small high-manganese steel-related enterprises, such as Shaodong County Shaofeng Reducer Manufacturing Co., Ltd., focus on specific fields, showing a high degree of professionalism and flexibility to meet market demand; Technological innovation enterprises, such as the Institute of New Materials Technology of the University of Science and Technology Beijing, pay attention to R&D investment, promote the development and application of high manganese steel technology through technological innovation, and form a leading edge in technology.
10. Development trends
The high-manganese steel industry in mainland China is ushering in a new era of vigorous development, and continues to improve under the trends of innovation and expansion of application fields, deep penetration of LNG fields, and dual trends of lightweight and environmental protection. In terms of subdivision, the continental high manganese steel industry has developed a new generation of high-performance high manganese steel/alloy with ultra-high strength and plastic toughness through the innovation of preparation methods and composition systems to meet the needs of special service environments. At the same time, the penetration of high manganese steel in the LNG field is becoming more and more significant, and its excellent performance makes it a key material for LNG storage and transportation facilities, and with the expansion of the clean energy market, it is expected to become one of the mainstream LNG materials in the world. In terms of lightweighting, the industry actively adopts advanced technology and design to achieve product weight reduction while maintaining performance to meet the needs of high-end manufacturing. In terms of environmental protection, the company introduces environmental protection technology, reduces energy consumption and emissions, and develops environmentally friendly products to meet the market demand for green materials.