The automotive steel market is estimated to be valued at USD 130.46 Bn in 2024 and is expected to reach USD 162.9 Bn by 2031, growing at a compound annual growth rate (CAGR) of 3.22% from 2024 to 2031. The increasing automobile production around the world especially in developing nations such as India and China is driving the growth of the automotive steel market.

Market Driver - Growing Demand for Lightweight Vehicles for Better Fuel Efficiency

The automotive industry has seen growing pressures to improve fuel efficiency and reduce emissions from vehicles. Stricter environmental regulations are pushing automakers to develop technologies that can help lower the carbon footprint of personal transportation. Customers are also becoming increasingly environment-conscious and prefer vehicles that are sustainable.

One of the major strategies that automakers are adopting to meet these twin objectives of better mileage and regulatory compliance is light-weighting of vehicles. Automakers are turning to advanced high-strength steels (AHSS) and aluminum alloys that can provide the required strength and durability even at reduced thicknesses and weights.

However, extensive use of aluminum increases production costs significantly. AHSS allows automakers to re-engineer body structures and deploy complicated multi-material joining techniques to shed kilos without compromising on safety. This is a major driver for the automotive steel market to innovate further and introduce new advanced grades of steel that can help optimize weight without penalties.

Market Driver - Increased Adoption of AHSS for Safety and Performance

Compared to mild steel, AHSS grades can be as much as 3-4 times stronger and hence offer significant weight savings. At the same time, advanced processing has enabled these stronger steels to be efficiently formable and joinable for mass production.

OEMs are employing these steel types extensively in construction of pillars, door rings, rocker panels and other parts of body-in-white. As per estimates, a vehicle manufactured with AHSS can achieve over 25% weight savings compared to use of conventional steel alone. This is a major factor for driving higher fuel efficiency and performance ability too.

Automotive steel continues to provide an optimum balance of fortification and mass optimization thereby boosting the growth potential for this specialty steel category. Its ability to deliver on safety, sustainability, and driving dynamics is a winning value proposition spurring growth of the automotive steel market.

Market Challenge - Volatility in Raw Material Prices, Particularly Iron Ore and Energy Costs

The automotive steel market has been facing significant challenges due to the volatility in prices of raw materials that are crucial for steel production. Iron ore and energy costs constitute a major portion of the total operating expenses for steelmakers. Similarly, energy costs, especially that of coal and natural gas have fluctuated frequently depending on global demand-supply dynamics and geopolitical issues.

Volatile raw material prices pose serious issues for automotive steel producers to strategize and plan their production costs effectively. The unpredictable nature of input prices makes steel production a high-risk process. It also discourages long term contracts between steelmakers and automakers as steel prices included in such contracts quickly become unviable. The volatility often leads to periods of losses for steel companies when raw material prices surge. Overall, unstable iron ore and energy prices introduce significant challenges around cost management for the automotive steel market.

Market Opportunity - Growth of Electric Vehicles (EVs) Driving Demand for Lightweight Steel Grades

The rise of EVs presents a major opportunity for the automotive steel market. As EVs need to travel longer distances per charge, automakers are using automotive steel for reducing vehicle weight to improve driving range. This makes lightweight steel grades an attractive proposition for EV manufacturing.

The growing preference for EVs is expected to drive robust demand for these lightweight steel variants in the coming years. Steel producers have begun large investments to ramp up capacities of advanced grades aligned with EV material needs. As automakers aggressively work towards electrification goals, lightweight steels can help steel industry capture a significant share of this growing automotive steel market.

Strategic Focus on Lightweight Materials: As vehicle emissions and fuel efficiency norms get stricter globally, automakers are under increasing pressure to reduce vehicle weight. Leading automotive steel suppliers like ArcelorMittal, POSCO, and Nucor have made sizable investments in R&D for advanced high strength steels (AHSS) that offer equal or better strength at lower weight compared to conventional steels.

Global Supply Chain Integration: Steel manufacturers have integrated supply chains spanning mines, mills and recycling to ensure security of raw material supply and timely delivery.

Innovation through Collaborations: Given huge R&D investments required, steel makers partner closely with automakers during product development phase.

Customer-focused Marketing: Steel suppliers focus marketing efforts on highlighting benefits like weight savings and performance advantages to gain leverage in the automotive steel market.

Insights, By Vehicle Type: Rising Standards of Living is Fueling Growth of Passenger Vehicles

In terms of vehicle type, passenger vehicles contributes the highest share of the automotive steel market owning to rapidly increasing standards of living across developing nations. Individuals in developing countries are witnessing higher disposable incomes owing to strong GDP growth rates and favorable economic conditions. This has increased their spending power and propelled the sales of personal vehicles for private transportation needs over public transport. The emerging middle class particularly prefers owning a private vehicle as a status symbol of their new-found affluence and social mobility. However, rising fuel prices and traffic congestion in urban areas are major deterrents for buyers, prompting automakers to focus on strengthening their portfolio of compact and fuel-efficient passenger cars. Government initiatives supporting infrastructure development of new townships and roads in suburban areas are also expected to drive the 'commuter culture' further, augmenting auto steel demand from the passenger vehicle segment.

Insights, By Application: Growth of Infrastructural Projects is Boosting Demand from Body Structure Application

In terms of application, body structure contributes 38.7% share of the automotive steel market in 2024, owing to large-scale infrastructure development activities worldwide. Construction of new highways, flyovers, bridges requires massive quantities of steel, primarily used in body structures which forms the backbone of these projects.

Government investments in nation-building agendas such as 'Make in India' and 'Rebuilding America' are channeling billions of dollars into strengthening transport and logistical networks both within and linking cities. This includes megaprojects for high-speed railways, metros and motorways that depend heavily on steel for their body structures such as trusses, girders and framework.

Industry experts expect these infrastructure-oriented investments to stay robust over the coming years, maintaining strong demand flows for auto-grade steel consumed in body structures of construction vehicles and equipment.

Insights, By Steel Type: Strict Safety and Emission Norms are Pushing Adoption of Advanced Steel Grades

In terms of steel type, high-strength steel (HSS) contributes the highest share of the automotive steel market currently. However, intensifying governmental safety and emissions regulations around the world are prompting a gradual shift towards advanced automotive steel grades.

Manufacturers are under increasing pressure to comply with stringent CAFE (Corporate Average Fuel Economy) and Euro Norms by making vehicles lighter and more fuel efficient. This has propelled the demand for advanced high-strength steel (AHSS) and ultra-high-strength steel (UHSS) variants which are lighter and stronger than conventional HSS and mild steel.

This enables construction of lightweight body architectures with equivalent or better crash performance. With tightening emission cutoffs looming, these enhanced steel grades are anticipated to see their market share grow at a relatively faster rate over HSS in the coming years.

• Collaborations: Automotive OEMs partnering with steel manufacturers to develop custom automotive steel solutions for specific vehicle models.
• Sustainability Efforts: Companies investing in green steel production methods to reduce carbon footprints in line with global environmental regulations.
• Increasing Use of AHSS: Advanced High-Strength Steel usage in vehicles has increased by 15% over the past five years due to its superior properties. This will drive important trends in the automotive steel market.
• Regional Growth: Asia-Pacific region accounts for over 50% of the global automotive steel demand, driven by countries like China and India.

The major players operating in the automotive steel market include ArcelorMittal S.A., Thyssenkrupp AG, Nippon Steel Corporation, Hyundai Steel, POSCO (Formerly Pohang Iron and Steel Company), Tata Steel, Baosteel Group Corporation, JFE Steel Corporation, United States Steel Corporation, and SSAB AB.

• In June 2024, Tata Steel Nederland introduced "Zeremis® Recycled," a steel product with an allocated 30% recycled content. This initiative aims to assist customers in achieving their circularity goals without compromising on steel quality. The product is particularly targeted at consumer-facing industries, including automotive, packaging, and construction.
• In April 2024, Mahindra Last Mile Mobility Limited (MLMML) introduced the Treo Plus, an electric three-wheeler featuring a metal body for enhanced durability. This update was implemented in response to customer feedback, aiming to improve the vehicle's robustness.
• In January 2024, Chinese automaker BYD surpassed Tesla in global electric vehicle (EV) sales, delivering 526,000 battery electric vehicles (BEVs) in the fourth quarter of 2023, compared to Tesla's 484,500 BEVs during the same period.
• In May 2023, ArcelorMittal introduced new multi-phase ultra-high-strength automotive steel grades at the Great Designs in Steel (GDIS) event in North America. These advanced steel grades are designed to assist automakers in reducing vehicle weight, thereby enhancing fuel efficiency and supporting the transition to electric mobility.

• By Vehicle Type
  • Passenger Vehicles
  • Light Commercial Vehicles
  • Heavy Commercial Vehicles
• By Application
  • Body Structure
  • Suspension
  • Power Train
  • Others
• By Steel Type
  • High-Strength Steel (HSS)
  • Advanced High-Strength Steel (AHSS)
  • Ultra High-Strength Steel (UHSS)
  • Mild Steel