Steel industry value chain.

Steel industry profit potential - the value chain

Value creation with flat and long products

A value chain for a steel product encompasses the stages involved in its creation, from raw material extraction to final use. For flat products, the production chain begins with the mining of iron ore and coal, followed by processing in blast furnaces to produce liquid steel. With long products, the process commences with the melting of ferrous scrap in an electric furnace. Liquid steel is then cast, rolled, coated, or further treated to create higher value products such as sheets, beams or plates.

The more processing steps there are, the greater the value that is created. The increase in profit potential as you move further downsteam is illustrated by the steel value chain. This shows how prices improve, when more metal processing takes place.

Flat steel products refer to items such as plate, hot and cold rolled strip and coil, tinplate, and electrical steel; and also include galvanised and organic coated steel. These products are usually made from slab. Slab itself is usually produced from continuous casting of liquid steel which in turn is usually made from iron ore via the blast furnace / basic oxygen steelmaking route.

Steel long products on the other hand refer to goods such as beams, heavy sections, rails, bar products (including SBQ), as well as wire rod, steel wire, strand, and even wire rope. These items are typically manufactured from a billet or bloom. Billet in turn is usually made from liquid steel which derives from melting scrap in an electric furnace.

Note that both definitions normally exclude tubular products such as welded or seamless pipe.

Click below to see the steel value chain for flat or long products, as defined by the market prices of raw materials as they undergo progressively more transformation or include increaing quantities of metal alloys.

FLAT PRODUCT VALUE CHAIN LONG PRODUCT VALUE CHAIN