They observed that the price of coking coal went from USD 75 per ton in February 2016 to USD 200 in December 2017, but it wasn’t a linear rise. In April 2016, the Chinese government implemented policies limiting the mining and production of coking coal, sending prices up to USD 300 per ton in just 2 months. Prices did eventually stabilize, but a series of natural disasters compromised supplies and logistics from major suppliers, leading to another rapid price increase.

The Chinese government is tackling overproduction and pollution in a series of economic policies. (Source: Brian D. Colwell)

Iron ore prices also had their ups and downs. At the beginning of 2016, the price for iron ore was  USD 41 per ton. Then, it reached USD 95 at the beginning of 2017, went back down to USD 57 in June, then shot back up to USD 70 in December 2017.

This price instability placed a heavy burden on steel producers and steel-consuming industries, making it hard to plan for the near and distant future. The following are a few of the factors that contributed to the capricious prices that will likely continue on into 2018 and beyond.

SEE ALSO: How Factories Produce Steel- the Smart Way

China environmental policy

Beginning in 2016, the Chinese government sought to close over 1,000 coal mines in just one year to cut the country’s production capacity by 60 million tonnes. This is part of the 5-year goal of cutting 500 million tonnes of surplus capacity.

Policies included switching to cleaner fuels and reducing mining-related working days from 330 to 276 days per year. Numerous small and medium-sized mines closed down as a result of the financial burden and domestic coal production was down 7.8 percent YoY.

Chinese mine workers were limited to 276 days of work per year in 2016.(Source: Mashable)

As China is the biggest producer of coal and the third largest producer of iron ore in the world, global prices skyrocketed and the ripple effect was felt in markets all over the world. Due to the greater-than-expected domestic and global outcomes, the Chinese government eased some of its policies in November of 2016, bringing prices back down by about 50 percent. However, the government is scheduled to gradually enforce production capacity reduction and environmental policies again in the near future. In the meantime, prices will continue to fluctuate in accordance to policy changes.

Climate change and unstable supplies

Australia is one of the top producers of coking coal and iron ore in the world, and the biggest net exporter. Much of the world relies on the raw materials coming from Australian mines, but in 2016 and 2017, natural disasters shut down mines and paralyzed logistics routes in the country.

In September 2016, Australia experienced record-breaking heavy rainfalls that led to the collapse of the Anglo American and South32 mines, and derailed railways leading to Port Abbot Point. Heavy rainfall again shut down rail operations and other major logistics routes in the beginning of 2017.

El Niño and La Niña events around the world are causing sporadic weather patterns that are costly to the environment and economy. (Source: Time)

Such inclement weather can be attributed to increasingly frequent El Niño and La Niña events around the world. According to the U.S. National Ocean Service, “El Niño and La Niña are opposite phases of what is known as the El Niño-Southern Oscillation (ENSO) cycle,….the fluctuations in temperature between the ocean and atmosphere in the east-central Equatorial Pacific… La Niña is the cold phase of ENSO and El Niño as the warm phase of ENSO.” Such deviations from average temperatures can cause fluctuations in global weather and climate, posing high risks for coal supplies and logistics.

The Oligopoly of major suppliers

Already, the biggest coal and iron ore producing companies are concentrated in Australia and Brazil. The “big four” are considered to be Vale, Rio Tinto, BHP Billiton and FMG, whose combined exports amounted to 959 million tons in 2014, 1.068 billion tons in 2016 and is expected to reach 1.135 billion tons in 2018.

Their growing share of the global minerals export market as oligopolies over the last few years have only strengthened their power to negotiate prices and contributed to the abnormal amplification of iron ore and coking coal prices. Plus, their position only looks to be solidified with the rise of renewable energy and environmental policies that are forcing smaller mines to close down.

Four major mining companies are expanding their share of the global market. (Source: New York Times)

BHP Billiton is the biggest exporter of coking coal in the world, and it announced in 2016 that it would increase coal output by 8 percent over the next 3 years. The company already owns several major coking coal mines all over the world, but continues to acquire profitable mines with high-quality minerals. Other major mining companies are also expected to continue increasing their share of the market, shutting out smaller companies and increasing prices for coking coal and iron ore.

In the near future, coking coal and iron ore prices will continue to be volatile, forcing steel and related industries to adopt more efficient and sustainable production processes to compensate. As such, global steel companies like POSCO are investing in sustainable energy alternatives to power production, smart factories to enhance efficiency as well as researching high-quality steel materials to boost its competitiveness in the global market. Preemptive planning in an unpredictable market has led to POSCO’s growth and success over the last 50 years, and it will continue to be a global steel leader and solution provider for its partners.

Cover photo courtesy of AVMY Steel Science.

It’s no easy task to prepare a city for such big-scale events, but it’s a great opportunity for host cities to boost their economy and make a lasting impression on visitors. For most, the airport will be their first impression of the city, so host cities have vamped-up their airports with the help of steel.  

Take a look at the airports expecting the most traffic in the beginning of the year:

Guarulhos International Airport – Brazil

Every year, from February 24 to 28, the people of Rio de Janeiro hold the Carnival, which unofficially lasts from the end of December to March in the form of hundreds of street parties called blocos. In 2017, more than 1.1 million people showed up for the Carnival from all over the world and spent about USD 782 million during their stay. The Guarulhos International Airport (GRU) is the busiest airport in Brazil, and traffic has tripled from 12.9 million people in 2004 to 39.5 million in 2014. To accommodate the growing number of passengers, the airport has undergone several additions and renovations in the past couple of years.

Terminal 3 at Guarulhos International Airport opened in 2014 ahead of the FIFA World Cup. (Source: Passenger Terminal Today)

Ahead of the 2014 FIFA World Cup, GRU built the 192,000 square-meter Terminal 3 to increase its passenger capacity by 12 million, bringing up the total capacity to 42 million. Terminal 3 consists of 2 main buildings made up of 40 metal modules weighing 70 tons each, held together by concrete pillars.

Then, in 2016, Terminal 2 was renovated ahead of the Summer Olympic Games to fit modern airport standards. With a budget of USD 50 million, architects took existing facilities that were close to 30 years old and rebuilt them into the modernized Terminal 2. The new terminal now accommodates plenty of retail space and a massive food court, and non-aeronautical revenues make up 51 percent of the airport’s entire revenue.

It seems the airport, and the city, made a lasting impression as last year, over 94 percent of tourists that took part in a survey said they would make another trip to the city and over 91 percent responded they would recommend Rio to their friends.

Louis Armstrong New Orleans International Airport – USA

The Louis Armstrong New Orleans International Airport (MSY) is another airport that sees millions of visitors every year during the month of February. Mardi Gras, or Fat Tuesday, landed on February 13 this year, marking the end of a month-long celebration. It’s basically the American version of the Rio Carnival, and social crews or Krewes organize different parties all over town. The event draws about 1.4 million participants on average.

The Louis Armstrong New Orleans International Airport’s North Terminal is scheduled for completion in 2019. (Source: Atkins)

Starting in 2016, MSY is working to complete a 972,000 square-foot North Terminal by February 2019. The project will cost about USD 1 billion to construct. When finished, the new terminal will include 35 new gates, a massive parking garage for 2200 cars as well as a central utility plant.

Besides increasing the passenger capacity, the project created about 64,000 jobs and generated USD 6.4 billion in local spending and USD 2.4 billion in local earnings. The project is also responsible for tons of steel consumption in the form of beams, bars and panels. On November 17, 2017, workers erected a steel beam at the highest elevation of the new terminal, signaling the project will most likely be completed on schedule.

Incheon International Airport – Korea

It’s not every year Korea gets thousands of visitors in the month of February, but as the host for the 2018 PyeongChang Winter Olympics, Incheon International Airport (ICN) is bustling with passengers. Global passenger flights were up 15 percent this year compared to last year, and up 24 percent in the U.S. alone. In Vietnam, bookings were up 550 percent from the previous year, the Philippines saw a 200 percent increase and Canadians booked 40 percent more flights, all in time for the 2018 Winter Olympics.

Incheon International Airport’s second passenger terminal opened on January 18, 2018. (Source: Medium)

To greet the growing number of passengers, ICN completed its second terminal earlier this year using POSCO’s 446M steel. The same type of steel was used to build the first passenger terminal in 2001, but this time, architects decided to apply a special process called Bead Blast to create a rough texture on the roof of the terminal to minimize reflectivity as it can interfere with sight during take-off and landing. The steel also contains high amounts of chromium (26%) and molybdenum (2%), making it extra corrosion resistant.

As the #1 ranked airport in service quality for the last 10 years, ICN will now be able to service more passengers, 72 million to be exact, and 5.8Mt of cargo every year.

SEE ALSO: POSCO’s World Premium Stainless Steel Products, Preferred Option for Strength and Beauty

Airports play a central role in the tourism industry of its respective country, and the national economy as a whole. Steel continues to be the most widely-used construction material for the building and renovation of bustling airports around the world, and will continue to help cities make a lasting impression on all its visitors.

Cover photo courtesy of Wilmotte & Associés.

However, these building projects are on another level of huge, and with all the megacities popping up throughout the country, China boasts many of the biggest infrastructure projects in the world. Here’s the Steel Wire’s look at some of the most impressive to date.

Three Gorges Dam

China is home to the largest dam in the world, measuring 1.5 miles in length and sitting 60 (!) stories tall. The Three Gorges Dam took 1.92 million tons of rolled steel to complete, along with 10.82 million tons of cement and 1.6 million cubic meters of timber. The dam opened in 2003 on the Yangtze River and last year, generated a record-high 97.8 billion kilowatt-hours of electricity, 4.35 percent higher than the previous year.

The Three Gorges Dam is the biggest dam in the world and is made up of 1.92 million tons of steel. (Source: Wikipedia)

Beijing Capital International Airport

Beijing Capital International Airport (PEK) was the second largest and busiest airport in the world in 2016, just behind the Hartsfield–Jackson Atlanta International Airport in the U.S. PEK recorded 94,393,454 passengers that flew in and out in 2016, a 5 percent increase from 2015, and is easily the biggest airport in all of Asia.

Beijing Capital International Airport is the biggest airport in Asia, and second in the world. (Source: Top China Travel)

The first phase of the airport cost USD 3.5 billion and was completed in 2008, but in order to handle the growing number of passengers, an expansion project is planned for 2025. The estimated 5-year project will almost double PEK’s capacity and cost an additional USD 13 billion.   

Jiaozhou Bay Bridge

China is also home to the longest sea-crossing bridge in the world. The massive structure stretches over 26.4 miles and connects the cities of Qingdao and Huangdao. The 110ft width accommodates 6 traffic lanes that are supported by 5200 steel pillars.

The Jiaozhou Bay Bridge is held up by 5200 steel pillars. (Source: Feel the Planet)

The bridge first opened in 2011 and took USD 2.3 billion and over 10,000 workers to build. The Jiaozhou Bay Bridge also took 450,000 tons of steel to complete, allowing the bridge to be able to withstand earthquakes up to 8.0 in magnitude, typhoons and the force from a 300,000-ton object.  

Jiuquan Wind Power Base

Not surprisingly, the largest wind farm in the world located in China. Jiuquan Wind Power Base is made up of 7,000 turbines that generate enough electricity to sustain a small country. The plant was approved in 2008, and the government has pledged an additional USD 17.4 billion by 2020 as part of the effort to develop China’s renewable energy industry. For now, only 3.3 percent of all the electricity generated in China comes from wind turbines. With the additional investment, Jiuquan Wind Power Base will be able to generate a massive 20 gigawatts of sustainable electricity.

The Jiuquan Wind Power Base generates enough energy to power a small nation. (Source: The New York Times)

New Century Global Center

What does the biggest building in the world look like? A mini country. Located in Chengdu, Sichuan province, the New Century Global Center combines a shopping mall, water park, hotels, movie theaters, offices, restaurants, ice rink and more into 19 million sq.ft. of space. The structure is made of glass and steel and measures 500 meters long, 400 meters wide and 100 meters high. Designed by architect Zaha Hadid, it even has artificial sun for the perfect weather, 24 hours a day.

The New Century Global Center located in Chengdu is the largest city in the world. (Source: Thousand Wonders)

Port of Shanghai

The world’s biggest ports are mostly located in China, and the biggest one is the Port of Shanghai. In 2012, 744 million tonnes of cargo and 32.5 million twenty-foot equivalent units (TEUs) of steel containers passed through the port. The entire area of the port on the Yangtze River covers 3,619km² comprised of 3 main ports: Wusongkou, Waigaoqiao and Yangshan Deep-Water Port. About 25 percent of China’s trade passes through the Port of Shanghai, or 2,000 steel container ships per month.

The Port of Shanghai is the largest port in the world and a quarter of China’s trade passes through it. (Source: Thomson Reuters)

Most recently, the 4th phase of the Yangshan Deep-Water Port was completed, making it the largest automated port in the world. It spans across 2.23 million square meters, and can automatically handle 4 million standard containers per year, or 25 per hour. It was also built to accommodate the heaviest ships in the world.

China is using its steel to build up the country’s infrastructure, and set world records along the way. Besides being impressive in size, the structures are expected to contribute to greater connectivity and economic prosperity throughout China.

Cover photo courtesy of Morgan Stanley.

With the performance increase in both steel and non-steel businesses in Korea and overseas, operating profit was highest it’s been in the last 6 years, and the operating profit to sales ratio was 7.6 percent. Year-on-year consolidated sales increased by 14.3 percent and operating profit and net profit increased by 62.5 percent and 183.7 percent respectively.

The total operating profit of POSCO’s non-steel businesses, which reached KRW 10 billion last year, also turned into a surplus. There was an overall increase in non-steel businesses including trade, energy, ICT, chemicals and materials, resulting in KRW 1.0927 trillion of profits, up KRW 1.0798 trillion from last year.

This is in line with POSCO CEO Ohjoon Kwon’s strategy to focus on group management by securing future growth engines and reforming non-steel businesses.

※ Total operating profit per sector

Indonesia-based integrated steel mill, PT. KRAKATAU POSCO, also generated a surplus for the first time since operations began in 2014. Mexico-based automotive steel sheet plant, POSCO Mexico, as well as India-based cold rolled steel corporation, POSCO Maharashtra, also achieved their highest operating profit, tripling the total operating profit of overseas steel business.

Moreover, separate sales and operating profit increased year-on-year by 17.4 percent and 10.1 percent respectively to KRW 28.5538 trillion and KRW 2.9025 trillion, and the net profit was KRW 2.5457 trillion.

Production and sales decreased year-on-year due to the repair and facility rationalization of Pohang Blast Furnace No. 3, but the sales ratio of World Premium products with better technology and higher returns increased to 53.4 percent, its higher ever.

Financial soundness was also saw improvements. POSCO’s Consolidated debt ratio decreased by 7.5%p year-on-year to 66.5 percent, the lowest since 2010. Separate debt ratio also decreased by 0.5%p year-on-year to 16.9 percent, constantly renewing the lowest record on a yearly basis.

POSCO also demonstrated a cumulative financial improvement of KRW 7 trillion with 150 cases of restructuring in the last 4 years, reinforcing the business structure as well as financial competency. Accordingly, this year the company expects to make more investments in new growth engines such as lithium and cathode materials as well as energy and construction in addition to renewing the facilities at its steel mills. Thus, there will be a budget of KRW 4.2 trillion for consolidated investment, an increase of KRW 1.6 trillion compared to last year. The consolidated sales target is KRW 61.9 trillion.

※ POSCO’s 2017 business performance

There are several different definitions for drones, so the numbers may vary, but Business Insider Intelligence projects drone sales of more than USD 12 billion in 2021 for military, personal and commercial use.

Commercial applications for drones are especially on the rise with an expected compound annual growth rate (CAGR) of 19 percent from 2015 to 2020, and The Association for Unmanned Vehicle Systems International estimates commercial drones will be worth USD 82 billion by 2025.

New ways of incorporating drones into the workforce are popping up everywhere, such as for marketing, expedient delivery and information gathering. In heavy industries like steel manufacturing, drones are playing an increasingly important role in workplace safety. When paired with AI, drones have even more possibilities for minimizing workplace hazards.

Accident Prevention

An accident in a heavy industry worksite can be disastrous for workers, the company as well as the environment. That’s why it’s important for factories to be able to monitor and prevent potential dangers before they happen, and it’s one of the most widely applied areas for drones.

Audi’s factory uses drones for automated parts transportation. (Source: Audi)

For example, steelmaker POSCO is incorporating drones into its smart factory to monitor gas leaks that are hard to detect. Workers also wear smart sensors that alert them of potential danger, and let others know their location in the factory.

SEE ALSO: How Factories Produce Steel – the Smart Way

Keeping Humans Out of Dangerous Industrial Areas

Besides monitoring the workplace, drones can be of practical use and take on dangerous and costly tasks formerly done by people. This includes accessing dangerous places. For example, drones can take aerial job site survey photos, eliminating the need for a pilot, helicopter and other employees. Construction companies are using drone mapping to create 3D models of their projects, saving time and resources along the way.

Drones can keep workers out of dangerous workplaces. (Source: Fortune)

The mining industry also uses drones to enter hazardous areas to gather information before sending in workers. Smart drones, or drones equipped with AI software, can provide and process information in real time, saving companies major costs.  

Accident Investigation

Even with drones, not all accidents are preventable. Once an accident occurs it’s vital to have accurate data that tells exactly how the event played out. Drones are a useful forensic tool to recall events and diagnose the situation. With this information, companies can not only fix equipment and operational failures, they can use the data for legal matters regarding insurance claims, court fees and compensation litigation.

Workers can use drones to access stored information. (Source: The Economist)

Due to the increasing adoption of drones in the workplace and the vital role they play in worker safety, the commercial drone market is looking to expand. With increased investment, drones are being upgraded from its structure to the software that goes in them.

What Drones are Made of

Drones are largely composed of a frame, motor, camera, propeller, sensor, controller and battery. The frame serves as the base of the drone to which various parts mounted. Therefore, the frame of the drone has to be light yet durable, in order to maintain its structural integrity and minimize battery consumption.

Most drones are powered by an electric battery. On longer flights and in harsh weather conditions, the motor gets overworked, putting a toll on the battery. Engineers are constantly working to improve the capacity of the battery, which usually results in a bigger, heavier battery pack.

The DJI Phantom 4 is an example of a drone with a magnesium body for weight reduction and added strength. (Source: Petapixel)

In order to make up for the added weight and volume, manufacturers are turning to light and strong materials such as magnesium, the lightest commercial metal available. Magnesium alloys are lighter than aluminum alloys and are widely used in smartphones, tablet PCs and automotive and aircraft parts. Magnesium alloys have high thermal conductivity and excellent heat dissipation. It also has high strength and durability against impact. Moreover, it is corrosion-resistant and cost-effective, making it an ideal material for drones.

The market for drones will be an exciting one to watch going into 2018 due to friendlier regulations, significant investments and drones’ unlimited potential for application. It will result in more industries actively incorporating drones into their operations, and the world can expect the launch of more technologically and structurally innovative drones that will play an increasingly vital role in workplaces.

Cover photo courtesy of Wired.

The 2008 Financial Crisis was a blow to the global automotive industry and its suppliers. It took years to recover, but the economy did start showing signs of growth. McKinsey&Company’s 2013 report, The road to 2020 and beyond: What’s driving the global automotive industry, painted a positive picture of the global automotive market with profits projected to reach EUR 79 billion by 2020, up from EUR 54 billion in 2012, with China responsible for 60 percent of profits.

Their 2016 report, Automotive revolution – perspective towards 2030, offered a similar outlook. Overall global car sales will continue to grow, but at about a 2 percent growth rate, down 1.6 percent from the last five years. New market trends such as electric/autonomous vehicles, shared mobility and stricter environmental regulations will disrupt the market with new challenges and opportunities, but what remains constant is that the majority of growth in global automotive sales will be lead by the rising middle class of emerging markets, namely in India and China.

Thousands of vehicles are scrapped in the Chinese government’s efforts to reduce emissions. (Source: The Daily Mail)

Subsequently, China reached record vehicle sales in 2016. However, in April 2017, it recorded the lowest number of sales in the past two years for passenger cars, down 3.7 percent from 2015. This follows a national sales tax rise early in 2017 to 7.5 percent, coupled with a general decrease in demand for cars as consumption is reaching a plateau. Moreover, China’s sales tax will increase again to 10 percent in 2018.

India’s Booming Automotive Industry

Unlike China, India’s automotive market shows little signs of slowing down. India is now the world’s fastest growing economy as their GDP is projected to increase by 7.2 percent from 2017 to 2018. Their middle class is estimated to triple by 2025, reaching 89 million households.

The government of India is looking to the automotive industry to lead India’s economic growth, as outlined in its Automotive Mission Plan for 2016-2026 and “Make in India” initiative. Under such plans, the government will work towards creating an additional 65 million jobs in the automotive market and a 500 percent increase in vehicle exports by 2026.

A full parking lot of Renault cars reflects the massive automotive market in India. (Source: The New York Times)

It’s no surprise that Foreign Direct Investment (FDI) is pouring in. From 2000 to 2016, India’s automotive industry alone attracted USD 15.79 billion in FDI. For investors, India’s growing middle class of consumers is as attractive as their vast and low-cost labor.

POSCO Maharashtra in India

POSCO Maharashtra is one automotive supplier that is echoing the growth of the Indian automotive market. Their 2Q17 unaudited earnings report showed significant growth from just a year before in 2016. The reported revenue was USD 331.7 million, compared to USD 174.7 million in 2016. The company’s operating profit was USD 32.6 million, up from USD 3.5 million in 2016. Finally, their net profit was USD 22.9 million, another significant increase from USD 15.9 million in 2016.

*Earnings figures were converted from Korean won to U.S. dollars using August 22, 2017, exchange rates.

The POSCO Maharashtra Plant in India

In May of this year, POSCO Maharashtra signed a MoU with Essar Steel to supply 1.1 million tons of flat steel products during the 2017 fiscal year. This is the second year of partnership between the two companies, but the volume of steel POSCO Maharashtra will supply is 30 percent higher than in 2016.

The growing business reflects the work philosophy of POSCO Maharashtra employees: “If [we] supply quality material, they’ll come back again and again. So that’s what we’re doing right now. Although our products might be priced a bit higher in the Indian market, we are supplying quality material and our customers continue to be loyal because they understand that value.”- Chetan Waghchoure, sales representative for POSCO Maharashtra. Read the full interview here.

POSCO Maharashtra’s Chetan Waghchoure during an interview with The Steel Wire

POSCO Maharashtra is taking full advantage of the thriving automotive industry in India and continues to expand its business by reducing production and inventory costs, increasing performance and efficiency and planning to incorporate AI technology into their future production processes.

Market indicators point to India to drive the profitability of the automotive industry. India’s growing consumption of vehicles, open business environment and vast labor force will continue to attract foreign investment and new businesses. The best part is that India is not even close to being fully developed, meaning brighter prospects for future growth and good news for manufacturers and suppliers.

Why is the Shipbuilding Industry Behind in Technology?

The advent of container ships dates back to 1956. About a decade later in the 1970s, there was a boom in demand for container ships along with the industrial revolution. Then, demand boomed again during the dot-com bubble. The bubble burst in 2001, and the world faced yet another recession in 2008. From this slowdown in overall trade and economic activity, the world now has an oversupply of container ships, and economists project it will last up to 2025.

The Ideal X leaving Newark, New Jersey in 1956 (Source: Wired)

This is bad news for the shipbuilding industry as well as their supplies. In fact, during the first half of 2016,  a reported 20,000 people from the shipbuilding industry lost their jobs in Korea, the third largest shipbuilder in the world. Steel suppliers were also hit hard with China’s oversupply of steel crowding out the market.

Not All Signs Point South

First of all, the global export to GDP ratio is projected to increase from 30 percent in 2015 to 33 percent in 2035. According to the World Trade Organization (WTO), in 2017, there has been an estimated 2.4 percent growth in the overall volume of trade, and an additional 2 to 4 percent projected for 2018. Export orders and container shipping have increased in 2017 as well. With 90 percent of the world’s trade goods transported via ships, things are looking up for the stagnant shipbuilding industry.

Another piece of good news for the shipbuilding industry and environmentalists came at the end of 2016 when the International Maritime Organization (IMO) announced the new global cap on the amount of sulfur for marine fuels at 0.5 percent by 2020. With full compliance, it will result in an 85 percent decrease in global S02 emissions.

The IMO announce the 2020 emissions cap (Source: Interfax Energy)

The outlook of global trade and the new IMO emissions cap will mean new business for shipbuilders as well as their suppliers. Operators working with ships and fuel that meet current emissions requirements will have to either modify their vessels, opt for low-sulfur fuel or turn to alternative solutions such as Liquified Natural Gas (LNG).

Scrubber Solutions  

Remember the overproduction problem mentioned earlier? Not every company has the financial resources to build brand new, eco-friendly ships or switch to low-sulfur fuel. At the moment, low-sulfur fuel is about 50 percent more expensive than low-grade bunker fuel. Nearing 2020, those prices are projected to increase a lot, due to skyrocketing demand.

An alternative way for ship owners to meet the IMO emissions cap by 2020 is installing scrubbers. Scrubbers are exhaust gas treatment plants that use water to clean the gas exhaust produced by ships before it is expelled into the air. They typically require 1 to 2 percent of total main engine power to operate and cost an estimated USD 5 million to install.   

A scrubber for a HFO-fueled ship (Source: Wartsila)

UBS Limited reported that about 19 percent of ship owners will embrace scrubbers as solutions while about 74 percent will turn to low-sulfur fuels.

Already, companies are jumping aboard. Technology company Wärtsilä will install their scrubber system to two 56,000 DWT Handymax bulk carriers for NYK Bulk & Projects Carriers Ltd. in Japan. The vessels are scheduled to be completed by 2018 and 2019, and will meet the new IMO sulfur emissions cap. Dutch company Spliethoff will also install scrubbers on six of their multipurpose vessels to be built in 2019 and continue burning HFO.

A Zero-S02 Emission Solution

Many of the carriers in operation today can run on several different types of fuel, including LNG. Even among concerns about the lack of facilities accompanying LNG, it is favored by suppliers, manufactures and environmentalists alike. Burning LNG emits zero S02 and particulate matter, and up to 25 percent less C02 and up to 90 percent less nitrogen oxides (N0x).

An LNG carrier heading to Brazil (Source: LNG World News)

An increasing number of companies are investing in the LNG solution.

Energy company Shell acquired LNG producer BG Group in 2016 for USD 50 billion; Volkswagen will employ two LNG carriers to ship their products between Europe and North America; and as of August 2017, three new shipbuilders joined SEA/LNG, a non-profit coalition that advocates the use of LNG for ships. Mitsui, Novatek and Sumitomo are the latest of the 29 members.

Although LNG is by far the most environmentally friendly solution for the shipping industry, it requires more space and adds weight to a vessel, using up more fuel. Shipbuilders need thinner and lighter material solutions to cope with this issue.

Eco-Friendly Material Solutions

All of this is why Hyundai Mipo Dockyard chose to build the world’s largest LNG-powered bulk carrier using POSCO’s High Manganese Steel. The vessel will yield up to 50,000 tons of cargo, seven times more than existing LNG carriers. The high manganese component allows the LNG to be kept at the freezing temperatures of -162℃. It out performs other traditional materials in strength, toughness and cost effectiveness. The carrier will be in operation in Korea beginning in 2018.

Workers building a ship at Hyundai’s shipyard (Source: AQT Solutions)

POSCO also supplies stainless steel for Korea Gas Corporation’s membrane-type LNG carriers starting from 2016 and is the world’s only supplier of stainless steel for membrane material.

The projected overall increase of worldwide trade and new environmental regulations will place a financial burden on ship owners. However, it is an opportunity to generate business in different sectors of the shipbuilding industry such as in parts manufacturing, energy and steel supplies. Such parties need to continue to find solutions to modernize vessels and comply with global standards to meet the demands of world trade in the very near future.   

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Today, the four most common materials used in race bikes are steel, aluminum, titanium and carbon fiber. The most common on the Tour are carbon fiber bikes that can range from USD 10,000~20,000 in retail price; that’s before adding the thousands of dollars worth of additional gear. The majority of competitive cyclists is not sponsored by a major bike company and cannot afford high-end bikes. Additionally, market conditions and the changing landscape of the racing industry could have manufacturers looking for alternatives.

The Race Bicycle Market

Michael O.B. Krähe analyzed the road race bicycle market trend for 2017 and beyond by looking at data from the Festive 500 Challenge on Strava, a widely-used application for tracking race times and training. In 2016, 83,000 challengers from all over the world attempted to ride 500 kilometers between Christmas and New Year’s Day, thus providing a rough but insightful representation of the global market for race bicycles.

In 2016, there was a 14% increase in the number of participants, much less than the 49% in 2015 and 54% in 2014. On the other hand, 32% more challengers completed the 500 kilometers in 2016. There was actually a decrease in the number of participants from the U.S. and Germany, two major markets for race bikes.  

Cyclists take a break from cycling

Krähe also looked into Jedermann Rennen (JDR) races in Germany, to account for cyclists who do not race or train during the winter season of the Festive 500 Challenge. The JDR, or “everyman’s race”, is an amateur version of a professional race held on the same day and route as the main event, kind of like the pro-am of golf. There was an average of 15% to 25% decline in the number of participants in JDRs from 2011 to 2016. Of those participants, more than 60% were over 40 years old and a mere 10% under 30 years old.  

The number of participants in three different JDR races from 2011-2016 (Photo courtesy of Cycling.com)

Recent changes only made things worse – there were 250,000 unsold bikes at the end of 2015, up 44% from the year before. It led to discounted prices in 2016. Then, at the end of 2016, the UCI (governing body of professional cycling) banned disc brakes, a popular feature on almost every race bike. This announcement came late when sponsoring companies were already finalizing their 2018-19 products, all with disc brakes. UCI article 1.3.007 requires all bikes used in competition to be commercially available, which could lead to another overstock of race bikes.

Bikes are placed on racks for display in a retail store

What does this mean for the race bike market?

Prices will have to drop along with the decrease in demand for race bikes. However, high performance will still be expected from race bikes by the long-time cyclists who become more devoted to the sport over time. A low-cost, well performing, and easy-maintenance bike will be the future of race bicycles.

It’s time for manufacturers to revisit the drawing board for race bikes.  

The Big Four

Most teams on the Tour de France are riding carbon fiber bicycles. Much credit is owed to Lance Armstrong who was the first Tour rider to win on a bike with carbon fiber frames. Though stripped of his seven titles as of 2012 due to doping accusations, his initial win unleashed the age of carbon fiber race bikes. The following years coupled light-weight carbon fiber with advanced technology for an outright dominance of carbon fiber frames in professional cycling.

Nonetheless, before there was carbon, there was steel, and aluminum and titanium.

From its advent to the 1970s, bicycles traditionally had steel frames, known for its strength, durability, and affordability. In the ‘70s to the ‘80s, manufacturers began turning to aluminum frames in the general wave of efforts to lightweight race bikes. To add, aluminum frames are easy to manufacture and corrosion-resistant. Titanium frames are also popular for its lightweight and durability, but it never completely dominated the market due to high costs and difficulties in manufacturing. Then came carbon and it took off.

The problem is that the technique to manufacture carbon fiber frames is high-end. Not only in its price, but if precise technology is not applied, riders will get little or none of the benefits of carbon fiber (high stiffness to weight ratio, lightweight, low thermal expansion, the ability to customize, etc.). Thus, there are few people who can actually repair carbon fiber bikes correctly, whereas any local shop can repair a steel model. Moreover, carbon fiber is non-recyclable, unlike steel which can be melted down and re-used in other ways. The UCI has also set the minimum weight requirement of race bikes at 6.8 kilograms, and non-carbon bikes can now be built down to the minimum weight.

Carbon fiber frames are also known for its bespoke qualities. Aluminum is very hard to tailor, but there is a new wave of bespoke frame workers who are choosing steel for its cost, durability, and moldability. Major brands Columbus and Reynolds are also returning to steel with their new stainless steel tubes that are light and stiff enough to give carbon fiber a run for its money.

Although the market for race bicycles is looking stagnant, this does not apply to the bike market as a whole, including transportation and leisure bikes. In fact, this market is projected to grow over the coming years according to Lucintel, a global research firm, which projected the global bicycle market to reach 59.9 billion U.S. dollars by 2021. The growth is calculated upon the cost-friendly, efficient and environmentally sustainable method of transportation bikes will provide. Steel bikes will be a driving force in this growth as well, for its affordable and sustainable qualities, ensuring it will always be in the game.  

POSCO has been ranked as the world’s most competitive steelmaker for seven years in a row. It has remained competitive in part by focusing on its World Premium Products, which offer advanced steel solutions for their customers. POSCO has also put extensive effort into maximizing its non-steel technologies and products to find new growth in non-steel sectors. In addition, POSCO has been a leader in innovating its own manufacturing processes, incorporating advanced AI and IoT technologies into its smart factories. POSCO has also remained committed to not only growing its non-steel secondary businesses, but advancing upon existing technologies to create new and eco-friendly production methods.  Below we take a closer look at how POSCO has continued its work to innovate and stay competitive.

POSCO Expands Lithium Manufacturing Business

Amid the rising demand for rechargeable lithium-ion batteries used in smartphones, laptops, and electric vehicles, POSCO has been working on proprietary technology for lithium extraction. Earlier this year, POSCO opened Korea’s first lithium plant, PosLX, and commercialized the production of lithium carbonate from rechargeable batteries after 7 years of development.

From left to right: Jae-chun Song, chairman of Gwangyang City Council, Hyun-bok Jeong, mayor of Gwangyang, Gi-jong Woo, deputy governor of South Jeolla Province, POSCO CEO Ohjoon Kwon, Ung-beom Lee, president of LG Chem and Nam-seong Cho, president of Samsung SDI who can be seen pressing symbolic buzzers to show that the plant is now online.

The PosLX Plant is expected to produce 2,500 tons of lithium carbonate per year using a new eco-friendly technology, which is enough to manufacture about 70 million laptop batteries. This output will supply POSCO’s battery making partners LG Chem and Samsung SDI, as well as POSCO ESM, a subsidiary that produces cathodes for secondary batteries.

POSCO incorporates AI into Smart Factories

POSCO is also breaking through technical barriers by designing smart factories connected through IoT technology and artificial intelligence (AI) that produce higher quality products with less waste. POSCO has also begun incorporating advanced AI technology into its smart factories in order to more efficiently manufacture automotive steel.

Smart factories operate autonomously as the machines talk to each other through sensors – reducing faulty products and waste.

In particular, the ‘Smart Solution for Coating Weight Control Based on AI‘ technology uses an automated control technology that predicts the coating weight in real time and accurately meets the target coating weight. When coating weight is controlled manually, quality deviates depending on the skill level of the worker, which inevitably results in significant amounts of wasted zinc. However, when it is automatically controlled by AI, the quality of POSCO’s automotive coated steel can be enhanced while production costs are decreased. These new automated processes have also helped increase work efficiency and productivity with workers.

Also, CEO Ohjoon Kwon recently visited Siemens in Germany and GE in the U.S., both of which are known to have successfully operated advanced smart factories to observe how other companies have implemented highly sophisticated smart factory models. Through close cooperation with POSCO’s major affiliates such as POSCO E&C, POSCO Energy, and POSCO ICT, Kwon aims to embrace smart technology and reorganize POSCO’s entire business structure (Smart Factory, Smart Buildings & Cities, and Smart Energy).

POSCO’s Thailand CGL, Southeast Asia’s First Automotive Steel Sheet Plant

Faced with sluggish growth due to the oversupply from China and a decline in steel demand, POSCO has been looking to expand sales in new markets. In a bid to become the world’s largest steel provider for automobiles, POSCO completed its Thailand CGL (Continuous Galvanizing Line) in 2016. The plant has an annual production capacity of 450,000 tons and incorporates some of the most advanced AI technologies in its smart factory system.

In addition to being one of the strongest automotive production bases in Asia, Thailand is also the center of the consumer-electronics industry in Southeast Asia.

With the newly established automotive steel plate plant in Thailand, POSCO’s global volume will reach over 9 million tons in 2017 and more than 10 million tons per year starting in 2018. The automotive steel sheets manufactured by the facility will be supplied to global auto parts companies and carmakers operating in Thailand including Toyota, Nissan, and Ford. Despite the increase in competition from other steelmakers, POSCO aims to become a market leader through building strategic partnerships with global automakers operating in the country.

POSCO CEO Ohjoon Kwon and Deputy Prime Minister and Minister for Foreign Affairs Tanasak Patimaprakorn shake hands at hands at Thailand CGL.

As cities around the world get more crowded, urban dwellers are facing more and noisier neighbors. To help combat this problem, POSCO introduced PosCozy in 2016, a unique flooring system that combines manganese (Mn) Z-clips with continuous galvanized steel plates that greatly reduce impact noise, save space, and lower costs (product video).  

Unlike conventional flooring that uses non-steel materials such as styrofoam insulators and rubber buffer materials, POSCO’s floor plates are developed by combining high Mn steel Z clips – a material that is 4 times more vibration-resistant than general steel – giving it the ability to reduce noise between floors. PosCozy is able to reduce the sound of typical walking from 50dB to just 40dB, while impact sounds are lowered from 58dB to 38dB.

PosCozy is the world’s first high manganese steel floor plate with first-class floor noise reduction.

PosCozy is the world’s first high manganese steel floor plate with top quality floor noise reduction. It is also the first flooring system to receive the highest rating in sound insulation from Korea’s industrial rating agency.  Due to its unique and superior qualities, PosCozy won the prestigious Jang Young Sil Award in 2016.

POSCO’s High Manganese Steel Used in the World’s Largest LNG-Fueled Bulk Carrier

Due to the rising number of shipbuilding orders for large-sized liquefied natural gas (LNG) carriers, there has been a shortage of nickel,  requiring new and innovative solutions to construct LNG-fueled ships. In order to address these issues, POSCO developed a new type of high-performance manganese steel and announced in 2016 that it would be applied to the LNG-fueled bulk carrier built by Hyundai Mipo Dockyard.

Developed independently by POSCO, this high manganese steel contains an Mn content of 20%. Compared to traditional materials, it boasts improved performance through unique properties that include high strength, low-temperature toughness, wear resistance, non-magnetic, and damping properties.

It is the first time a bulk carrier will have been constructed to include an LNG-fueled system and a fuel tank made of high manganese steel.  Its higher strength, ability to withstand an extremely low temperature (-162℃), and cost competitiveness make it superior to the nickel and aluminum alloys that are typically used in tanks. The ship, which will be the world’s largest LNG-fueled bulk carrier, is expected to have a capacity of 50,000 tons, seven times more than previous ships.

POSCO’s high-performance manganese steel will be applied to the world’s largest LNG-fueled bulk carrier built by Hyundai Mipo Dockyard.

POSCO has been able to overcome immense barriers, from the nickel scarcity in the LNG market to the oversupply of steel from China. POSCO strives to be a pioneer across all industries with its innovative products and will continue to do so in the years to come.

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PT Krakatau POSCO held a meeting with export firms on February 9. Attendees strengthened their relationships as partners and exchanged ideas on POSCO’s sales strategies and goals.

PT Krakatau POSCO recognized the three trading companies with the highest performance in 2016. These three companies included Samsung C&T Co., Hyosung (Europe), and ThyssenKrupp (Brazil). Samsung C&T Co. was recognized for achieving the highest number of sales (88,000 tons, which accounts for 17%), while Hyosung and ThyssenKrupp were recognized for pioneering new markets. Awards were handed out to Yong-soo Kim, a senior managing director at Samsung C&T, Wolfgang Schnittker, CEO of ThyssenKrupp, and representatives from Hyosung. “We want to thank PT Krakatau POSCO for holding this event and hope to continue building our partnership for continued success,” said a representative from Samsung C&T.

Executives from three trading companies accept prizes for recording strong sales or developing new markets in 2016. From left to right: Kyung-joon Min, head of PT Krakatau POSCO; Frederik Bremsteller, a senior manager at ThyssenKrupp; Yong-soo Kim, a managing director at Samsung C &T; Bon-seok Koo, a manager at Hyosung; and Si-young Choi, head of PT Krakatau POSCO Headquarters.

During the main portion of the event, participants discussed marketing strategies to expand the sales of World Premium Products (WPP), countermeasures for common issues, and sales strategies. In addition, with its eye on overcoming recently strengthened protectionist policies, PT Krakatau POSCO also discussed ways to improve its own brand management, which included a regional sales quota management plan with further emphasis on indicating the place of origin on its products. PT Krakatau POSCO is steadily ramping up sales by implementing strategies to promote high-end products (such as WPP).

Kyung-joon Min, head of PT Krakatau POSCO, delivers his opening speech before kicking off the event.

PT Krakatau POSCO is in its fourth year of operation since beginning its full-scale sales activities in 2014. The steel mill has sold 7.7 million tons of products, including a total of 2.3 million tons of steel plates in Southeast Asia. Its cumulative exports of steel plates amounted to 290,000 tons in 2014, 445,000 tons in 2015, and 510,000 tons in 2016 due to aggressive new customer acquisition and local market development activities. The company has also connected with 307 new buyers in 23 countries including Southeast Asia, Europe, and Brazil.

In the future, PT Krakatau POSCO plans to continue developing partnerships with trading companies and to make efforts to strengthen its position and competitiveness as Southeast Asia’s first integrated steel mill and as a leading steel plate maker for the region.

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