The refractories industry continues to be negatively impacted by the problems and demands of its customers—the traditional manufacturing industries—as well as legal issues, cash flow and retirement/benefit payments. The decline is also partly the result of the industry’s great success in providing longer-lasting refractories to its customers, which results in reduced demand and a declining market.
From 1997-2001, the overall market value for all categories of refractories has decreased each year, as shown in Table 2. Nonclay refractories comprised 60% of the annual market value in 2001, compared with 57%, 59%, 57% and 58% in the preceding four years.
Through the first nine months of 2002, steel production in the U.S. was 2% less than that of 2001. This would indicate that the refractories market should be relatively flat in 2002. Although there might be some rebound from the larger decrease that occurred in 2001, there is no current indication of coming market demands or changes that might boost the refractories industry and reverse the continuing decline in production or reduce the need for further consolidation and downsizing.
By contrast, the Chinese refractories industry should be very strong and busy, because that country’s steel production increased 12% in 2001 and 24% through the first nine months of 2002. The striking difference between the steel production trend in these two countries seems to reflect the difference between China’s young, new economy—and the world’s largest population (with huge infrastructure and transportation needs)—and the older, more stable economy of the U.S., which is growing at a slower pace.
Refractories are essential for the traditional industries to efficiently and profitably continue their manufacturing endeavors, so the need for refractories will definitely continue for decades, and even longer. The refractories industry has already changed significantly, through consolidation and downsizing, in response to the decreasing market size. More changes can be expected, with additional restructuring, further reduction of production capacity and more international collaboration, for the industry to function more efficiently—and profitably—in the global marketplace.