Industrial metals and minerals lie at the heart of the global construction and manufacturing industries. For that reason alone, it's always going to be a cyclical industry -- investment jargon for an industry whose prospects are tied to economic growth. The key question investors need to think about now, with regard the current cycle, is: Where is China's demand for industrial metals and minerals heading? Will it be sufficient to create marginal demand to take industrial metals and minerals prices higher?
If you're an investor in one of the large diversified miners, such as Vale (VALE -1.56%), Rio Tinto (RIO -1.62%), or BHP Billiton (BHP -0.98%), or metals producers such as Alcoa (AA) (aluminum) or Nucor (NUE -1.26%) (steel), then the question will be of crucial importance. I'll return to it later, but first, a closer look at the industry.
In a nutshell, the industry includes any mineral or material that's used for construction and industrial purposes. As such, it excludes those used for energy purposes. Examples of industrial minerals include asphalt, silica, gypsum, and potash, along with less obvious industrial minerals such as marble and diamond. Some important industrial metals include copper, steel, aluminum, lead, and zinc. In addition, rare-earth metals -- metals with unique properties that are increasingly being used in the electronics industry -- make up a further subset of the metals market.
Strictly speaking, coal isn't an industrial mineral, because it's mainly used for fuel and as part of the steelmaking process. A similar argument applies to iron ore. However, both are subject to many of the same end-demand drivers, so you could consider them as being in tandem with industrial metals and minerals.
According to a report from the International Council on Mining and Metals, the global metal and mining industry grew from $214 billion in 2000, to $644 billion in 2010. It's this kind of growth that encourages many to believe in a so-called commodity supercycle, the idea being that increasing urbanization within emerging markets will lead to a huge increase in fixed asset investment (specifically housing, construction, and infrastructural activity) that would create a long-term boom in commodity demand.
Loosely speaking, there are four kinds of companies in the industry. The most obvious are the large-scale miners such as Rio Tinto, Vale, or BHP Billiton, whose broad-based exposure makes them de facto plays on the mining and energy industry on the whole. The second group are companies with a heavy exposure to a metal or mineral, such as Southern Copper Co. (SCCO -2.15%) with copper. The third are the niche market players such as rare-earth miners, and the fourth are the metals producers such as Alcoa or Nucor, which tend to focus on one particular metal.
According to a KPMG report, China makes up 45% of global metals demand, and if the commodity supercycle theory has credibility, then China's demand outlook is critical to the industry. The problem for the theory's advocates is that evidence in the past few years has created some room for significant doubt.
A chart of the key metals and minerals prices reveals the extent of the declines in the past two years.
While much of the blame lies with ongoing slow growth in the global recovery and the slowing of growth expectations in China, there is an added factor. Specifically, China's massive $586 billion stimulus investment in 2008 led to a 30.5% increase in fixed-asset investment in 2009 and included significant expansion in steel and aluminum building capacity. The result is that China appears to now have overcapacity in these industries, a fact made worse by the slowing economy.
Diehard believers in the supercycle theory will see this as a temporary slowdown in China's long-term demand, but China skeptics would question its ability to return to double-digit GDP growth anyway. The answer to this question will shape the long-term prospects of the industrial metals and minerals industry, and give clues as to whether it's the right long-term investment for you.
Continental Steel & Tube Company is a globally leading supplier of quality industrial metals, backed by nearly 40 years of experience and a highly knowledgeable technical staff. As an ISO 9001:2015 and AS 9120B:2016 registered company, we meet the needs of diverse markets by supplying the metal alloys needed for demanding industrial applications. Choosing the right metal is the only way to ensure the longevity and performance of your application.
The term “industrial metal” is used to describe any type of base metal that is used for industrial purposes. These materials are typically highly durable, malleable, and provide electrical or thermal conductivity. At Continental Steel, we meet the demand for high-quality metals and alloys with an extensive catalog of materials suitable for construction, infrastructure development, electronics, automotive manufacturing, and much more.
In this guide, we will further discuss what industrial metals are, their unique characteristics, and which applications they are used in.
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Nickel and high-temperature alloys are known for their exceptional heat resistance, as well as numerous other specialized properties. Nickel-based alloys are created by combining nickel with other metals to improve their performance capabilities. The most popular alloying material for nickel is stainless steel, but titanium, copper, iron, chromium, and aluminum are also used.
These alloys perform reliably in temperatures as high as 1000 °C and are well suited to harsh industrial environments. Nickel-based alloys also deliver corrosion resistance and improved strength at a variety of temperature ranges. Due to these characteristics, nickel and high-temperature alloys are commonly used in applications such as:
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Stainless steel is a versatile and corrosion-resistant steel alloy that is used throughout many industrial sectors. Stainless steel must contain a minimum of 10.5% chromium as well as varying amounts of molybdenum, nickel, and niobium. These alloying metals ensure enhanced corrosion resistance and improved performance in challenging environments.
Stainless steel is available in an extensive range of grades, forms, finishes, and gauges, making it suitable for a large number of applications. In industrial applications, it is commonly used as hot or cold-rolled bars, sheets, coils, or strips, as well as piping and tubing. In addition, stainless steel is easily fabricated into an array of structural shapes.
Some of the most common industrial applications for stainless steel include:
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Aluminum is a lightweight, corrosion-resistant metal that is highly versatile. On its own, aluminum demonstrates excellent strength but is often supplemented with alloys to further enhance its strength and durability. Aluminum absorbs energy during impacts and exhibits a strength-to-weight ratio that allows it to be fabricated into parts that are both strong and lightweight. It is easily fabricated using a variety of processes, including extrusion, rolling, forging, and casting.
Due to these characteristics, aluminum alloys are a popular choice for aerospace and automotive components. They are also used in applications such as:
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Titanium is an incredibly versatile metal that is used throughout virtually every industry. It is highly valued due to its unique characteristics, which include an exceptional strength-to-weight ratio, corrosion resistance, and biocompatibility. Titanium also displays the highest strength-to-density ratio of any metal.
Due to its strong yet lightweight nature, titanium is used to create military equipment like missiles, jet engines, and other components for the aerospace industry. When alloyed with another metal, such as aluminum, molybdenum, or iron, it becomes even more versatile. Some of the most common industrial applications for titanium include:
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These related alloys display unique and valuable characteristics. Copper is highly ductile and an excellent conductor of electricity. It is also durable, impermeable, and low maintenance. Brass, a combination of copper and zinc, is ideal for low-friction applications, while bronze, a copper and tin alloy, is tough and versatile. These materials are easily fabricated into diverse components, available in wire, strip, or tubing form.
Copper, brass, and bronze are used throughout numerous industrial applications, such as marine components, electrical connectors, and even musical instruments. Some alloy-specific uses for these materials include:
Copper: Telecommunications, HVAC systems, plumbing, electrical wiring, and electronics
Brass: Plumbing fittings, marine and nautical components, musical instruments, decorative hardware
Bronze: Aerospace components, bearings, bushings, marine hardware, architectural components, art sculptures
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Carbon steel is a metal that features iron and a carbon content of up to 2.5%. This high carbon concentration delivers several beneficial characteristics that other types of steel do not have. For example, carbon steel displays greater strength than traditional steel and is less likely to break under pressure. It is also more durable and popular for industrial applications that demand an affordable yet high-strength option.
Due to its relatively low cost, it is a popular material for petrochemical plants and refinery piping and valves. Carbon steel is available in several grades and forms that include plates, tubes, beams, and rebar. They are often supplied as coated metals, such as galvannealed, galvanized, or Galvalume® carbon steel. Some of the most common industrial applications for carbon steel include:
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Alloy steel is a highly versatile steel with a nickel and chrome-based superalloy that is used in the most rigorous applications. Due to the addition of its various alloying elements, it displays enhanced mechanical properties, such as corrosion resistance, creep resistance, and oxidation resistance. It also retains its strength at high temperatures and within extremely corrosive environments.
While alloy steel grades vary in composition and performance capabilities, they are all well-suited to applications that require high strength, wear resistance, and hardness. Some common industrial applications for alloy steel include:
No matter what type of high-performance industrial metal your application requires, Continental Steel has the materials you need, in the grade, ASTM standard, and quantity you’re looking for. We carry an exhaustive inventory of industrial metals in various grades, shapes, and sizes and also offer fabrication services like cutting, bending, and forming for your convenience.
Our team has over three decades of experience meeting the needs of demanding industries, such as military, construction, marine, aerospace, and many others. We’re committed to ensuring your project is a success by delivering unsurpassed quality at competitive prices. To get started on your next project, request a quote today.
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