China’s offshore wind boom to boost steel demand

18 Sep, 2020

The anticipated boom in the Chinese offshore wind market is set to boost steel demand, offering slate and pipe producers advantageous opportunities, Kallanish Energy reports.

Consultancy firm Rystad Energy forecasts that the rapid development of renewable projects opens up new possibilities for the country’s supplier industry.

New installed offshore wind capacity is expected to nearly double to 4 gigawatts (GW) this year, having already grown by 23% last year. Total capacity will then reach nearly 7 GW in 2021, according to Rystad.

The construction of offshore wind foundations will directly impact the sourcing and supply of steel plates. Total steel plate consumption in China’s offshore wind market is set to reach 600 kilotonnes (kt) in 2020, and more than double to 1.5 million tonnes (Mt) next year.

Plates producers aren’t the only ones likely to benefit from growth in turbines deployment. Pipe producers “will be keen to take advantage of opportunities that can make use of excessive capacity in their longitudinal submerged arc welding (LSAW) production facilities,” Rystad analysts said in a report on September 16.

“We believe the total market size for LSAW in the Chinese offshore wind sector could multiply from less than 200 kt in 2019 to between 950 kt and 1Mt in 2021,” they added.

As the world moves towards a green future, some pipe producers will seek to transition into the renewables market, following demand growth. Yet, some LSAW pipe mills would become more dedicated to supplying the oil and gas pipeline market, which is still expected to grow, particularly for large OD LSAW pipes.

“Either way, the expanding offshore wind market could help improve steel mills’ utilization rate in the long run and give them an opportunity to enter the clean energy arena,” Rystad concludes.