Metals & Mining

Strong dependency on Automotive and Construction Materials industries leads to cyclical demand

What drives the industry according to public sentiment?

The high cyclicality of the industry, coupled with its strong dependence on sectors like Automotive and Construction Materials, which are experiencing fluctuating demand, has resulted in increased market volatility.

Rising competitive pressures from China, particularly in battery material processing (such as nickel, cobalt, and lithium), are pushing European companies to accelerate their innovation efforts.

Global exports from Chinese manufacturers continue to grow, driving down international prices. As a result, European players need to focus on high-value-added products to maintain a competitive edge.

Significant capital is being funneled into new technologies, such as hydrogen-based processes, to facilitate the industry's shift toward low-carbon production methods.

At the same time, soaring energy costs, particularly for gas and electricity, are inflating production expenses in this energy-intensive sector, further eroding competitiveness.

How business leaders can take position according to BCG experts?

Building a flexible cost structure is essential, alongside maintaining a resilient and adaptive supply chain, to create room for maneuvering in volatile conditions. Shifting focus towards high-value and specialized products tailored to emerging sectors like renewable energy infrastructure or aerospace is key, though these areas may not guarantee high profitability.

Investing in lightweight materials, such as aluminum or advanced alloys, is necessary to meet the growing demand from electrified automotive and aerospace industries. Embracing circular economy principles, including the increased use of recycled materials and the development of closed-loop manufacturing systems, can help reduce environmental impact.

Energy-efficient technologies and partnerships with renewable energy providers should be prioritized to respond effectively to comparatively high energy costs, ensuring competitiveness in a changing energy landscape.

Go back to overview

Continue to the next page