Energy More effective use seen as key factor in future

Sep 02, 2001 | 08:25 PM |

Anthony Wilson is president of Strategic Dimensions Inc., Pittsburgh.

In its "Energy and Environmental Profile of the U.S. Iron & Steel Industry" (August 2000), the U.S. Department of Energy (Office of Industrial Technologies) highlights the importance of the U.S. Iron and Steel Industry as a major energy consumer. Iron and steel producers account for approximately 2 to 3 percent of total U.S. and 9 percent of the manufacturing sector's energy consumption. Energy is the largest single component of operating cost for many producers (typically 15 to 20 percent).

The steel industry's energy needs are provided from three major sources coal, natural gas and electricity (plus smaller quantities of oil). All have recently shown varying fluctuations in price and supply. Steelmakers look with concern at rising energy costs, at a time when falling steel prices have already plunged many producers into losses. The effect of rising energy prices impacts differently upon each consumer, however, depending upon the industry sector and the area of the country in which they are located.

Eleven integrated producers account for approximately 50 percent of the nation's 100 million tons of raw steel. These integrated producers use blast furnaces and basic oxygen furnaces (BOFs) to smelt iron ore to produce liquid steel for largely flat-rolled products. They are located generally in the Northeast and North-central regions, near their sources of coal and iron ore.

Approximately 60 "mini-mills" provide the other 50 percent. They employ electric arc furnaces (EAF) to melt scrap and other solid ferrous materials to produce liquid steel for the complete range of steel products from rebar, wire rod, beams and plate to hot- and cold-rolled coils. They are much more widely distributed, with better access to a wide range of domestic and imported raw materials and to growing markets for finished products.....

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