Blast furnace technology appears poised for a
dusting-off of sorts as costs for scrap used by electric-arc
furnace (EF) steelmakers skyrocket, but whether that will cast
a cloud over the EF dust sector remains to be seen.
EF steelmakers have been on a steady growth
curve for much of the past 50 years. First, they tackled
reinforcing bar and other long products like beams and
structurals. In the past 20 years, they've invaded the sheet
steel business and now account for about 60 percent of overall
U.S. steelmaking capacity.
Riding on their coattails have been EF dust
processors and other companies that specialize in providing
outsourced services. Growth in processing EF dust hinges on the
EF-based segment of the steel industry. Integrated steel mills
use blast furnace iron and relatively little ferrous scrap with
much of the waste products of their output normally held in the
But Nucor Corp., the largest EF-based
steelmaker in the United States, has laid plans to build a
3-million-ton-per-year blast furnace and produce iron for its
own melt shops, with a proposed Louisiana site potentially
being the first integrated steelmaking complex to be
constructed in the United States since 1969.
To some that move might suggest if not the
end, at least a flattening of the growth curve for EF steel
mills and a return to the basic oxygen process. Not necessarily
the case, according to two industry analysts.
The fundamentals are still in place to
support expansion of EF mills that make long products like
rebar, said Peter F. Marcus, managing partner of World Steel
Dynamics Inc. (WSD), Englewood Cliffs, N.J.
There is a big difference between scrap-using
mini-mills that use obsolete grades of ferrous scrap, like No.
1 heavy melting steel and shredded scrap, and the mini sheet
mills that rely on industrial grades like No. 1 busheling and
No. 1 bundles, Marcus pointed out.
Prices paid for No. 1 busheling averaged
$883.33 a long ton in mid-July, according to AMM's
composite price data, while shredded averaged $594 a ton and
No. 1 heavy melt $523.33. By comparison, hot metal costs at an
integrated steel mill can range from $600 to as high as $700
per net ton, one mill source said, depending on how much
purchased metallurgical coke is used in the blast furnace to
produce iron vs. the coke from the integrated steel mill's own
For scrap-consuming mini-mills that depend on
obsolete grades, the raw material supply is huge and is traded
substantially on a global basis. The "spread" between scrap and
long products, like rebar, is what determines profitability,
Marcus said. Higher scrap prices, which usually occur when
there is a strong steel market, draw out more scrap, and the EF
steelmakers making long products come out ahead. The mini-mills
making sheet products that use more industrial steel scrap face
a tougher challenge their scrap supply is limited and they have
to battle integrated steelmakers for the material.
Against that backdrop, Marcus said "it might
be argued, theoretically, that there will be a rising
proportion of integrated expansions. However, if you look to
Russia, EF expansions are huge, even though the cost of the
final product is high, because the demand outlook (for
construction) and the price of long products is so lofty."
Those expecting a full-scale return to the
blast furnace-basic oxygen furnace (BOF) route have to realize
that, outside of China, few steelmakers favor that technology.
It takes an incredibly long time to build such facilities and,
once built, can require a lengthy start-up time. Consequently,
"the strategy-du-jour is to build electric furnace-based mills
to make commodity long products, build the plant fast and
cheap, and capture a sizable margin due to the high spread,"
In the United States, the mini sheet mills of
the future might have to forge a link to a pig iron or scrap
substitute supply-à la Nucor's potential Louisiana plant
(pig iron production) and Trinidad and Tobago facility
"I don't think mini sheet mills will be
losing market share," Marcus said. "Their plants cost less,
make an increasingly outstanding product and start up much
faster from planning to good-quality shipments."
Michelle Applebaum, managing director of
Michelle Applebaum Research Inc., Chicago, said the technology
of the EF vs. the blast furnace makes each right for their
particular steel products. "There is a difference in the
technologies that goes beyond the randomness," she said.
"The idea that we would go one way or the
other is very akin to saying we would never build another blast
furnace in this country.
"The economics here have shifted in favor of
the blast furnace, so it makes sense to do that (right now),"
So while EF expansions might see a slight
cooling in the U.S., they're still hot on the burner globally,
which should bode well for the EF dust recycling industry.