NEW YORK The metallics sector foresees growth in the years ahead on the back of technological advancements, affordable natural gas and renewed interest from steelmakers.
Metallicsincluding pig iron, hot-briquetted iron (HBI) and direct-reduced iron (DRI)might be unconventional raw materials for steelmaking, but considerable technological advancements in the past decade have created renewed interest and even market investment on the promise of a good return, sources said.
"Over the years, we have, through market development activities and seminars, tried to increase the perception of these raw materials," International Iron Metallics Association (IIMA) secretary-general Frank Griscom told AMM. "Theyre not just a source of iron. We want people to look at these materials in light of the overall charge mix theyre putting into their furnaces and how to achieve the specs and how to achieve the lowest-cost liquid steel. These ore-based metallics ... have piggybacked on the movement of the electric furnace for higher-quality steels."
Griscom, who has worked at DRI producer Midrex Technologies Inc. for more than two decades, is retiring as IIMAs secretary-general and will be succeeded by Stuart Horner, managing director at F.W. Hempel Metals UK Ltd. (amm.com, Dec. 11).
Metallics have one major benefit over mini-mill-driven ferrous scrap: dilution. While melting scrap might include alloys that are difficult to remove during recycling, adding HBI or DRI can help improve steel quality.
"Steelmakers are adding small amounts of various elementslike copper, titanium, vanadiumto make microalloy or high-strength low-alloy steels. ... These elements will likely be carried in ferrous scrap and charged back into furnaces. And steelmakers may very well want a certain amount of copper in their steel, but they dont want to be restricted by the ferrous scrap they have to charge," Horner told AMM. "Metallics allow steelmakers to dilute, which allows the steelmakers the flexibility they need. We have to recognize that ferrous scrap in the steelmaking charge will give you problems at the end of the day."
U.S. steelmakers appear to be taking the option to heart. Charlotte, N.C.-based steelmaker Nucor Corp. is building a $750-million DRI facility in St. James Parish, La. (amm.com, May 7, 2011); Dearborn, Mich.-based Severstal North America Inc. is conducting a feasibility study on the construction of a potential DRI project in Trinidad and Tobago in an effort to expand its vertical integration (amm.com, Jan. 10, 2012); and U.S.-Australian joint venture North Star BlueScope Steel LLC is mulling a DRI project (amm.com, Aug. 21).
The emergence of shale gas, which many call a game-changer, also might play into the metallics sector. Supporters of shale gas say that affordable natural gas could allow for more competitive steelmaking, and also might boost the metallics sector.
"We have an interesting development right now because we have another wave of direct-reduction interest in the United States. Shale gas is promising some moderate gas prices longer term, which is what you really need to have a direct-reduction industry in any country," Griscom said. "From a merchant standpoint, we look on this as a benefit. The more DRI or HBI or pig iron used in the U.S. creates increased demand, and we feel that the demand will grow greater than the installed plants. Its the prospect it offers thats so intriguing."
However, Griscom and Horner said that metallics arent intended to displace scrap, instead allowing steelmakers and iron casters more flexibility when choosing their raw materials.
"At the end of the day, its not necessarily the cost per iron unit going in thats going to yield you the lowest cost for liquid steel. Thats what our message is. Were not competing with scrap; were a supplement to scrap," Griscom said.
Moving forward, the IIMA aims to build stronger relationships with steelmakers internationally, including engaging U.S. and Asian electric-arc furnace (EF) steelmakers.
"Weve made a point to develop relationships that are key, such as with the Steel Manufacturers Association. We (also) have a number of customers primarily in the iron ore business in Australia as part of our organization. Were in touch with a number of Chinese traders. We have a longstanding relationship with the (South East Asia Iron and Steel Institute)," Griscom said.
Chinas EF sector will be "part of the future," he said, adding that its important for the organization to tap into that market.
Horner agreed that much of the focus will be geared toward Asia. "We recently met with the director of the China Iron and Steel Association, and theyre very keen to get better acquainted," he said. "My job is to keep operations running, raise our profile and expand."