MEXICO CITY Nucor
Corp.s move into production of direct-reduced iron (DRI)
in the United States is expected to reduce global trade flows
of pig iron into the country, affecting producers from Brazil
and, to a lesser extent, Russia and Ukraine.
The Charlotte, N.C.-based
steelmaker, which already has a 2-million-ton-per-year DRI
facility in Trinidad and Tobago, plans to commission its
2.5-million-ton DRI plant in Louisiana in the latter part of
this years third quarter.
This will further diminishing
the companys need for third-party scrap and scrap
substitutes, such as pig iron and hot-briquetted iron
"We anticipate being at full
production (in Louisiana) by the end of the year," a Nucor
spokeswoman told AMM sister publication Steel
First May 28.
Nucor plans to build as many as
three other DRI units at the same site, as well expand an
existing plant in South Carolina, because access to affordable
natural gas energy has heightened interest in DRI production in
"The plant in Louisiana will
definitely affect imports of pig iron into the U.S., as Nucor
is the biggest importer here," one U.S.-based pig iron trader
A second U.S. trader agreed. "I
think 60 to 70 percent of the pig iron imported into the U.S.
goes to Nucor, and their pig iron requirements will surely go
down (after the Louisiana plant comes on-stream)," he said.
Executives from Nucor have
already said that the new DRI output will displace part of the
pig iron and scrap materials the company buys from third
Former Nucor chief executive
officer Daniel DiMicco said the company used to import about 3
million tons of pig iron until a few years ago, mostly from
The spokeswoman didnt
disclose the volume of scrap and scrap substitutes Nucor
Data compiled by Metal Bulletin
Research (MBR) show total net U.S. pig iron imports of 4.2
million tonnes in 2012 and 4.12 million tonnes in 2011.
"This new DRI plant in Louisiana
is part of our long-term raw materials strategy to provide 6
(million) to 7 million tons per year of low-cost, high-quality
iron units to our steel mills," the spokeswoman said.
In 2012, the steelmaker recycled
about 19.2 million tons of scrap, which is mixed with iron
units such as pig iron and DRI for the production of steel
products like sheet, plate and special bar quality (SBQ)
"The main feedstock for our
mills is scrap. That wont change, and DRI will not
replace all pig iron and scrap metal," the spokeswoman
The direct effect of the
plants commissioning on Brazilian pig iron exports is
difficult to quantify, several sources told AMM sister
publication Steel First.
"It will affect the market, no
doubt about it, but well need to see this plant (in
Louisiana) up and running to estimate a figure," one major pig
iron producer in Brazils northern region of
Two other important local
producers also said that they expect a reduction in
Nucors pig iron purchases, but couldnt give a clear
"Nobody knows for sure," one
Nucor also couldnt
quantify how much its pig iron requirements would be reduced.
"The DRI will replace both pig iron and scrap metal, but the
exact mix will depend on the cost of those materials at the
time we make those decisions," the spokeswoman said.
The only certainty among
Brazilian sector participants is that producers from
Carajás will be affected much more than anyone else
since they depend entirely on the export market, and especially
on shipments to the United States.
Pará and Maranhão,
the states that make up Carajás, exported 971,032 tonnes
and 1.13 million tonnes of pig iron, respectively, in 2012.
Shipments to the United States
from Pará accounted for 83.3 percent of the
regions total pig iron exports, while those from
Maranhão reached 84 percent of total shipments.
In 2011, the United States
accounted for 72.4 percent of Parás and 90.4
percent of Maranhãos total exports, according to
figures from Brazilian foreign trade ministry MDIC.
It is a different case in
Brazils southeastern Minas Gerais state, where pig iron
makers have been selling most of their output to local
steelmakers such as Gerdau SA, ArcelorMittal Brasil SA and
Votorantim Siderurgia SA.
Minas Gerais producers have also
managed to diversify their export destinations over the past
few years, with the United States taking only 274,788 tonnes of
the states total shipments of 801,024 tonnes in 2012.
"The new Nucor plant will affect
Brazilian producers, but also less directly (Commonwealth of
Independent States) producers as U.S. consumption of pig iron
will decline," one European trader said.
Ukraine exported 413,707 tonnes
of pig iron to the United States in 2012, while Russian
shipments to the country reached 1.41 million tonnes.
CIS pig iron producers are less
worried than their Brazilian counterparts about the loss of
sales volumes, however, mainly due to the share of total
exports going to the United States.
Shipments from Ukraine to the
United States represented only 21 percent of the countrys
total exports last year; in the case of Russia, the United
States accounted for 36 percent of total exports. Both levels
are far below those seen in Carajás.
Ukraine-based pig iron producer
Donetskstal JSC exports 150,000 to 200,000 tonnes per year of
pig iron to the United States. "I dont think (the Nucor
DRI plant) will have a huge influence on us," a source at the
company said. "We could lose some quantities, but its not
our main market."
OAO Tulachermet, the
worlds largest exporter of merchant pig iron and part of
the Russian metallurgical Koks Group, sells about one-third of
its productionat 2.12 million tonnes in 2012to the
The company doesnt expect
Nucors DRI plant to substitute for its pig iron
"If Nucor was able to substitute
pig iron with DRI, it would have done it a long time ago,
buying additional quantities on the market from Venezuela or
Russia," a spokesman for Tulachermet said. "We assume that
their pig iron consumption volumes will not be affected by
(the) launch of this new facility."
Traders also noted that
Nucors DRI facility will mainly feed into the
companys 23 steel plants across the United States, which
produced 19.9 million tons of steel products in 2012.
"Other steel plants will still
import pig iron," a second European trader said.
Severstal North America Inc., Dearborn, Mich.; North Star
BlueScope Steel LLC, Delta, Ohio; Steel Dynamics Inc., Fort
Wayne, Ind.; and Gallatin Steel Co., Ghent, Ky.are
usually active in the market.
Nevertheless, given Nucors
plans for raw materials self-sufficiency, and it being the
largest pig iron importer, CIS pig iron producers might not be
completely spared from the expected fall in pig iron
Brazilian and CIS pig iron
producers are already pushing into new products and market
niches, as weak buying and low prices are creating challenges
for the market.
Nina Nasman, London,
contributed to this story.
A version of this article
was first published by AMM sister publication Steel