NEW ORLEANS The
future looks bright for direct-reduced iron (DRI) use in the
North American steelmaking industry, although some players
remain wary about whether the technology can retain its
Several speakers at
AMMs DRI & Mini-mills Conference in New
Orleans outlined the North American markets distinct
suitability in housing DRI production facilities, most notably
through access to cheap natural gas.
Sara Hornby, principal
at Global Strategic Solutions Inc., Charlotte, N.C., estimated
that as many as seven DRI production plants are being
considered in the United States.
Natural gas prices in
Louisiana average around $3.29 per British thermal unit (mmBtu)
compared with $15 per mmBtu in China, according to data
presented by Kenny Rocker, assistant vice president of
industrial products marketing at Omaha, Neb.-based Union
While this has given
DRI producers incentive to set up shop in the United States, it
may also give natural gas producers impetus to ship more
product overseas, some sources suggested.
"I dont believe
that exporters wont be tempted by the higher prices
overseas. They can always liquefy it; if all they have to do is
spend a few dollars to sell it for another $10, theyre
going to do it," one source said.
Its an option
natural gas producers would like to have, Erica Bowman, vice
president and chief economist at Americas Natural
Gas Alliance, said at the conference.
"Our position is that
we should be supporting exports. Our primary reasonother
than its a free market and we should be able to export
our productis that we have so much supply that our system
is demand-constrained right now. Its hard to have enough
outlets to supply the demand we can supply. Liquefied natural
gas is a way where we can have a different outlet for our
product and help stabilize prices. The prices of
todayaround $3.60its not sustainable, whereas
prices between $4 and $5 are very sustainable for us," she
Energy Information Administration forecasts natural gas prices
will drop in the coming years despite a greater rate of
consumption. This is attributed to improvements in natural gas
production technology, Bowman said.
Meanwhile, Hornby and
Lynn Lupori, managing consultant in Hatch Associates Pty.
Ltd.s North American Strategy Consulting Practice, said
that much of the DRI demand was driven by concerns over a
perceived deterioration in steel scrap quality in the U.S.
"A number of operators
have told us that the main reason theyre looking at DRI
is not just from a cost standpoint but from a scrap quality
standpoint, that theyre having difficulties keeping those
residuals down," she said.
But others disagreed.
"Weve done a study on it and found it hasnt
declined at all," one steelmaking source said.