imports of merchant pig iron are expected to decline sharply as
new facilities to produce direct-reduced iron (DRI) come into
operation in the country, according to AMM sister
publication Steel First, citing data from Metal
Bulletin Research (MBR).
This will compel
Brazilian and Russian pig iron suppliers to look for new
markets for their exports.
U.S. merchant pig iron
imports will fall 17 percent year on year to 3.5 million tonnes
in 2013, according to MBR estimates. This largely will come
amid weaker domestic crude steel production, driven by subdued
domestic consumption of finished steel.
According to American
Iron and Steel Institute data, U.S. mill shipments slipped 4.1
percent year on year during the first seven months of 2013 (
amm.com, Sept. 16), while crude steel output
declined 3.6 percent through mid-September (
amm.com, Sept. 24).
This has been driven
particularly by reduced domestic shipments of hot-rolled long
products, which fell 7.1 percent in the first half of 2013
compared with a year earlier, MBR has been told.
shipments of long products have also declined more sharply than
flat products thus far this year.
As a result, U.S.
steelmakers that operate lean raw material inventories and
apply a hand-to-mouth purchasing strategy have been unlikely to
maintain their typical import volumes of higher-priced iron
units from suppliers in Brazil and Russia.
Charlotte, N.C.-based Nucor Corp. in mid-September was in the
final stages of hot commissioning its 2.5-million-ton-per-year
DRI facility in St. James Parish, La. (
amm.com, Sept. 17). The facility is expected to be
working at nearly full capacity by the end of 2013, Nucor chief
executive officer John Ferriola said earlier this month at
AMMs DRI & Mini-mills Conference in New
amm.com, Sept. 11).
A large proportion of
the companys pig iron import volumes are expected to be
displaced by the new captive DRI output, MBR said, estimating
Nucors pig iron requirements at around 60 percent of
total U.S. imports.
The new DRI facility
is part of Nucors long-term strategy to supply and manage
its raw material requirements for 6 million to 7 million tonnes
of low-cost, high-quality iron units for its steel mills.
The effect on overall
U.S. merchant pig iron imports will be more evident in 2014,
according to MBR. By then, Nucors Louisiana DRI facility
will be fully operational and the company will need lower
import volumes of raw materials.
As a result, MBR
forecasts U.S. pig iron imports will fall to 3 million tonnes
in 2014. This will likely create significant challenges for the
five remaining Brazilian pig iron producers, which together
exported 2 million tonnes of material to the United States in
2012, or 70 percent of Brazils total exports for the
competitive Brazilian pig iron merchants will need to shift
their sales efforts to markets further afield, as happened with
the 50,000-tonne cargo recently shipped to Italy.
MBR also expects steel producers in China, South Korea and
Taiwan could exploit some slack in supplies from this point of
origin to feed their own steel expansions.
A version of this
article was first published in AMM sister publication Steel