LONDON U.S. 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.
Service center 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.
More pertinently, 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 Orleans (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 year.
Looking ahead, 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 First.