Gaining insight into ferrous raw material trends. (2002 AFS Ferrous Charge Materials Conference).
The supply and demand for iron units, ferroalloys, silicon units and carbon additives has become truly global. Bankruptcies at steelmakers, amalgamation by ferroalloy producers and federal regulations on imported steel have all exerted noticeable changes to raw materials pricing.
In an effort to expose and discuss the magnitude of such changes, the second Ferrous Charge Materials Conference sponsored by the AFS Ferrous Charge Materials Committee (8-G) was held on September 17-18. Nearly 70 foundry purchasing and melt management officials gathered in Rosemont, Illinois, to hear 12 speakers address issues from the state of the ferrous foundry industry to the supply of pig iron.
Citing data compiled by Stratecasts, Inc., MODERN CASTING's Mike Lessiter opened the conference by presenting an overview of the U.S. ferrous casting industry. The U.S. foundry industry now consists of about 1000 ferrous casting operations. The collective casting industry employs 220,000 workers with annual casting sales of $28 billion, with ferrous castings representing 46% of this figure. The overall industry is currently operating at about 76% of capacity, he said, down considerably from the last several years.
Shipment forecasts for 2001-02 had predicted a softening versus 1999 and 2000, although things proved to be far worse due to the September 11 tragedy of 2001, and the depth and length of the recession. 2002's total ferrous shipments are expected to finish at 10.1 million tons, the lowest total since 1991. Total ferrous shipments are estimated to increase 5.6% in 2003, however, and begin a steady climb for the next several years.
In addition to a look at the overall forecast for casting shipments, Lessiter shared recent data and survey results on the casting import situation, which may continue to temper positive forecasts for casting demand in the years ahead. While imported castings represented just 7% of domestic demand as recent as five years ago, this figure is expected to rise to 15% in 2003.
As a result of the increased pressure from foreign producers, an AFS Commission on Trade was formally organized following the AFS Trade Forum in Washington, D.C., last April. This group's mission is to "facilitate an understanding of the full impact of global competition on the metalcasting industry and identify and create a roadmap of actions available for future consideration."
Prime grades of steel scrap have seen price increases of more than 20% since the beginning of 2002. According to Dan Pflaum, Daniel Pflaum LLC, demand has had a much larger effect on price than supply. He said the domestic supply of steel scrap is about 60 million tons per year, with foundries consuming about 16%. Exports have fallen in the past 10 years from 12.2 million tons to 7.9 million tons. Several factors have contributed to this, including the that fact that electric-furnace produced steel has grown to more than 50%, requiring more steel scrap in the charge.
The biggest single change over the past five years, however, has been the emergence of the People's Republic of China as the number one export market for U.S. steel scrap. According to Pflaum, foundries have experienced a "price disconnect" in which the demand rose for several years without an accompanying price increase. This years "correction" (Fig. 1) is also due in part to exchange rates. A strong U.S. dollar makes exports of U.S.-generated steel scrap less economical for foreign consumers.
Trends now indicate that scrap industry consolidation is no longer likely to continue, said Pflaum. Internet purchasing of scrap (reverse auctions) have not proven to be efficient, and more global issues than ever before are influencing pricing. Exchange rates, the growth of the Chinese and South Korean steel economies, a possible ban on Russian scrap exports, domestic automotive demand, and domestic steel operating rates are in a state of flux and are unsettled.
David Borsuk, Sadoff Iron and Metal, examined the economics of scrap preparation. In evaluating torching, shearing, baling, shredding, briquetting and crushing, he reported that a balance must be struck between high tonnage production and effective segregation. The investment necessary to process large tonnages of steel scrap offsets the relatively low manhours necessary to operate the equipment. Without the personal examination given during torching and hand shearing, he said contamination is much more likely, however.
Borsuk cited several definable differences between foundry and steel mill markets for steel scrap. Foundries typically have much tighter specifications and size requirements. Negotiations between steel producers and scrap suppliers are typically more antagonistic than those between foundry consumers and suppliers. He said a need exists for better, more uniform definitions on grades of steel scrap, and regional differences abound. As a first step, the MS Charge Materials Committee (8-G) is currently rewriting the scrap manual originally published by the Iron Casting Research Institute. The revised edition should be available by the 2003 AFS Casting Congress.
Tim Hogan, National Materials Trading, and Steve Miller, Ferrosource, discussed pig iron imports. The installed world capacity for pig iron production is 700 million tons annually. Of this, 12 million tons are available as merchant pig iron. Brazil, Russia and the former Soviet states continue to be the leading exporters of pig iron to the U.S. Imports from Brazil were 4.3 million tons in 2001, while Russian pig imports have been limited to less than 600,000 tons by the U.S. Commerce Dept.
Steelmakers consume 75% of the imported pig iron. Electric arc furnace (EAF) steelmakers point to density, purity, quality, contained energy and low cost as the advantages of using merchant pig in their charge mixes. Brazilian imports may be impacted by an announcement that Nucor Steel will invest in a 500,000-ton/year blast furnace operation in Brazil, with 100% of production going to Nucor.
With raw steel production down in the U.S., there is excess worldwide capacity of direct reduced iron/hot briquetted iron (DRI/HBI). As economies recover, the excess DRI/HBI supply will dwindle. EAF steelmakers rely on imported pig iron and DRI/HBI to maintain the low residual levels necessary to produce high-quality sheet steel. China has a sizable pig iron production capacity, but is currently importing some pig iron. Steel and foundry production in the People's Republic of China consumes all domestically produced pig. The same holds true for South Korea.
Dauber's John Redshaw and Miller and Co.'s Sudhir Gupta examined silicon carbide trends. U.S. foundry consumption of silicon carbide, both as a grain in electric furnace melting and as a briquette product in cupola melting, is roughly 150,000 tons per year. Domestic production of silicon carbide is 6.4% of world production.
Meanwhile, Chinese capacity is estimated at 690,000 tons, representing 39% of the global capacity. Imports of silicon carbide account for 84% of the total U.S. demand. The majority of these imports are now from China, replacing what had traditionally been Canadian-produced silicon carbide. Venezuelan and Brazilian silicon carbide serve the European marker, where a hefty duty prevails on the Chinese material. Although these tariffs expire in 2006, there is sufficient idled capacity in China to avoid any shortages.
Metallurgical silicon carbide represents 68% of demand while the abrasive grade material is only 32%. According to Gupta, the major reasons for the use of silicon carbide in iron foundry melting are low tramp elements, deoxidation capacity, high quality carbon units, improved lining life in coreless furnaces and a reduction in slag-type defects.
Magnesium, Ferrosilicon Alloy
Domestic magnesium production also is overshadowed by imported (Chinese) magnesium according to U.S. Magnesium's Joe Fox (Fig. 2). World production of magnesium is estimated at 350,000 tons, with China accounting for 46%. There is currently one domestic producer of magnesium, three in Canada, one in Brazil and one in Israel.
Magnesium is a critical alloying element in the production of ductile iron, which is expected to match gray iron in total tonnage over the next five years, and eventually grow to be the industry leader in casting shipments. There is further concern when consideration is given to the fact that 25% of the magnesium ferrosilicon necessary for U.S. ductile iron production is imported, said Fox. The total demand for magnesium ferrosilicon is about 75,000 tons per year. Nearly 80% of all ferroalloy demand in the U.S. is now imported, he said.
In a typical cost scenario presented by Rod Naro, ASI International, the production cost of domestically produced 50% ferrosilicon currently exceeds the market price (Fig.3). World production of ferrosilicon is estimated at 4.2 million metric tons. The breakdown by producing nations is China (33%), Commonwealth of Independent States (29%), Norway (10.8%), U.S. (5.7%) and Brazil (4.5%). There have been limited instances of imported Chinese ferrosilicon, but a great potential exists.
Carbon raisers and graphite demand is also supplied, at least in part, by imported product.
Praxair's Gary Douglass discussed oxygen supplies for foundry use. Reporting that many cupola foundries have now adopted supersonic direct injection of oxygen, he said some foundries have boosted melt rates by 25% by introducing 34% oxygen at 100 psi downstream from the source. This requires oxygen of 90-92% purity, not 99.8% purity as is often required in other industrial applications. When consumption is less than 10,000 scf/hr, truckload deliveries can be made every other day or less. Once consumption exceeds 10,000 scf/hr, delivery, storage capacity and total cost become economic issues where onsite generation may be advantageous. Today's onsite plants are less noisy, non-polluting and can be configured to include load tracking and pressure swing absorption.
GE Betz' Scott Smith presented alternative techniques for suppressing or avoiding dust and/or oxidation products. Suppressant methods include wet dust suppression, chemical suppression, foaming, binding, and agglomerating agents and fogging techniques.
Ferrous charge materials that contain oxides require more than twice as much energy to melt as clean material. Additionally, less oxides charged produce less slag in the melting unit. Airborne dust also can be dramatically reduced while processing or charging metallic scrap. GE Betz addresses dust (nuisance) management as a step change in quality.
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|Title Annotation:||statistics and more|
|Date:||Nov 1, 2002|
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