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July/August 2011 – Vol.35 No.5 – www.steeltimesint.com

NEWS HANDLING PROCESSING CONFERENCE REPORT

STEEL TIMES INTERNATIONAL TIMES STEEL 2011 July/August – – Vol.35 – No.5 jul aug_Contents_STI_Mar10 7/21/11 10:30 AM Page 3

July/August 2011 Contents Vol.35/No.5

Front cover image courtesy of Woodings Equipment, the hydraulic distributor

EDITORIAL Editor Tim Smith PhD, CEng, MIM Tel: +44 (0) 1737 855154 [email protected]

Deputy Editor Greg Morris Handling – Page 19 Handling – Page 24 Tel:+44 (0) 1737 855132

Production Editor Annie Baker

SALES International Sales Manager Paul Rossage [email protected] Tel: +44 (0) 1737 855116 Area Sales Manager Anne Considine [email protected] Tel: +44 (0) 1737 855139 Group Sales Manager Ken Clark [email protected] Tel: +44 (0) 1737 855117 Processing – Page 36 Heat recovery – Page 45 Marketing Executive Annie O’Brien [email protected] News Tel: +44 (0) 1737 855284 News – Australia wins $300M ‘relief’ in carbon tax 2 Advertisement Production Martin Lawrence Statistics & Events – Production up 4.2% in May and 5% in April 8 [email protected] USA Update – Steel industry urges Congress to crack down on unfair trading practices by foreign countries 10 Tel: +44 (0) 1737 855332 Latin America Update – CSN’s internationalisation phase three: Commercial flow in the opposite direction 12 SUBSCRIPTION China Update – Resumed power cut policy impacts production 14 Katerina Smith Tel +44 (0) 1737 855032 India Update – Steel consumption up in India in FY 2010-11 16 Fax +44 (0) 1737 855358 Email [email protected] Handling Steel Times International is published eight times a year and is available on subscription. Transporting steel in the US market 19 Annual subscription: UK £155.00 A non-metallic label to withstand temperatures up to 600°C 22 Other countries: £222.00 (US$342) (€269)

2 years subscription: UK £279.00 Steel industry can reap the benefits of safer lifting 24 Other countries: £399.60 (US$615.60) (€484.20) Verlinde equips NZ Steel/Hot conveying DRI 26 Single copy (inc postage): £35.00 Email: [email protected] RFID identification in the steel sector 30 Straddle Carrier saves time and space 32 Published by: Quartz Business Media Ltd, Westgate House, 120/130 Station Road, Processing Redhill, Surrey, RH1 1ET, England. Tel: +44 (0)1737 855000 Stemcor makes strong recovery from recession 35 Fax: +44 (0)1737 855327 www.steeltimesint.com Penn Stainless installs heavy gauge cut-to-length line 36

Steel Times International (USPS No: 020-958) is published A new coating for cold forming stainless steel 38 monthly except Feb, May, July, Dec by Quartz Business Media Ltd and distributed in the US by DSW, 75 Aberdeen Road, Emigsville, PA 17318-0437. Periodicals postage paid Others at Emigsville, PA. POSTMASTER send address changes to Karnataka – An open door for global steel producers 39 Steel Times International c/o PO Box 437, Emigsville, PA 17318-0437. CRU 2011 Latin American iron & steel trends conference: Steel profits under pressure 40

Printed in England by: Pensord, Tram Road, Pontlanfraith, Analysis of potential and specific problems of heat recovery in the EAF 45 Blackwood, Gwent NP12 2YA, UK Barriers to product innovation in EU steel companies 49 ©Quartz Business Media ltd 2011

History: Pioneers of Steelmaking: Part 3 – The science of steel 52

Features on the web www.steeltimesint.com/features Conference reports: The 9th International Steel Market and Trade Conference, Beijing/Eurofer – European Steel Day/Eurocoke Summit 2011 in Vienna/Moscow’s Litmash 2011 Handling: Lowering the emissions from heavy forklifts Processing: Carl Cloos – Welding rail bogies/Kienzle Prozessanalytik – Inline measurement of film thickness/ Spartanics/Friedrich Vollmer – Strip shape measurement ISSN 0143-7798

www.steeltimesint.com Steel Times International – July/August 2011 – 1 STI news_Layout 1 7/18/11 2:24 PM Page 1

News in Brief World News www.steeltimesint.com

Metals for Building alliance The steel industry has helped launch Australia wins $300M US ore in the Metals for Buildings European alliance. It has called on EU legisla- tors to consider end-of-life recycling ‘relief’ in carbon tax Hebei plan rate of building products as a resource saving indicator. Steel manufacturers have emerged O'Malley said the proposed com- China’s Hebei Steel, Australian It brings together nine European as key winners under a AU$9.2bn pensation ‘if implemented as company Richmond Mining, and its metals associations active in the compensation package for indus- explained to us, deals with the US subsidiary Nevada Iron have building sector to promote the tries affected by the Australian car- steel sector’s carbon tax issues in a signed a JV to develop Buena Vista strengths of metal products for recy- bon tax. significant way for the first four iron ore mine in Nevada, USA. clable & sustainable buildings. Manufacturers will get $1.2bn years’. The combination of free The Buena Vista magnetite iron The use of metals should be consid- over four years to improve energy permits and $300M is expected to ore reserves are estimated at 400Mt ered as an investment, and not as efficiency and invest in clean tech- cover the steel makers’ entire costs and is cheaper to exploit compared pure consumption. Metal scrap col- nology, while steel makers will get a from the carbon price in the to those in Australia due to its prox- lection and recycling from the dem- five-year, $300M bonus on top of scheme’s early years. imity to nearby railway and ports. olition or renovation of buildings is their extensive free permits to emit The $300 million is to help Once the new company success- already a well-established business carbon. ‘investment and innovation’ in the fully obtains $161M in financing, activity thanks to the high intrinsic The extra money for steel and industry, but there is little detail on Hebei Steel would be entitled to financial value of metal scrap. manufacturing follows public cam- how it will be delivered. 80% of its iron ore production, with paigning for protection by High-emitting industries - such the preferred option for the remain- Vijayanagar contracts BlueScope Steel and OneSteel, as steel, aluminium, zinc, pulp and ing 20%. Indian group JSW Steel has awarded along with manufacturing unions paper makers - will get 94.5% of With all options exercised, Hebei two contracts worth $135M to and industry groups. their carbon permits for free. Steel will be holding 19.9% of Harsco group. BlueScope chairman Graham Lower emitters will get 66% for Richmond Mining. Managing The 10-year contracts include the Kraehe said in March the carbon free. The free permits are guaran- Director Max Nind of Richmond briquetting and micro-pelletizing of price had the potential to shut teed for five years, but will reduce Mining said Buena Vista mine is JSW’s iron and steelmaking by-prod- down the Australian steel industry annually. The Productivity expected to start operation in Q4 ucts at the massive Vijayanagar pro- in its current form within two Commission will review industry 2012. duction facility, where JSW plans to decades. Now, chief executive Paul compensation needs in 2014-15. Hebei Steel’s iron ore self-suffi- produce 10Mt/y of flat and long ciency rate is less than 20% as of products. 2010. The group plans to annually Harsco’s resource recovery technolo- add 5Mt to the amount of its self- gies will enable JSW to recover the Finex &2 for Posco sufficient iron ores, and gradually high-value iron content of its by- Posco broke ground on a new tion that opens the next generation bring the figure to 35% by 2015. products for re-use in the produc- KOR1.3tri ($1.2bn) plant in the for iron-making, enabling steel- In a related development, Hebei tion of new steel and iron. southeastern city of Pohang. makers to use low-grade coal fines Steel has completed restructuring The facility will be the compa- that account for about 80% of the nine privately-owned local miners South African acquisition ny’s third plant to employ Finex world’s iron ore deposits. in Dawan mining areas in Laiyuan SMS Siemag has bought a majority technology jointly developed by “The eco-friendly process will county in Hebei province. Hebei share in South African group Metix. Posco and Siemens VAI. Finex is also dramatically reduce pollution Steel expects to mine 1Mt of iron Metix has been involved in plant more environmentally friendly and from the production process,” ore in Laiyuan between 2011-15. construction and equipment sup- cost effective than conventional Posco chairman Chung Joon-yang Source: China Metals plies for the ferroalloy industry for steelmaking methods. said. e-mail [email protected] 10 years. Its products and services The newest plant, which will be The Finex method enables cover planning and supply of equip- completed by July 2013, will have a Posco to use cheaper raw materials ment and plants, especially for the 2Mt/y capacity, which would ele- such as iron ore fines and non-cok- production of ferrochromium and vate Posco’s Finex output capacity ing coal to produce steel products Chinese ferromanganese. to 4.1Mt or 25% of its total crude that are comparable in quality to SMS Siemag has a strategy of steel capacity that year. those produced from the blast-fur- expanding in the field of sub- “Finex technology is an innova- nace process. output up merged-arc furnace technology for the production of ferroalloys, Si China’s steel mills defied credit metal, nonferrous metals and calci- tightening, razor-thin margins and um carbide for new plants and Tata reaches £130M a possible power supply crunch to revamps. produce a record 60.25Mt in May, although daily output declined NMLK completes Duferco deal Teesside settlement slightly. NLMK has completed its acquisition Crude steel output fell to of the remaining 50% interest in Tata Steel which shut and sold part Korea’s Dongkuk Steel Mill Co, 1.94Mt a day from April’s peak of Steel Invest and Finance (SIF) from of its Teesside Cast Products unit Luxembourg-based Ternium SA 1.968Mt, but the industry still Duferco Group for $600M. after four of its largest customers and Swiss- Italian steelmaker expects production to remain high It now owns all of SIF. halted orders, said it received Duferco Participations Holding until a seasonal lull in demand hits As part of the deal, SIF has trans- $130M as settlement from the vio- Ltd walked away from taking in July. Overall steel output was up ferred to Duferco Group certain lators of the 10-year contract. deliveries of slab steel, which they 2% from April, according to data non-core assets consisting of long An arbitration tribunal ruled the process into other steel products. issued by the National Bureau of products operations with 0.3Mt/y buyers unlawfully terminated the The company mothballed some Statistics. and Belgian steelmaking operations agreements, Mumbai-based Tata of Teesside’s operations in Steel demand normally begins to with 3Mt/y capacity. Steel said in a statement to the February last year. A year later, fall in the hot summer months as Bombay Stock Exchange. Thailand largest steel producer construction activities slow. Tata Steel Europe lost about Sahaviriya Steel Industries Public China’s tightening measures VISIT: £150M ($242M) from Teesside, Co agreed to buy the unit for have had no noticeable impact on www.steeltimesint.com UK after the buyers, accounting $469M. The deal includes the sale steel output, and they have also To see a full list of news and for about 80% of its business, did of coke ovens, power generation failed to rein in inflation which features. not honour the 2009 contract. facilities and the Redcar Blast reached a 34-month high of 5.5% Italy’s Marcegaglia SpA, South Furnace. in May.

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www.steeltimesint.com World News News in Brief

Vietnamese ore ban Chinese MEPS: Global output The Vietnamese government said it will raise the export duty on iron ore to 40% in early July from 30% now takeover at 1.56bnt in 2011 to ensure the raw material for its domestic steel industry. Anshan Iron and Steel Group Co, MEPS (International) Ltd predicts developing nations. MEPS expects The government said iron ore (Angang) has received formal that world crude steel output will subdued demand from the steel exports in recent years had led many approval from the Chinese expand by 105Mt in 2011 – up sectors in industrialised countries. domestic steel manufacturing com- Ministry of Industry and 7.2% on the outturn in the previ- China will continue to be the panies to face shortages of the raw Information Technology (MIIT) to ous year, to another record high. driving force behind growth in material and forced them to import. take over the Sangang Group. It is important to note that world steel production – providing The Vietnam Steel Association and It is the latest move in Angang’s MEPS figures for 2010 of more than half of the increased several domestic steel producers had operational restructuring, which is 1.463bnt are above the official sta- output to 728Mt. sought a government ban on the expected to step up economic con- tistics because they incorporate an Demand from the construction export of processed iron ore. struction across the Taiwan Straits adjustment of 45Mt for under- sector for affordable homes will and further upgrade the iron and reported production by the make a large contribution. Steel Sinosteel suspends ore work steel sector in Fujian province. Chinese mills. making in the EU27 is expected to Sinosteel Midwest Corp, a unit of Sangang Group is the state- The data also includes output in increase by 4% this year due to Sinosteel Corp, has suspended work owned parent of the Shenzhen- the Middle East which is not con- improved production in Italy and on a US$2.1bn iron ore project in listed Sangang Minguang. tained in official figures. A signifi- Germany. Western Australia because of uncer- Fujian province, home to cant proportion of this improve- South America will grow by tainty about the development of the Sangang Group, has been a ment will be driven by activities in 16.6%, the highest of all regions. Oakajee port and rail development. province with a net import of steel Bloomberg reports: “The completion products. Sangang is the largest date for the Oakajee port and rail one of its kind in the province with project has pushed out from 2012 products meeting ready demands. Duisburg revamp to a forecast not before the end of Market insiders are therefore 2015, with further delays likely,” generally bullish for this ‘marriage.’ ABB has won three contracts col- systems to produce a new range of said Sinosteel, which wants to ship Back in 2006, Angang and lectively worth $29M from steel products. The company oper- ore from its Weld Range mine Fujian provincial governments ThyssenKrupp Steel Europe to ates four hot strip mills with a through the proposed port. reached framework agreement modernise the company’s 7-stand capacity of 15Mt/y. Sinosteel will continue its mining which allows Angang to build a hot strip rolling mill No 1 in its After the modernisation it will operations at Koolanooka and Blue steelworks of 5Mt/y along the Duisburg-Bruckhausen steel plant, produce lightweight steel for the Hills, exporting through Geraldton. coast of Fujian, as well as to take Germany. automotive industry, material for over Sangang Group. ABB will supply automation for recyclable tin cans, as well as steel NIS orders Consteel system The agreement, however, was drives, drives power systems and for oil and gas pipelines. Nghi Son Iron and Steel Corporation soured in the next year, followed equipment and related project It will also start producing elec- (NIS) has assigned to Tenova the by another five years of hand twist services. The orders were booked trical steel for use in wind turbines, order for the supply of an EAF between the two. in Q1 2011. hybrid engines and other applica- equipped with the Consteel system Source: China Metals The project is part of tions. For these grades of steel, capable of producing 1Mt/y. e-mail [email protected] ThyssenKrupp’s on going initiative consistent properties and precise It means five Vietnamese steel proj- to modernise its hot strip mill facil- dimensions throughout the entire ects have now selected Consteel ities with automation and drive hot strip are critical. technology. The EAF and Consteel will have a Imports nominal tapping size of 120t and a productivity of 150t/hour of liquid CMI supplies Europe’s steel. The meltshop will be installed warning in Thanh Hoa Province approximate- ly 200km south of Hanoi. The steel Eurofer’s Q3-2011 economic and largest galvanizing line plant is planed to start production steel market outlook sees the EU operations in Q2 2013. economy continuing its course of an unspectacular but steady recov- Forgemasters in top 10 list ery in 2011 and 2012. Sheffield Forgemasters strong man- Evidence has become stronger agement team, innovation, past of economic growth becoming growth and future prospects have more balanced owing to an invest- earned them a top 10 place in a ment-driven rebound in domestic national business list of UK compa- demand. Apparent steel consump- nies to watch in the future. tion in the EU grew by almost 16% The international steel engineering y-o-y in the first quarter, driven by company was showcased in the the strength in real consumption Sunday Times newspaper’s ‘Ones to and some stock building. Recognise’ list. In addition to robust levels of The list showcases a selection of domestic deliveries the first quar- companies that have either had, or ter saw also a significant rise in predict, a good profit growth. The third country imports; particularly steel group beat off competition flat product imports rose sharply. Belgium group CMI Industry has thick and has a maximum width of from hundreds of UK companies. Q2 2011 data signal a moderation supplied Rivagroup with Europe’s 2000mm. It was installed at Italian in domestic deliveries from EU largest capacity galvanizing line. company Rivagroup’s Novi Ligure mills. Imports, however, appear to The line, dedicated to automo- plant. The line has CMI-made VISIT: have kept a high level in April. tive exposed quality steel benefits equipment including its strip www.steeltimesint.com Import licenses in May have from vertical furnace technology cleaning section, annealing fur- To see a full list of news and neared the peak levels registered in developed by CMI. The line has nace, side trimmer, exit rotating features. June-July 2008. 510kt/y capacity, is 0.4 to 2.5mm shear and all mechanical aspects.

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World News www.steeltimesint.com

Bhilai rail ArcelorMittal in joint India set mill order $5bn bid for coal firm for ‘mega’ Peabody Energy has teamed up ditional on receiving regulatory with ArcelorMittal to offer $5bn approval and winning acceptances projects for Australia’s Macarthur Coal, the to own more than 50% of the com- world’s largest producer of pul- pany. The move by Peabody under- India’s ministry of steel is planning verised coal, as demand for steel scores recent efforts to consolidate mega steel plants on a fast-track making raw material intensifies. ownership of collieries in the basis in five mineral rich states. Despite concerns of environ- Bowen Basin of Queensland, The move is aimed at meeting a mentalists, the global market for where more than a dozen compa- demand supply defecit in the steel coal has never been better, with nies rely on limited rail haulage sector. This is in line with the pro- prices for the pulverised coal lines and only a handful of ports to posed ultra mega power projects. mined by Macarthur trading at a ship coal. A steel ministry official said they narrowing discount to hard coking An alliance of BHP Billiton and were considering a proposal to set coal. ArcelorMittal is the second Mitsubishi Corp are the largest up a 8-10Mt/y steel projects in largest shareholder with a 16.2% operators in the Bowen Basin, Jharkhand, Orissa, Chhattisgarh, stake in Macarthur, according to exporting some 58Mt/y of metal- Madhya Pradesh and Karnataka Bhilai Steel Plant has placed an its website. lurgical coal. states. order with SMS Meer, Germany, The new bid will need the sup- Macarthur is a producer of low Source Steel Scenario for the supply of a new universal port of China’s Citic Group, which volatile pulverised coal for injec- rail mill. holds 24%, as the proposal is con- tion into blast furnaces. The mill will enable Bhilai Steel Plant to produce rails for high- Vietnam speed trains. Furthermore, rails for goods transport with high weights Jindal Group grows and rail head-hardened products closure for special applications can also be produced. Oman investment The Vietnamese government has The rolling mill has a capacity of revoked the investment license of 1.2Mt/y and rails with a maximum Indian steel giant Jindal Group missioned by May 2013. a $9.8bn JV between state-owned length of up to 130m will be pro- plans to increase its investment in “The third phase will include shipbuilder Vinashiin and duced. Rolling of the first rails is Oman to $1bn within two years. setting up of a 7Mt capacity pel- Malaysia’s Lion Group to build a scheduled for spring 2013. Naveen Jindal, executive vice- letisation plant,” Jindal said, steel plant. chairman and managing director of adding that the plan would depend The Prime Minister approved a Jindal Steel and Power Ltd (JSPL), on the availability of raw material plan to cancel the Ca Na project in said the company plans to broaden and natural gas. the central province of Ninh Posco picks the scope of its operations in “The [Oman] government has Thuan. Investors broke ground on Oman into power generation and not given any assurance for gas for the project in late 2008, since then mining. the third phase,” he said in reply to no construction work has been car- local firms He said that future investments a question. ried out. South Korean group Posco has would include $400M spent on the The head of the Indian steel selected two Indian firms for its two-phased expansion of its Sohar giant added that the pelletisation proposed 6Mt/y facility at plant, Oman’s first integrated iron project was at an early stage. Halligudi area in Gadag district, and steel manufacturing facility, “It is in the planning stage, but Barrett in Karnataka, India to ensure speedy which was recently acquired from we will keep all the plans ready. clearances and uninterrupted iron Abu Dhabi-based Shadeed at a The pelletising plant would ore supply. cost of $464M. depend on the availability of iron £500k deal It signed an agreement with Jindal said a steel melting shop ore and whether we can get ade- Bangalore-based Hothur Group with a 2Mt/y capacity will be com- quate gas,” he said. Barrett Steel has increased capaci- and Goa-based Salgaonkar Mines, ty and reduced lead times at the both of which own iron ore mines company’s C Roberts facility in in Karnataka, and offered them Rotherham, UK. 49% in equal proportion, while Outotec in Brazilian It has invested in a £500k retaining the majority itself. upgrade to cutting operations with By tying up with Hothur Group the installation of a Ficep Tipo A31 and Salgaonkar Mines in the proj- iron ore delivery automatic CNC drilling and ther- ect, Posco should have fewer prob- mal cutting line for steel plate. lems in getting clearances, besides Outotec is to deliver the world’s delivered from Brazil. The new plasma drill processor ensuring uninterrupted supply of largest iron ore pelletizing plant in The new plant will be installed at is designed for wide plates up to iron ore to the plant. Brazil Samarco’s iron ore port in Ponta 200mm thick, making it suitable Coking coal, another important Outotec has agreed with de Ubú, Espírito Santo, Brazil. for the manufacture of bridges and raw material, would be entirely Samarco Mineração on a turnkey Once operational at the end of viaducts, agricultural and earth imported to feed the plant, a delivery of the world’s largest iron 2013, the plant will treat 9.25Mt/y moving machinery, mining equip- source said. ore pelletizing plant in Brazil. of iron ore on a 816m² traveling ment and other heavy structural The €200M contract will be grate indurating machine. steel operations. booked in Outotec’s Q2 order Outotec’s scope covers the It enables the main operations VISIT: intake. In addition, the contract entire process technology, concep- required in the steel construction www.steeltimesint.com includes local €100M purchases tual and detailed engineering, proj- industry such as drilling, milling, To see a full list of news and performed on behalf of the cus- ect management, supply, construc- pointing, tapping, marking, scrib- features. tomer. Some 90% of the services tion and start-up of the pelletizing ing and plasma/oxy cutting to be and supplies for the project will be plant. carried out in one step.

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World News www.steeltimesint.com

Taiwan in JSW to source iron Port Talbot China JV ore from Goa, India revamp Taiwan’s China Steel Corp is in Faced with acute shortage of iron iron ore to operate to its full capac- talks with several Chinese steel ore, JSW Steel Ltd (JSW) has ity. Of this, 5Mt is supplied makers and a Japanese steelmaker approached six small mining com- through JSW’s captive mines in the to jointly invest in overseas iron panies in Goa to procure enough state. ore and coking coal mines. to feed its existing steel plant and Industry sources believe that Dow Jones reported the compa- the proposed pig iron project in JSW has signed a long-term con- ny is in talks with China’s the state. tract with public sector NMDC Shougang Group, Baosteel Group The company’s plant at Ltd to meet another 20-25% of the Co, Angang Iron & Steel Group Vijaynagar (Bellary) in Karnataka total iron ore requirement. Co and Wuhan Iron & Steel is set to expand to 10Mt/y. The For the remaining 10Mt, the Group Co on potential coopera- capacity would be further expand- company is dependent on the open tion in buying stakes in overseas ed to 12Mt/y. market. mines. In the last quarter of the finan- There is a huge scarcity of iron An official said the ideal places cial year 2010-11, the company ore in Karnataka as the state is for iron-ore investments are had already started operation of its passing through a transition phase Australia and Brazil, while Canada sinter plant — two blocks of the now. JSW does not want its opera- and Indonesia would be good four blocks of coke oven, convert- tion to be hit because of the short- choices for coking-coal resources. er, caster and captive power plant age of iron ore and is ready to Teaming up with China, the (300MW) as part of an expansion transport even by road from Goa Plant constructor Oschatz has world's biggest consumer of iron plan. despite the huge transportation been awarded the contract to ore and coking coal, both key The company requires 20Mt of cost. renew the cooling systems at Tata ingredients in steel making, Taiwan Steel Europe’s Port Talbot plant. is hoping to benefit from the sig- The order includes the disas- nificant bargaining power that sembly of the old cooling equip- China has in the global market- Expansion plans ment as well as the design, manu- place, both in commodity pricing China Gerui Advanced Materials steel is used in food and industrial facture, delivery and assembly of and in asset acquisitions. Group Ltd, a Chinese maker of packaging, cell phones, construc- two new converter cooling stacks high-precision, cold-rolled strip tion, communication cables, and with evaporation cooling. steel listed on the Nasdaq index, household decorations, among It is the first time this kind of started work on production lines other things. cooling system with steam utilisa- World Steel that will allow it to make 300kt/y Gerui makes more of that type tion will be implemented in the more of its chief product. of steel than any other company in UK. in Figures The company will spend $60M China and commands about Until now the cooling of waste to more than double the amount 12.5% of the market for the prod- gases in the Port Talbot steelworks The World Steel Association of the steel it can produce annual- uct. Next is Hebei Dachang has been achieved via cold water (worldsteel) has published the ly by the end of the year. Jinming Accurate Cold-rolling cooling in an open circuit. The 2011 edition of World Steel in High-precision, cold-rolled strip Steel Plate Co Ltd. work at Port Talbot will be com- Figures. It is now available at pleted by end of 2012. www.worldsteel.org. World Steel in Figures provides facts and statistics about the glob- Essar Steel starts al steel industry. Dust The booklet contains informa- tion on crude steel production, Gujarat strip plant apparent steel use, pig iron pro- control duction, steel trade, iron ore pro- duction and trade, and scrap trade. Gerdau Ameristeel Cambridge is World Steel in Figures lists the using an atomised mist system top steel-producing countries and developed specifically for dust worldsteel member companies. In suppression, reducing potential 2010 the five major steel produc- hazards and improving visibility ing countries were China, Japan, around the dumping pit and serv- USA, India and Russia. ice area. Total world production was The equipment from Dust 1 413.5Mt in 2010, up from Control Technology can be operat- 1 230.9Mt in 2009. ed by remote control from the The largest five steel producing overhead crane or from a front worldsteel member companies in A Compact Strip Production It means Essar Steel will have loader, or by the ground-level con- 2010 were ArcelorMittal, Baosteel, (CSP) plant supplied by SMS the first three-strand CSP plant trol panel. The Cambridge facility Posco, Nippon Steel and JFE. Siemag, Germany, to the Indian worldwide with a 3.5Mt/y capacity has the capacity to produce A PDF copy of the book can be steel manufacturer Essar Steel of of hot strip. 300kt/y of low- to medium carbon downloaded from the website and Hazira, Gujarat has been put into The CSP plant is supplied by a steel bars, primarily from feed- printed copies can be ordered operation. meltshop, also built by SMS stocks of recycled materials. from the bookshop. The plant went into operation Siemag. The X-Melt steelworks Gerdau Cambridge chose a DB- with one casting strand and will be with two 200t Conarc furnace 30 DustBoss, which is mounted on VISIT: successively extended in the next units and two twin ladle furnaces is a movable carriage and has a 7.5 www.steeltimesint.com few months by the second and designed for around 5Mt/y. HP (5.6kW) motor that generates To see a full list of news and third strands. The first strip had a A conventional continuous slab 9200 CFM of air flow. features. final gage of 5.5mm and a width of caster is also supplied from the The DB-30 can cover more than 1290mm. EAF meltshop. 30 000ft2 in area.

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www.steeltimesint.com News and Statistics Events Diary

Molten Production up 4.2% AUGUST 2011 03-04 18th International Steel Summit protection in May and 5% April Kolkata, India www.steelscenario.com World crude steel production in In May 2011, the world crude May was 130Mt – 4.2% higher steel capacity utilisation ratio of 10-12 8th China International than in May 2010. the 64 countries was 81.7%, 0.6% Metallurgy Industry Expo 2011 China’s crude steel production lower than in April 2011. Beijing, China for May 2011 was 60.2Mt, up Compared to May 2010, the www.goingtomeet.com/195525 7.8% compared to May 2010. utilisation ratio is 0.6% lower. Japan produced 9.0Mt of crude Production was 127Mt in April SEPTEMBER 2011 steel in May 2011, a decrease of 2011 – 5.0% higher than in April 7.0% compared to the same month 2010. 05 Steelmaking Technology in last year. China’s crude steel production India South Korea produced 5.9Mt, was 59Mt, up 7.1% compared to Kolkata, India 12.8% more than in May 2010. April 2010. www.steeltech-india.com Germany’s crude steel produc- Japan produced 8.4Mt of crude tion for May 2011 was 4.1Mt, an steel in April 2011, a decrease of 07-09 European Oxygen increase of 1.1% compared to May 6.3% compared to the same month Steelmaking Conference 2010. last year due to the production dis- Stockholm, Sweden Italy’s crude steel production ruption caused by the earthquake www.jernkontoret.se was 2.6Mt, up 6.9% compared to and tsunami. the same month last year. In the EU, Germany’s crude 14-15 16th Galvanizing & Coil Toray Textiles Europe has Brazil’s crude steel production steel production for April 2011 Coating Conference launched a heat and flame resist- for May 2011 was 3.3Mt, an was 3.8Mt a decrease of 1.7% Milan, Italy ant fabric that offers protection increase of 14.7% compared to compared to April 2010. Italy’s www.metalbulletin.com/Events/galv against large and small molten May 2010. The US produced crude steel production was 2.5Mt, metal splashes. 7.3Mt of crude steel in May 2011, up 9.8% compared to the same 14-16 9th China International ThermGuardô Molten Repel 0.1% higher than in May 2010. month last year. Coking Technology and Coke has been designed to ensure work- market congress ers are protected from molten For full listing of monthly statistics by country visit Shangdong, China metals such as iron and alumini- www.worldsteel.org/?action=stats&type=steel&period=latest um. It has been developed for 15-16 World Steel Raw Materials those working in foundries and in Conference large, heavy industrial manufactur- Bali, Indonesia ing plants where the processes of www.steelbb.com/steelevents/raw- smelting, casting, welding, cutting Malaysian steel boost materials-2011/ and grinding are common. The Malaysian steel sector has good platform for overseas www.ttel.co.uk received a positive upgrade thanks investors wishing to tap into the 22-24 Metex India 2011 to M&A activity and iron ore con- huge population in South East Bangalore International Exhibition cessions. Asia, especially with the good basic Centre, India OSK Research Sdn Bhd upgrad- infrastructure, stable utilities sup- www.koelnmesse-india.com Vietnam ed the Malaysian steel sector to an ply and a skilled workforce in the overweight rating following recent country.” OCTOBER 2011 reports of M&A fever within the It said local mills with integrated site loan country’s industry. set-ups present better investments 06 Steel Seminar Series In a research note it said: “We compared to their neighbouring Sheffield, UK VietinBank will grant the Vietnam- think that local steel mills offer a peers. www.iom3.org/events/steel2011 China Mineral Resources and Metallurgy Co a loan of $109M to 17-18 9th European Steel develop an iron and steel factory in Success Strategies Conference the northern mountainous Chinese demand set London Waldorf Hilton province of Lao Cai. www.metalbulletin.com/EventDetails The first phase will see a capaci- /0/4229/9th-Steel-Success- ty of 500kt/y of steel by the end of for resurgence? Strategies-London next year, and after the second phrase from 2012-15, that will rise Research by MEPS International The government’s much trum- 24-26 5th North American Steel to 1Mt/y. Ltd suggests that the Chinese steel peted economic housing scheme Conference The $307M factory will use iron industry will end the year resur- has provided little impetus for Intercontinental, Chicago, USA ore from the local Quy Xa mine, gent. Production in China has steel demand so far this year. http://crugroup.com/Events/NorthA Vietnam's second largest iron ore been rampant in H1 2011 but Official estimates suggest that mericanSteel/Pages/NorthAmericanSt mine with a reserve of 122Mt. research shows that demand is far construction is falling behind eel2011.aspx It is expected to contribute from spent. schedule. By the end of May work $34M to the provincial budget Following a summer slowdown, is reported to have commenced on NOVEMBER 2011 each year while creating thousands MEPS forecasts that crude steel only 30% of the 10 million eco- of local jobs. output will rise by 7%, year on nomic housing units targeted to be OCT 31-NOV 2 Metcoke 2011 Five new steel plants will open year, to 176Mt in the final quarter. started in 2011. Pittsburgh, USA this year, according to the Viet MEPS highlights in its latest MEPS research suggests that www.metcokeworldsummit.com Nam Steel Association (VSA). report ‘China Steel Insight’ that the central government will be suc- The new plants would have a booming demand from the con- cessful in accelerating the pace of VISIT: combined annual production struction industry, which has driv- construction of these projects but www.steeltimesint.com capacity of up to 1.7Mt of con- en steel consumption to record not until the final quarter, when an To see a full listing of industry struction steel and around 250kt levels, has been led by private extra 6Mt of steel will be used. events click on ‘events diary’ of pig iron. housing projects. Source: www.meps.co.uk

8 – July/August 2011 – Steel Times International www.steeltimesint.com USA copy_Layout 1 7/12/11 11:32 AM Page 1

USA Update

Steel industry executives urge Congress to crack down on unfair trading practices by foreign countries

Restricting imports of finished steel the strengthening of the economic recovery. sections for the actual loading, resulting in remains foremost in the minds of the Visclosky had in the past introduced legislation lighter, more efficient sections that can be tai- in Congress requiring US Departments of lored for their expected uses. This will allow CEOs of major US steelmakers but Transportation, Defence and Homeland cold formed steel to be designed, specified and investing to develop new products Security to use only iron and steel produced in built in a greater number of applications with which, in turn, open new markets is also the United States for their projects. This, he greater confidence by engineers and building vital to lift the share of US manufacturing said, was one way to keep Americans on the owners. payroll of steel mills in their own country. in GDP beyond the present 13%. US steelmakers fight price declines By Manik Mehta, New York Steel imports in May down by 6% Three leading steelmakers have been calling for Based on the Commerce Department’s latest steps to stop the downward slide in steel prices. Steel Import Monitoring and Analysis (SIMA) The decline comes after steel prices began ris- data, the American Iron and Steel Institute ing in November with mills passing on the high- THE economic recovery, jobs and foreign (AISI) reported that steel import permit appli- er raw material prices to their customers, but imports dominated the testimony by US steel cations in May totalled 2 579 000 net tons. This this ended in early spring this year. industry executives who told lawmakers that was a 6% decrease from the 2 746 000 tons per- Prices of raw materials such as iron ore, cok- because the economic recovery was tepid and mit recorded in April. Import permit tonnage ing coal and scrap metal increased dramatically not generating enough jobs, Congress should for finished steel in May was 1 768 000 net tons, in 2010, caused by strong demand from China, crack down on unfair trading practices by for- down 8% from the preliminary imports total of the world’s largest steel producing country. eign suppliers. 1 915 000 net tons in April. The prevalent North American price for flat- Some of the nation’s major steel players, In May, the largest finished steel import per- rolled steel, for example, declined from a peak including the United States Steel Corporation mit applications came from Korea at 222 000 of US$800/net ton in April 2011 to around and ArcelorMittal, joined by the United net tons down 28% from April; Japan 145 000 US$780/net ton in June. While the decline was Steelworkers’ Union, gave testimony at a recent net tons up 36%; China 114 000 net tons up partly due to supply chain shortages and Congressional Steel Caucus’ State of Steel 19%; Turkey 80 000 net tons down 32%; and brought about a correction to the excess pricing hearing in Washington DC. The Congressional Germany 77 000 net tons up 6%. of the past, the decline prompted steelmakers Steel Caucus is a bipartisan group of 100 legis- Reacting to the May 2011 SIMA data, such as AK Steel, the USS, Nucor and the US lators representing constituencies that have Thomas J Gibson, the AISI president and Severstaal-owned mills to effect price increases steel manufacturing companies and the domes- CEO, stated that despite an 8% decline in fin- of about US$40 a ton. tic steel supply chain. ished steel imports in May, the import market However, the question is whether those hikes Lou Schorsch, president/CEO of share at 21% remained stubbornly high under can be sustained as buyers urge steelmakers to ArcelorMittal Flat Carbon Americas, lamented current economic conditions, including a slow- bring prices down in view of weak demand. But that the industry was hurt by the steady erosion er pace of economic recovery and a domestic analysts believe that steelmakers will report of the nation’s manufacturing base. steel capacity utilization rate that is under 75%. strong second-quarter earnings, though the cru- Manufacturing accounts for about 13% of “We must therefore maintain enhanced vigi- cial period will be the third quarter. With a slow the United States’ GDP, while it accounts for lance with respect to dumped and subsidized economic recovery accompanied by volatile 20.5% of the GDP in Germany and 33% in imports and the need for strong and effective steel and raw material prices, the outlook for China. enforcement of our trade laws and customs the second half of the year remains uncertain. Schorsch urged Congress to pass legislation procedures,” he added. by creating a funding mechanism for invest- Transport Dept calls for US ment in infrastructure development and main- Research on advance cold formed production of streetcar rails tenance, and opening up new areas for oil and steel building design The steel industry recently held a round of dis- gas exploration. Schorsch also called for enact- Meanwhile, the AISI has entered into an agree- cussions with the Department of Transportation ment of a long-term infrastructure bill depend- ment with researchers at Johns Hopkins on the plan to produce streetcar rails in the ing on the national requirement, with new and University to develop the next iteration in the United States. Deputy Transportation Secretary dedicated sources of revenue which would be Direct Strength Method, an important step for John Porcari underlined the “commitment of free from the ‘vagaries of the yearly appropria- cold formed steel building design. In its current the Obama administration to put Americans tions process’. form, the Direct Strength Method only applies back to work and making the products our Tom Conway, the international vice president to beams and columns. The Metal Building nation needs to compete”. of United Steelworkers, blamed China’s prac- Manufacturers Association is jointly funding The Federal Transit Administration, which is tice of currency manipulation for America’s the project. undertaking a major investments in streetcars huge trade deficit with that country. Conway The research will be conducted under the that are making a comeback in many cities, also favoured a legislative agenda that would direction of Prof Benjamin Schafer, chairman wants these made in the USA because given the address unfair trading practices, infrastructure of the Department of Civil Engineering at the “ingenuity of the American workforce and investment and work-force development, while Johns Hopkins University, from April 1, 2011 to industry, we can do it right here at home”. firmly opposing the United States from becom- March 31, 2012. According to DoT’s estimate, some 18 000 ing a “dumping ground of last resort”. Jay Larson of AISI’s Construction Technical metric tonnes of steel rail will be needed alone For some Congressmen, the steel industry’s Program described the research project as part during the next three years to meet the demand fierce opposition to cheap imports came as a of a long term industry road map to develop the of streetcar projects being planned and built in welcome opportunity to bolster their own posi- Direct Strength Method. Its end result will be the United States. That amount is expected to tion. the development of a method for handling increase to over 33 000t in the next 10 years. Representative Pete Visclosky, vice chair of beam columns and a finite element verification The meeting was convened following a sur- the Steel Caucus, expressing concern over the of the method. vey by the FTA and the National Institute of practices of US trading partners, called for AISI says that the research results are expect- Standards and Technology Manufacturing investment in the country’s energy and infra- ed to have long lasting, positive impacts as Extension Partnership suggesting interest structure. Energy is the new buzzword in the beam column design is brought up to modern among domestic steelwork foundries to manu- industry, as if it is the mantra that will lead to standards, enabling the industry to optimize facture streetcar rails. ᔢ

10 – July/August 2011 – Steel Times International www.steeltimesint.com LA_Layout 1 7/12/11 11:34 AM Page 1

LA Update CSN’s internationalisation phase three: Commercial flow in the opposite direction

Companhia Siderúrgica Nacional (CSN) of Brazil confirmed the acquisition of part of the assets of Grupo Alfonso Gallardo (GAF) located in Spain and Germany in May 2011. Considering that the present Brazilian business sentiment is much better than that in Spain, it is interesting to review the strategy of internationalisation being carried out by CSN. By Germano Mendes de Paula*

CSN’s first investment abroad was made in These plans never moved forward; on the con- • Cementos Balboa (Spain): 2001 with the purchase of the assets of trary, the tinning line was shut down in early 1.4Mt/y of cement and 1.1 Mt/y of clinker Heartland Steel in the USA for $69M, of which 2008. Lusosider produced 233kt of HDG in production. $50M was cash and $19M in debt assumption. 2008, 197kt in 2009 and 241kt in 2010. In addition, the company invested $120M as Generally speaking, CSN obtained only lim- Even after the transaction, which had to be working capital and pre-paid interests. For this ited success in its initial attempts to internation- approved by antitrust authorities, GAF will reason, CSN considered that this investment alise. While the original idea of integrating maintain a significant presence in the steel totalled $175M. Heartland Steel had only start- upstream activities in Brazil with downstream industry (with Steel Balboa, Corrugated ed operations in 2000, at a cost of $285M. processing in developed countries was reason- Getafe, Alfonso Gallardo, Ferralca, However, in early 2001, after just a year in able at the time (due to cost differences), Ferromallas, Galvacolor, Eusebio Calvo and operation during which time it had experienced implementation was not particularly successful. Marceliano Martin), and other sectors such as a high rate of idle capacity, it was declared insol- Besides, CSN has experienced frustrated initia- paper (Papresa), communications vent. Heartland Steel was renamed CSN LLC tives when attempting to purchase integrated (Communication Gallardo) and renewable at the take-over. steel companies abroad, in particular Wheeling- energy (Renewable Energy AG). In addition, The underlying motivation of CSN in this Pittsburgh (USA) and Corus (UK), as well as a GAF is engaged in developing an oil refinery in investment was to bypass the protectionist bar- cement producer (Cimpor), based in Portugal. Balboa, Spain. riers on imported steel imposed by the US The transaction was equivalent to approxi- authorities. As these obstacles are less restrictive Coal Business mately $1.37bn (of which 57% related to the for semis, CSN intended to export slab to the In Q4 2009, CSN unveiled the purchase of a payment of shares and 43% for assuming debt). US mill and reroll it there. But Heartland had 15% stake in Riversdale Mining, an Australian On one hand, the deal can be considered rela- no hot strip mill and CSN ended up with its mining company with coal assets in South tively small as it was equal to just 7% of CSN’s 800kt/y cold strip mill and a 300kt/y galvanizing Africa and Mozambique, for $161M. This market capitalisation. On the other, this was line. Because of the antidumping and counter- transaction represents backward vertical inte- clearly an acquisition of distressed assets in a vailing duties imposed on Brazilian exports of gration, aiming to have access to metallurgical very weak market, which allowed CSN to HRC, CSN was forced to contract a North coal (or at least to get a price hedge on it). It obtain large discounts on the purchase price. American mill to roll its slab imports to hot should be stressed that the previous invest- Goldman Sachs estimates $2.9bn as the rolled coil (HRC) and sometimes even to buy ments in the USA and Portugal corresponded replacement value for those assets, and valua- HRC in the market, to feed the cold mill. to forward vertical integration. At first sight, it tion does not attribute value for the steel distri- CSN LLC still experienced a large idle capac- appeared that Riversdale would constitute a bution and clinker plant businesses. ity in the recent years, as it produced only 262kt new route for CSN’s internationalisation. It is understood the steel mills were running in 2008, 218kt in 2009 and 250kt in 2010. Nevertheless, in Q2 2011, the company agreed at above 80% capacity utilisation, while the In 2003, CSN announced the acquisition of to sell its 19.9% participation in Riversdale to cement plant had some 50% spare capacity. a 50% share of Lusosider, a cold strip mill Rio Tinto for $830M. This second stage of Most probably, CSN will be able to reactivate (500kt/y), hot dip galvanising (300kt/y) and tin- strategy of internationalisation was short, but some of the idle capacity by gaining market ning line (80kt/y), located in Seixal, Portugal. very profitable. share in Europe (reproducing its trajectory in This participation was bought from Arcelor as a Brazil), but also by exporting finished product result of merger restrictions imposed on the More European Assets back to Brazil. The company intends to ship company by the European Commission Also in May 2011, CSN agreed to purchase long products and clinker to Brazil until busi- (Arcelor was created in February 2002 by the from Spanish based Grupo Alfonso Gallardo ness activities have recovered in Spain. combination of three steelmaking companies: (GAF) the following assets: CSN will accelerate its announced plans to Aceralia Corporación Siderúrgica (Aceralia), focus on the cement and long steel segments – Arbed and Usinor and was later acquired by • Stahlwerk Thüringen (Germany): at home and abroad – rather than on flat steel Mittal Steel in 2006). Arcelor initially sold its 1.1Mt/y minimill focused on sections; products. Therefore, the transaction was also shares in Lusosider to Corus for $11.8M as • Corrugados Azpeitia (Spain): motivated by the intention to diversify the Corus already held a 50% stake in Lusosider, 1.1 Mt/y minimill specialised in rebars; enterprise’s business lines and geographical inherited from Hoogovens, and Corus then • Corrugados Lasao (Spain): exposure. Moreover, in the third phase of resold them to CSN. In 2006, CSN acquired 200kt/y electro-welded mesh producer; CSN’s strategy of internationalisation, the host the remaining shares retained by Corus, becom- • Gallardo Sections (Spain): nations will be the exporters, which is the ing the sole owner of Lusosider. Due to the a steel distributor; and reverse of what happened in the first stage.
absence of antidumping restrictions on Brazilian HRC exports to Europe, the integra- tion between the production of slabs in Brazil Phase 1 (2001-2) Phase 2 (2009-11) Phase 3 (2011) and the rolling activities in Portugal has been more effective than in the US experience. Investments Heartland Steel (2001) Rivesdale (2009-2011) Thüringen (2011) Lusosider can roll HRC from Brazil on its Lusosider (2003) (then resold to Rio Tinto at a profit) Azpeitia (2011) 180kt/y capacity cold reversing mill and coat it Cementos Balboa (2011) on its 230kt/y hot-dip galvanising line. Countries USA South Africa Mozambique Germany At least on two occasions (2004 and 2007), Portugal Spain/Spain CSN has declared its intention to increase Activities Flat steel re-rollers Coal Long steel and cement Lusosider’s installed capacity. These projects Motivations Exports slab from Brazil to be Supply of metallurgical coal from Africa Supply the local market rolled in North America and Europe to Brazil (or, a hedge on coal prices) and export long steel had different configurations in terms of equip- products and clinker to Brazil ment and scale, but the logic throughout was to maintain the Portuguese plant as a re-roller. Table 1 Globalisation of CSN by acquisitions

*Professor in Economics, Federal University of Uberlândia, Brazil. Email [email protected]

12 – July/August 2011 – Steel Times International www.steeltimesint.com China_Layout 1 7/12/11 11:35 AM Page 1

CHINA Update Resumed power cut policy impacts production Power cuts which were introduced by China’s governing authorities in Q3 last year to meet emission targets before the end of the 11th five-year plan on December 31 have already been reintroduced throughout industrial China and are likely to slow steel output which peaked in April at an average crude output of 1.93Mt per day. This curtailment is increasing steel prices due to shortages, particularly in construction where 10 million new homes are planned this year. By Shi Lili, China correspondent

DUE to a major shortage of power arising from tive since it is mainly brought about by the steel industry cannot be exempt. The power environmental concerns and a tight supply of shortage of power. Until now, Hebei province, consumed by steel production accounts for coal, ‘the tide of power cuts’ has come earlier the largest steel producing region in China, had around 14% of total industrial power use and it than expected. After the policy was activated in not been affected by power cuts and most steel is therefore a major focus for provincial govern- Hunan and Hubei, provinces, it has spread to mills were still operating as normal. What is ments in carrying out their energy saving and many other regions throughout China. more, most large steel companies are equipped pollution reduction policies. In the third quar- Industrial plants in such places as Zhejiang, with their own power generating capacities. ter last year, the power limiting policy slowed Jiangsu, Hebei, Jiangxi, and others were already Among the major 19 steel producers in China, the monthly increase in crude steel output from trying to avoid periods of high electricity con- 50% of their supply is made within the works. 25.83% during the first half of 2010 to 6.34% in sumption each day to obtain more favourable This means although they will be affected the second half of the year. Then, steel produc- power prices. In recent days, Guangdong also somewhat by power cuts, their ability to contin- tion actually witness a negative growth in started a new round of power cuts. ue production is also strong. This is as long as August and October 2010. Implementing such an immediate policy of there is no compulsory power consumption Secondly, The large scale construction of res- cutting power put most steel mills in a stand-by limit achieved by switching power off province idential housing will push up the demand for position and a shortage in output may well – wide – as happened in September last year. steel. During China’s ‘twelfth five-year plan’ show up in an industry already working at a But the power cuts are not the main cause of (2011 to 2015) the country aims to build 36 high output. This will inevitably lead to a rise in the increasing steel prices. The growth in down- million houses. 2011 is a crucial year in this tar- steel prices as a result of strong demand at this stream demand with high consumption is also get with an expected 70% growth in house time of year. At present, there is strong demand causing rising prices. This explains the record building over last year. The proportion of funds from downstream consumers and steel prices high output of crude steel in April. The China for this project from central government in have risen overall. Most steel mills were in full Iron & Steel Association report that China’s 2011 will exceed 10bn Yuan (US$1.54bn). The production to satisfy this demand, but due to average total production per day in April was steel industry is inevitably the largest benefici- the power shortages this year, several provinces 1.931Mt, a gain of around 1% on the previous ary of this policy. and cities have carried out power cuts on high month’s 1.912Mt. But, as the restrictions on Based on industrial experience, each square energy consuming industries such as steel. use of power started in May, the tightness of metre of residential housing will require 55kg Companies are forced to operate during off- power will cause more steel mills to reduce out- of construction steel. Assuming a typical floor peak hours of electricity use and those that put, for example by bringing maintenance peri- area of 30m2, the 10 million houses planned break the rules will be fined. Since such a poli- ods forward. Steel prices are likely to increase this year will need 49.5Mt of steel. The stock- cy is new, most steel mills have not devised the due to these factors. piles of rebar on the spot market are strong evi- precise arrangements to reduce production, but dence of this fact. the majority of companies have already been Supply & demand improves Thirdly, the negative influences of the power affected. Once the power cut policy becomes As the shortage of power becomes more cut policy cannot be ignored. From the perspec- widespread throughout the major steel produc- intense, there is likely to be a limit on steel out- tive of downstream consumption, steel for tion regions of China, the conflict between sup- put to some extent. In mid April this year, industry accounts for 50% of the total demand ply and demand will be aggravated and any China’s Committee of Development and in China (eg 16% for machinery, 5% for auto- steelplant capacity that has long been consid- Reform released warnings that the supply of mobile and 3% for coal). Power cuts will also ered surplus to requirements will close. electricity in most of China will become tight. reduce demand from these industries as the With the coming of May the season of high Chinese government increases energy saving Prices lift with power cuts power consumption and ‘power starvation’ measures. This will drag down the investment Steel prices charged by large mills have benefit- becomes a market focus. Some local govern- in fixed assets and the demand for steel prod- ed from the power cut policy. As for the whole ments have commenced power cuts and the ucts will be negatively affected. ᔢ steel industry, cuts will spread to medium and small steel mills, especially for construction materials. Since production capacity is restrict- ed somewhat by the cuts, there will be a short- Green credit guidance for I&S age of steel products to a certain extent. Yet considering that the second quarter has always CHINA’S Ministry of Environmental also part of the government’s efforts to pro- been the high season for consumption and Protection (MEP), the China Banking mote energy-saving and emissions-reduction via demand, this will provide strong support to Regulatory Commission (CBRC), and the financial instruments. steel prices. As for the largest steel mills, they China Iron and Steel Association (CISA) joint- Previously, in July 2007, the People’s Bank of always have better access to power supplies and ly published the Green Credit Guidance for the China rolled out an environmentally-friendly most can generate at least part of their require- Steel Industry in June. This instructs banks to loan policy, or ‘Green Credit Policy’, together ments in-house. Therefore, the output of large stop offering loans to high energy-consuming with the CBRC and the environment authorities. producers will not be affected much and they and polluting projects, in a bid to curb blind Tighter monetary policies have put pressure will benefit from the steel price increase. expansion of the industry. on the working capital of steel mills and also led In the coming season of high power use and The guidance set out both qualitative and to a drop in orders, which, in turn, has affected the lively demand for steel products at the quantitative indicator systems, including vari- steel production. moment, power cuts may give rise to active ous aspects such as policy risks, environmental China’s iron and steel industry posted a prof- market demand. And although such an intense impact assessments (EIA), environment per- it of RMB 90.9bn (US$14bn), or a 16.8% situation regarding power use is likely to contin- formance, local environment requirements, growth y-o-y in the Jan-Apr period, according to ue, its influence on steel mills tends to be limit- enterprise management and technologies, and the National Development and Reform ed in term of market price. Yet it should be others to help banks evaluate and classify steel Commission (NDRC). In May, the composite noted that many large steel companies have companies seeking loans. According to this index of China’s domestic steel product price made plans to lower output due to the power guidance, steelmakers that fail to pass these gained 2.24 over the previous month to average cuts and use the time for maintenance. The assessments for new projects will be unable to at 136.04. The figure was also 13% higher than notice released by the Ministry of Finance for get access to fresh credit. a year ago. the elimination of old and small mills also push- Yuan Qingdan, deputy director of the MEP’s es forward this process. environment and economic policy research cen- Source: China Metals But this round of price increases is specula- tre, said that the issuance of the guidance was e-mail [email protected]

14 – July/August 2011 – Steel Times International www.steeltimesint.com India_Layout 1 7/12/11 11:36 AM Page 1

INDIA Update Steel consumption up in India in FY 2010-11 India’s automobile industry has posted hefty growths in production in the 12 months to March 31 2011 with nearly 18 million vehicles (including 2 and 3 wheelers) produced up 29.6% on FY10. India was the 5th highest global producer of crude steel at 66.8Mt in calendar year 2010 and consumption of carbon finished steel, after adjusting for variations in stock and double counting, rose by 10.81% to 62.14Mt over 56.08Mt in the previous year. Company profits were hit by high coke prices. By *Sanjay Sengupta, India correspondent

INDIA’S GDP is expected to grow by 8.6% in As recorded by the World Steel Association, diameter pipe 608kt. FY10-11 (April 2010-March 2011) over 8.0% in India was the 5th highest global producer of India remained a net importer of finished FY 09-10. crude steel at 66.8Mt in calendar year 2010, steel in FY’11 importing 2.92Mt more than it The country’s Index of Industrial Production marginally lower than Russia’s output of exported. (IIP) declined to 7.8% during FY’11 from 67.0Mt at the 4th position. 10.5% in the previous year. The manufacturing Consumption sector, having a weightage of about 80% in IIP, Ferrous output India’s consumption of carbon finished steel in also dropped to 8.1% from 11% in FY’10. The India’s Joint Plant Committee (JPC) is moni- FY’11, after adjusting for variations in stock growth of Capital Goods Sector registered a toring ‘Production for Sale’ which is arrived at and double counting, rose by 10.81% to heavy decline to 9.3% in FY’11 over 20.9% in by deducting inter-plant transfers (IPT) and 62.14Mt over 56.08Mt in the previous year. the previous year. producers’ own consumption from gross pro- In its short term outlook for steel released in The output of six infrastructure industries duction. 61.8Mt was available for sale up 8.2% April 2011, worldsteel predicts that in calendar known as the ‘Core Sector’ rose to 5.9% in on the year previous. A summary of Production year 2011, India’s steel consumption will grow FY’11 over 5.5% in FY’10. for Sale of iron and steel materials by ISPs and by 13.3% to 68.7Mt. In 2012, this will further secondary producers in FY’11 is shown in accelerate to 14.3%. Robust automotive growth Table 3. India’s automobile industry has posted hefty Financial performance growths in production, domestic sales and Steel trade The net profits of some Indian steel companies exports in FY’11 over the previous year. Two- Imports of carbon finished steel in FY’11 were brought down by rises in input prices, par- wheelers topped the list with nearly 13.4 million declined by 6.0% at 5.96Mt compared with ticularly that of coking coal. Steel Authority of produced, followed by 2.9 million cars and 6.34Mt in FY’10. Major imported products in India Ltd (SAIL) suffered worst on this nearly 800 thousand three-wheelers and 753 FY’11 were plate 764kt, HR Coils 2.31Mt and account. thousand commercial vehicles (Table 1). CR Sheets/Coils 1.13Mt. The rising input costs impacted SAIL’s finan- Exports of carbon finished steel from India cial results in FY’11 by about IRs37180M Crude steel production in FY’11 declined marginally by 1.30% to reach ($831.58M) of which IRs31000M ($693.35M) India’s crude steel production in FY’11 and its 3.04Mt compared with 3.08Mt in FY’10. Major was due to the increased price of imported cok- variance with the previous year is shown in exports in FY’11 were GP/GC sheets 1.25Mt ing coal alone. India presently imports about Table 2 HR Coil 525kt, CR Sheet/Coils 283kt and large 28Mt/y of coking coal of which SAIL’s share is about 10Mt. Type of Production % change Domestic % change Exports % change Tata Steel’s consolidated net sales (including Vehicles (FY’11) over Sales over (FY’11) over Indian and overseas operations) reached FY’10 (FY’11) FY’10 FY’10 IRs1171490M ($26.2bn) in FY’11 over IRs Passenger Vehicles 2 987 296 26.72 2 520 421 29.16 453 479 1.64 1011570 ($22.62bn) in FY ’10, a growth of Commercial Vehicles 752 735 32.63 676 408 26.97 76 297 69.51 15.81%. Three Wheelers 799 553 29.13 526 022 19.44 269 967 55.86 The company’s consolidated net profit in Two Wheelers 13 376 451 27.24 11 790 305 25.82 1 539 590 35.04 FY’11 was IRs89826.9M ($2.01bn) against a Total 17 916 035 27.45 15 513 156 26.17 2 339 333 29.64 consolidated net loss of Rs20092.2M ($449.39M) in FY’10. Table 1 Production, domestic sales & exports of Indian automobile industry in FY’11 Higher sales and realizations along with cost Unit: Number of vehicles Source: SIAM cutting measures in Indian and overseas plants contributed to the higher growth. Product Production Change Product Production Change over Tata Steel’s captive coal mines supply coking for sale over FY’11 (P) (Mt) FY’10 (%) coal to its Jamshedpur plant and it has succeed- in FY’10 ed in bringing down the ash contain to 13%. FY’11(P) (%) Crude Steel 69.575 5.67 The company presently imports less than 50% (kt) of which ISPs 23.852 2.47 of its total coking coal requirements of approx- Secondary (1) 45.723 7.43 imately 6Mt/y. Cold Pig Iron* 5585 (-) 6.07 Source: JPC. – ISPs are SAIL, Tata Steel & Vizag Steel Plant The financial results of India’s major steel- of which ISPs 579 (-) 20.79 (P) = Provisional. Note (1): Includes mini blast furnaces. makers are presented in Table 4. Secondary 5006 (-) 4.01 Details of sales and profits of some Indian Less IPT/own consumption 44 (-) 29.03 Table 2 Production of crude steel by India in companies are shown in Table 4.
Production for sale 5541 (-) 5.83 FY’11 (Mt.) Sponge Iron (DRI) 26 709 9.80 of which ISPs - - Company Net sales/income Net profits Secondary 26709 9.80 FY’11 FY’10 % change FY’11 FY’10 % change Less IPT/Own consumption - - SAIL 427201.9 405513.8 5.35 48812.5 67543.7 (-)27.73 Production for sale 26 709 9.80 Tata Steel* 290730.0 247170.0 17.62 68660.0 50460.0 36.07 Finished Carbon Steel 71179 9.06 JSPL 95348.9 73595.6 29.56 20641.2 14796.8 39.50 of which ISPs 17998 0.35 JSWSL 70320.7 51670.7 36.09 20106.7 20227.4 (-)0.60 Secondary 53 181 12.36 Bhushan Steel 70004.6 56403.5 24.11 10330.7 8458.0 22.14 Less IPT/Own consumption 9380 14.77 Maharastra Seamless 17612.1 15931.7 10.55 3468.4 2846.0 21.87 Production for sale 61 799 8.24 Monet I & E 15737.2 14807.0 6.28 2850.6 2691.0 5.93 *: Surplus of steelmaking requirements supplied to foundries. Surana Industries 12330.3 9450.2 30.48 565.5 347.1 62.92 Data Source : JPC (P) = Provisional NB: All the above figures are on stand alone basis. *Indian operation only. Does not consolidate Corus and other overseas plants.

Table 3 India’s ferrous Output for Sale in FY’11 (kt) Table 4 Sales and profits/losses of major Indian steel companies in FY’11 vs FY’10 (IRs M)

16 – July/August 2011 – Steel Times International www.steeltimesint.com transport myra_Layout 1 7/12/11 11:40 AM Page 1

Handling Transporting steel in the US market

Following earlier scrapages, about 1100 barges have been built since the downturn

There is currently a perfect storm developing regarding the availability of transport equipment to move steel and steel related products, and one that seems to be destined to just get more intense as the US economy continues to improve. By Myra Pinkham, US correspondent New York

Overall US freight tonnage is expected to grow about 24% by 2022, American Trucking Association’s US Freight Transportation Forecast

AVAILABILITY of transport to move steel Thomas Danjczek, president of the He observes that new steelmaking capacity is within the US boarders continues to be a con- Washington-based Steel Manufacturers already coming on stream. For example, cern even with the recent cooling down of eco- Association, says that even with steel capacity ThyssenKrupp Steel USA LLC in Calvert, nomic growth rates, this being generally per- utilisation rates hovering between 70 and 75% Alabama, has begun ramping up its capacity, ceived as the usual summer slowdown arriving compared with above 90% prior to the down- RG Steel is restarting a furnace at its recently early this year, not the dreaded double dip turn and US gross domestic product growth acquired Sparrows Point, Maryland, facility and recession. Despite negative movement in cer- rates continuing to be fairly lacklustre at is expected to start up currently idled capacity tain key leading economic indicators, most between about 2-3%, steel mill transportation at some of the other facilities it acquired from industry observers predict that the US economy managers are facing a number of challenges, Severstal North America. Also, Severstal NA will find its legs again in the fall and that the including limited railcar availability, barge avail- has announced that it has completed hot com- steel industry – and manufacturing in general – ability – which has been impacted by the flood- missioning of a second electric arc furnace at its will see a significant year on year gain this year ing of the inland waterways – reduced availabil- Columbus, Mississippi facility (formerly known and even stronger improvement in 2012. ity of both trucks and truck drivers and $4-plus as SeverCorr) and that construction of a push- Even in the first quarter of this year, when all diesel fuel prices. pull pickle line and a second hot-dip galvaniz- the economic indicators – other than those For the time being, things are not that bad – ing line there remains on schedule to come on relating to the still very weak construction with the exception of barge transportation, stream this fall. industry – were pointing positive, economic activity was still lagging far behind the levels “Actually the US manufacturing sector has recovered quicker than had been expected,” enjoyed prior to the global economic downturn. But despite that, availability of all modes of J Anton, Director IHS Global Insight service centre transportation – trucks, railcars and barges – had already been tight, at least in certain traffic which had been just about stymied by the “Actually the US manufacturing sector has lanes. floods created by all the tornado activity. In recovered quicker than had been expected,” Greg Burns, chairman of PLS Logistics fact, Billy Johnson, director of political and says John Anton, director of the steel service of Services, Pittsburgh, says that despite the fact public affairs for the Institute of Scrap IHS Global Insight, Washington. Overall that availability has loosened a little in April and Recycling Industries, says that at least for the industrial production was up about 5% year on May and could continue to do so through the transportation of scrap metals equipment avail- year in April. Also while it has backed off a lit- traditional summer doldrums, which have ability is currently in the sweet spot. He does, tle over the past few months, the manufacturing appeared to come early this year, he believes however, admit that there is potential of it sector is seen to be continuing to expand, albeit that a structural tightness in transportation becoming very tight going forward. very slowly in May. The well-watched Institute capacity could continue – and perhaps get “If steel production was back to 2007 levels, for Supply Management’s purchasing man- worse – over the next five to six years. I don’t know how we would transport all of our agers’ index’s May reading of 53.5% indicates This, he says, is due to a ‘perfect storm’ cre- goods,” Danjczek says. “As you see the capacity that the US manufacturing sector has now been ated by reduced fleets during the economic utilisation of American mills coming back that expanding for 22 consecutive months. downturn, relatively low investments by freight will put more demand on the railroads and carriers, an improving economy, more regula- other freight carriers,” says David Reid, manag- Trucks Gain tions and, especially when it comes to trucking, ing partner of Metal Strategies Inc, West According to the American Iron and Steel a declining pool of drivers. Chester, Pennsylvania. Institute, US Steel shipments were 8.0M short

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As of May 1 a total of 276 288 freight as ‘okay’ at the moment, “But the steel industry cars, or 18.2% of is not yet operating at levels that one would the total US fleet, expect. As capacity utilisation increases things were still in storage will get tighter.” ISRI’s Johnson agrees, surmis- say the Association ing that there could be a noticeable tightening of American of railcar availability in the next three months or Railroads so. “Right now we can get railcars, although the prices might not be the greatest and they are going up.” SMA’s Danjczek, however, says that even now railcar availability, especially for gondolas, is already very limited. “This is because the rail- roads have chosen not to build new wagons over the past several years – ever since the eco- nomic downturn, and even before that.” He “Currently we have no new builds for freight cars serving the steel industry at this time, says the trade group has appealed to the although we have ordered 1500 new coal cars.” Surface Transportation Board to give the rail- roads the ability to add to their fleets. Schaaf group VP Metals & Construction Norfolk Southern Jim Schaaf, group vice president for metals and construction for the Norfolk Southern Railway Co, says that there was tight to short tons in March, up 4.7% from a year earlier, retiring – but it is also because of the impact of availability of railcars from the fourth quarter of bringing first quarter shipments to 22.5Mston new safety regulations that are currently being 2010 through the first quarter of this year, but (an annualised 90Mston), up 9.6% year on year. phased in. Burns has called the new he maintains that was mainly due to extreme According to the American Trucking ‘Comprehensive Safety Analysis 2010’ initiative weather conditions across the rail system, espe- Association’s US Freight Transportation by the Federal Motor Carrier Safety cially in Chicago, which is an epicentre for rail Forecast, overall US freight tonnage is expected Administration “a game changer” that would traffic. “Those weather delays have had a ripple to grow about 24% by 2022. reduce the driver pool by about 10%, or more. effect across the system. Another major factor The ATA’s April seasonally adjusted for-hire He explains that once it is fully enacted, CSA has been the large number of railcars that were truck tonnage index, while down 0.7% from 2010 it will create a national database of drivers put into storage, and even scrapped, during the March, was up 4.8% compared with a year ear- having less than perfect safety records. “This economic downturn, he added. Christopher lier, according to the Association of American means that drivers can’t just change jobs and Plummer, Metal Strategies’ managing director, Railroads (AAR). start over with a clean slate anymore.” says that that there had been a high scrappage Of all the modes of moving steel and steel products, trucks are definitely the tightest, “…..there had been a high scrappage rate of older rail cars, given that the average railcar contains “And we anticipate that it will get tighter in the about 20 tons of steel, which, at current prices, yields about $10 000.” future as little, if any, capacity is being added, says Bob Costello, ATA’s vice president and C Plummer, MD Metal Strategies chief economist. “Being more of a just-in-time mode of trans- portation, requirements for trucks were even Further tightening driver availability are the rate of older rail cars, given that the average rail- more reduced that those for other modes of FMCSA’s new hours of service regulations car contains about 20 tons of steel, which, at transportation during the downturn,” says which, according to Plummer, will restrict the current prices, yields about $10 000. He could Plummer, who explains that with shippers less hours that drivers can drive each day and each not, however, say how many were scrapped. pressed to move their products very quickly, week and will dictate how many hours they Schaaf says that at the peak of the recession they were more likely to turn to less expensive must have off between shifts. Norfolk Southern had about 30 000 railcars in modes of transportation such as rail and barge. The negative impact of these new rules, how- storage, the most pronounced proportion of “But that has reversed with shippers now once ever, could be somewhat lessened should the which were coil cars and gondolas due to the again committed to just-in-time deliveries.” US Congress approve the Safe and Efficient severe downturn in the steel sector. As of May 1 “Right now flat bed trucks (the type of trucks Transportation Act, which would allow state a total of 276 288 freight cars, or 18.2% of the generally used to move steel) are definitely at a transportation departments to selectively set total US fleet, were still in storage, according to premium,” says Allen Dworakowski, executive interstate gross weight limits of up to 97 000 lbs the AAR. That was down 7421 from the previ- director of PGT Trucking Inc, Monaca, (44 tonnes) for trucks equipped with a sixth ous month. Pennsylvania. He observes that for a while there axle, therefore, allowing more freight to be “We are more fluid now in the second quar- were as many as 800 to 900 trucking companies hauled per truck. This would result in increas- ter,” Schaaf says, stating that, at least at Norfolk – mostly local or regional companies with an ing the hauling power by about 25-33% per Southern, has been accomplished by a combi- average of five to ten trucks each – closing their truck ISRI’s Johnson estimates. nation of better utilisation of current equip- doors each quarter. In fact, PLS’ Burns main- “Still, at least in the short term there will be ment and “a very aggressive spending pro- tains that during the depth of the recession continued truck capacity challenges,” gramme,” including the expenditure of $30M there were only about a third as many heavy Dworakowski says. for maintenance and repair of equipment. duty trucks on the road as there were in 2006. There was an explosion of orders for freight But now that demand for trucks has built up Rail Freight cars in the first quarter of the year, notes Peter again, trucking companies are not emerging or April US railcar loadings did not fair quite as To ja, president of Economic Planning re-emerging to take up the slack and surviving well, falling a slight 0.2% year on year, say the Associates, Smithtown, New York state, with a companies are not increasing their fleets much, Association of American Railroads (AAR). total of 36 903 cars and intermodal platforms Costello says. This, according to Ken Kremar, a Railcar loadings of metallic ores, motor vehicles ordered during the quarter, compared with a principal in IHS Global Insight’s industrial and parts and grains did, however, see gains, scant 5078 freight car orders in the first quarter practice, is because the truck driver shortage is although coal traffic was down for the first time of 2010. “This, however, included very few coil once again rearing its head. since July 2010. Loadings for the first four cars or gondolas, as the steel industry is still in This is partly because of demographics – not months of this year, however, remained 3.8% the doldrums,” he says. “The railroads can meet enough young, new drivers interested in filling ahead of those for the same period in 2010. the needs of their steel customers with their the holes left by the older drivers who are now Reid termed steel-related railcar availability current fleets.” That is what Norfolk Southern is doing, “But by this summer, when the flooding situation has been alleviated, Schaaf says. “Currently we have no new builds there should be plenty of barge capacity.” for freight cars serving the steel industry at this time, although we have ordered 1500 new coal To t h , R i v e r Tr a n s p o r t N e w s cars. In general, Reid says, coal cars have been a big mover because of the rising exports of

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metallurgical coal. About 1100 barges have been built since the downturn. “We are in the process of forecasting our needs for 2012 and beyond,” Schaaf says, “But Toth, River Transport News we don’t plan to build any new steel-industry related freight cars at this point, although that is subject to change.” As far as the railcars that have been ordered Barge Transport capacity,” even with the increased demand for earlier this year, they will take a while to be Right now, due to flooding of the inland water- coal, grains and some other industrial products. delivered. Toja says order backlogs are current- ways, there is still very little movement of It is true that, like had happened with railcars ly out a record 6.8 quarters, as the railcar freight by barge, Sandor Toth, publisher of and trucks, a lot of older barges were scrapped builders, who geared down during the recession River Transport News, Silver Spring, Maryland, in 2009. “But starting last year the industry has were not able to just ‘turn on a dime’ once notes. But even when the waterways open been going crazy building new barges to both order activity picked up again. “The best thing again, he does not foresee a big problem with replace the scrapped barges and to add to their is for them to play it slow,” he says. “They barge availability. fleets.” Toth says about 1100 barges have been should make sure that the expansion is real He admits that there will likely be some pent built since the downturn. before they start cueing up capacity. Their cus- up demand and possibly some logistics chal- “The only real tightness could be with the tomers will wait for their cars. They don’t have lenges for another month or two, “But by this open hoppers to transport coal,” he says. “But to worry about competitive factors. Everyone summer, when the flooding situation has been there isn’t expected to be any problems with has backlogs.” alleviated, there should be plenty of barge covered hoppers.”
A non-metallic label to withstand The tags are made temperatures up to 600°C from a strong flexible coated synthetic material A non-metallic label capable of with- 2D bar-coding, standard code 39, EN8 plus which can be standing temperatures up to 600°C corporate graphics and man-readable data can pre-printed with the which can be printed on by thermal all be printed using a thermal transfer printer. customer’s logo This gives steel processors the ability to design then thermal transfer to produce a permanent mark and print any variable information they require transfer overprinted resistant to heat and outside storage on the tags. on demand by users offers a lower cost and more flexible A key customer quoted “We are using solution to the existing engraved metallic Thermo Tag 600 on products that come off the line at around 500ºC. They are then stored tags. both inside and outside for long periods of time. No other tag, capable of printing on ther- A new development in the pipeline is a more mal transfer printers, has ever survived these economic tag which will withstand mid to high initial temperatures or storage conditions. We temperatures of 280°C-300°C. Tests on specific A TAG with thermal transfer printed barcodes, are very pleased with the time and effort IML applications have so far provided excellent sequential numbering and batch control infor- invested in developing this label.” results. This product is still in the development mation that can be attached to metal products IML are pleased to gain this accolade from a stage but launch is targeted into the market at temperatures of up to 600ºC is the Thermo primary UK steel manufacturer following the place for autumn 2011. Tag 600™. Exclusively manufactured and sold launch of the new Thermo Tag 600. The tag is Well established and highly acclaimed in the by IML Labels, the tag which was first launched now in use in the UK and Europe and is cur- metal processing trade is the remarkably strong into the UK is now being supplied to steel rently being trialled in the Middle East. Rip-Proof tag. Thermal Transfer printable with industry customers worldwide. all the benefits from on-demand batch coding, With ever increased speeds in steel produc- Other applications enduring temperatures up to 220°C it is manu- tion Thermo Tag 600 offers benefits; delivered Alternative applications for the label have been factured from a special abrasion resistant through the use of bar coded track and trace found, an example being as a replacement for woven fabric with a special coating. This excep- information which can be applied much earlier rigid valve tags in manufacturing environments tionally strong tag is highly resistant to tearing in the manufacturing process as there is no where high temperatures are present. or creasing and is used in many processes with- longer a need to allow for cooling time before The ability for customers to apply informa- in the metal processing trade. Printing remains tags are attached. tion on demand, rather than wait for an engrav- legible even if crushed when being handled or Manufactured from a highly durable material, ing process has added considerable flexibility stored. Thermo Tag 600 labelled metal products can and reduced costs in engineering control. Full labelling solutions are offered to cus- safely be stored outside for extended periods of It is expected that other applications will tomers, having developed these remarkable time, with a guarantee that the integrity of batch emerge; testing in areas where chemicals are materials, IML’s technical team have extended coding information will be assured. The tags are present is the next stage of this products devel- the development process to include the identi- currently being used to identify products includ- opment. fication of the most appropriate and robust ing wire coils, billets and steel bundles. thermal transfer printers and easy to use soft- Prior to this development bar coded asset Other Products ware. Ribbons for the thermal transfer printers tracking above 450ºC was only possible if a sig- While Thermo Tag 600 has filled a gap in track have also been developed and tested to ensure nificant budget was available for set up equip- and trace labelling solutions at elevated temper- that customers print applications are as endur- ment and the purchase of metal based tags. atures, IML already specialises in the manufac- ing as the labels. Training in all aspects of International Sales Director, Gordon Dunn, ture of a wide range of self adhesive labels and Thermal Transfer printing is all part of the pack- identified the requirement for more economi- tags to suit many different temperature range age as is the provision of on-going support. cally viable tagging at up to 600ºC through applications within the steel industry. The com- For customers who need to work at even close research into the supply-chain of major pany’s particular expertise is in the develop- higher temperatures of around 1000°C, IML steel processors in the UK. ment of new materials to support continuous are the distributor in the UK for Pannier laser The tags are made from a strong flexible improvement in the customer’s supply chain. systems and laser printable metal tags.
coated synthetic material which can be pre- Whilst Thermo Tag 600 offer savings against printed with the customer’s logo then thermal the previous, metal based, alternatives for Contact: transfer overprinted on demand by users, giving labelling at 600ºC, research continues to find IML Labels & Systems Ltd, 441 Brightside Lane, Sheffield, UK the benefit of relatively low set-up equipment even more economic solutions for lower tem- Tel +44 114 2612261, Fax +44 114 2612231, costs. perature ranges. e-mail: [email protected]

22 – July/August 2011 – Steel Times International www.steeltimesint.com LEEA aumund verlinde_Layout 1 7/13/11 4:09 PM Page 1

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Steel industry can reap the benefits of safer lifting

The complex legal framework applicable in the UK, EU and adopted in many countries overseas, which governs the safety of overhead lifting equipment, is discussed in this article by the Lifting Equipment Engineers Association. By Geoff Holden*

OVERHEAD lifting plays a key role in a num- loads, unusual circumstances, or more than one ber of different areas of the steel industry, lifting appliance and/or special equipment. In encompassing both manufacture and distribu- these circumstances, a written plan is essential, tion. And, because overhead lifting remains a with all the staff involved briefed and their significant cause of accidents within the work- responsibilities clearly defined. place, in most developed countries it is the sub- ject of dedicated health and safety legislation. Correct equipment Whilst there is no reason to believe that the Selection of appropriate equipment is invari- steel industry has particular problems with lift- ably an important aspect of the planning ing safety, there are certainly a number of fac- process. This is particularly true in arduous tors which make it more challenging. These applications typical of steel manufacture. It is include the fact that loads can be heavy, awk- vital that the important role played by relatively ward or hot – or a combination of all three. simple items such as slings and load lifting A thorough examination must be per- Furthermore, the working environment can attachments is not overlooked. These are solely formed by a competent person, with the prove hard on lifting equipment, and lifting responsible for securing the load during the lift- ability to act independently of the employer operations may often take place in close prox- ing operation, and are vulnerable to damage imity to staff. All these issues can serve to each and every time they are used. An effective have increased. A useful tool for buyers is pro- heighten the inherent risks. equipment specification will include explana- vided by Harmonised European standards In the UK, overhead lifting is governed by a tion of the requirements of the lifting opera- (CEN). These have a quasi-legal status, in that a legal framework that includes the Lifting tion, the characteristics of the load, and the product genuinely made to the relevant CEN is Operations and Lifting Equipment Regulations proposed manner in which the equipment is to deemed to meet the essential health and safety (LOLER), the Provision and Use of Work be used. The buyer should also warn the suppli- requirements demanded by the Machinery Equipment Regulations (PUWER), and general er of adverse environmental factors, such as Directive. They therefore represent a near-water- legislation such as the Health and Safety at extremes of temperature, humidity, dirty condi- tight means of achieving appropriate quality. Work Act and the Management of Health and tions or the danger of chemical attack and/or a Safety Regulations. Introduced in the late corrosive atmosphere. Testing & maintenance 1990s, LOLER and PUWER are derived from Ensuring equipment is of a satisfactory level of Ensuring that equipment remains fit for pur- European Directives. As such, employers across quality is another significant challenge. pose while in service is another key requirement the EU will almost certainly need to comply Globalisation and the rise of the internet have of LOLER – and indeed any safe lifting regime. with similar national legislation. Furthermore, resulted in a dramatic growth in the volume of Specifically, LOLER demands periodic ‘thor- in many developing countries that lack lifting- lifting equipment manufactured in low wage ough examination’. Full details are given in the specific regulations, companies are increasingly economies and a proliferation of new routes to legislation and ACoP, but typical in-service adopting LOLER as best practice. As a result, market. Whilst it is impossible to generalise, intervals are six or twelve months, dependent LOLER’s influence now extends across the there is no doubt that the chances of encounter- on the type of equipment. It should be stressed Middle East, Far East, Africa and beyond. ing sub-standard or even counterfeit equipment that a thorough examination is a rigorous LOLER is flexible, wide ranging and risk process, often supplemented by tests, to deter- based. For employers new to this area, the best mine whether equipment is fit for the next peri- starting point in terms of compliance is proba- About the LEEA od of service. It should always be accompanied bly the relevant Approved Code of Practice by a written report. A thorough examination (ACoP). However, it is possible to highlight a Established in 1944, the LEEA has over must be performed by a competent person, few key issues. Above all else, LOLER reflects 450 member companies worldwide and with the ability to act independently of the the fact that most lifting accidents can be traced campaigns vigorously for higher standards employer. back to human error rather than straightfor- of safety within the lifting industry. In Whilst the term competence provides wel- ward equipment failure. ‘Competent’ staff addition to providing members with train- come flexibility, it can also lead to misunder- must therefore be used for every aspect of a lift: ing and expert technical advice, the associ- standing and, sometimes, wilfully lax interpre- planning, supervision and operation, as well as ation works closely with organisations tation. In terms of thorough examination, the testing, examination and maintenance of the such as the Health and Safety Executive in LEEA defines competence as a combination of equipment. the preparation of regulations and British, theoretical knowledge of the equipment to be European and International standards. examined, and the experience to be able to put Planning Member companies include those this into practice. In the UK, there is no official Planning merits particular consideration, as this involved in the design, manufacture, hire, licensing scheme for such engineers, but the is where things typically start to go wrong. repair, refurbishment, test, examination, LEEA recently began issuing TEAM (Test, Effective planning demands the ability to iden- verification and use of lifting equipment. Examine And Maintain) identity cards to engi- tify hazards, assess associated risks and outline Applicants are subject to an initial techni- neers that pass its industry-recognised Diploma methods of controlling them. The precise cal audit before full membership is grant- examination. Given that around half the requirements are very much dependent on the ed, and then to a continuing programme of LEEA’s 450-strong corporate membership is complexity of the operation. For a basic repeti- assessments. For large scale users of over- now based outside the UK, this is a truly inter- tive lifting operation, such as on a production head lifting equipment, associate member- national scheme. Employers in the steel indus- line, planning should be part of the plant layout ship provides benefits such as access to try are urged to support it by checking that any- and design of the overall task to be performed; technical information and training, with- one proposing to work on their lifting equip- it will largely be a matter of initial selection and out the need for auditing. Further details ment is a TEAM card holder. installation of the lifting equipment, supported on the activities of the LEEA and a full list Whilst thorough examination is clearly by operator training. Complex lifting operations of members can be found at: important, it is also vital that employers do not however, are more likely to be one-offs that www.leeaint.com rely on it exclusively as a means of ensuring the involve factors such as unusual or dangerous integrity of lifting equipment. As already noted,

*Chief executive, Lifting Equipment Engineers Association (LEEA)

24 – July/August 2011 – Steel Times International www.steeltimesint.com LEEA aumund verlinde_Layout 1 7/13/11 4:09 PM Page 2

Handling

some lifting equipment is at risk every time it is The HSE’s approved code of practice for used. It is therefore crucial that operators are LOLER is available free to download at: Hot conveying trained to perform frequent in-service inspec- www.hse.gov.uk/pubns/books/l113.htm tions to check that it remains safe. This need not be a time consuming or bureaucratic exer- DRI cise. Perhaps most important is the prevailing Selection of appropriate culture of the workplace, which should leave equipment is an important WHILE DRI technologies presently account employees feeling free to report damaged, aspect of pre-lift planning for only 5.5% of total steel production, it is a defective or dangerous equipment without fear growing means of producing high quality iron of negative repercussions. for use in electric arc furnaces. Overhead lifting is so well established it is By 2020 DRI production is expected to perhaps too easy to take it for granted. Given increase to 130Mt/y. There is in fact good rea- its significance to the steel industry, however, it son for this increase, as the energy consumption should naturally figure high on the agenda. is significantly lower when producing DRI than Fortunately, for employers looking to achieve when producing hot metal in the blast furnace. optimum standards of safety, LOLER and Another advantage is that the DRI remains as equivalent legislation elsewhere in Europe ‘nut sized’ solid particles and can easily be han- offers a modern and largely sensible frame- dled with mechanical equipment. work. Companies that adhere to its require- Additional energy saving can be achieved by ments will go a long way to minimising the risk feeding the DRI still hot from its production to of things going wrong. the EAF. However, employers need not be driven In contrast to relatively complex and expen- purely by the fear of accidents and/or prosecu- sive pneumatic conveying systems, Aumund’s tion, as there are many positives to be drawn hot charging conveyors need less effort and from paying closer attention to overhead lifting. experience. Using specially designed buckets, A safe working environment is almost invariably the material is transported to the EAF for melt- an efficient one. Given that overhead lifting is ing under sealed gas (nitrogen or other inert generally critical to the maintenance of produc- gases) conditions and with special temperature tion and material handling schedules, compa- management. This way the iron is protected nies that succeed in making improvements are from reoxidation and maintains its designated therefore likely to reap genuine long productiv- carbon content and metallisation. Newly ity benefits as well. Diary Date designed sealing supports a transport in inert condition and helps to reduce nitrogen con- Contact LiftEx 2011, a two-day exhibition dedicated sumption. Geoff Holden, Chief Executive, LEEA, 3 Osprey Court, to overhead lifting and associated products Conveying DRI to the EAF is a crucial part of Kingfisher Way, Hinchingbrooke Business Park, and services, takes place in Leeds on continuously feeding the furnace. If the convey- Huntingdon PE29 6FN November 17th and 19th. or stops so does production; but this has never Tel +44 (0)1480 432801 Fax +44 (0)1480 436314 happened in ten years of building and supplying e-mail [email protected] web www.leeaint.com For more details visit www.leeaint.com these machines to the industry. There has never been any damage or unscheduled downtime. While the mechanics of this equipment is robust and easy to handle, Aumund hot charg- Verlinde equips NZ Steel ing conveyors help save energy. Compared to pneumatic systems only 10% of the drive power NEW Zealand Steel required a crane capable close enough to each other to achieve the is needed. Even better, there is a significant of working in a confined space to remove and required approach distances east and west. So productivity gain. That is because the material installation a heat radiation shaft in its slab the middle two chain bags had to be does not need to be specially processed before plant. redesigned. It was not possible to place them it is transported. This way not only is tap-to-tap The crane had to fit into a four metre wide lower as there was no headroom space so time in the EAF much shorter but production is space and be capable of lifting 16t to a height of instead they were made wider. This presented also more efficient. 30 metres. Normally a rope hoist would be used another problem in that the chain had to fall for this, but a hoist drum large enough to store away into the full width of the bags. This was Contact sufficient rope for that size of lift would mean achieved by installing deflector plates in the Aumund Fördertechnik, Division Metallurgy, the drum would be just about the same size as middle and open the bag throat to allow the Saalhoffer Str. 17, 47495 Rheinberg, Germany the space available. chain to fill into the bag properly. Tel +49 2843 720, Fax +49 2843 602 70 Also, the point load had to traverse on the During commissioning fine tuning took place e-mail [email protected] crane girder, but a rope hoist could not do this, to ensure that the two hooks ran equally at the due to the size. A chain hoists was considered same height and that the limit switches activat- but the problem with chain hoists is that the ed at the same time. Numerous difficulties The hot conveyor carries largest size available as standard was 7.5 tonnes. appeared with the long travel speed, since the DRI from the base of the Combining two twin chain hoists was the crane could only go at very slow speeds in all shaft furnace (right) up an solution and the team at crane supplier, directions. Variable speed controls were used to incline of 45° (to left) to KraneQuip – the local agents for crane manu- smooth the operation. But with the long travel charge hoppers located facturer Velinde Lifting Equipment, of France – a lot of dust was accumulated on the rails, and above the EAF for gravity managed to fit four 5 tonne hoists on a mono- the wheels were extra wide to take the load of feed through a roof port rail crane beam to achieve the moving point the whole crane and the maximum SWL (safe load dimensions required. The end stops had to working load). The power at slow speed was be redesigned to achieve this, and the assembly barely enough to make the crane move and the fitted into the available space by just a few mil- dust resulted in quite a few jams. In the end it limetres. was decided that the only way was to ensure KraneQuip design an ‘I’ beam girder with that the rails were blown clean of dust prior to extra thick top and bottom flanges to take the every use. aditional load. By doing this they shortened the delivery time and saved NZ Steel the extra Contact costs of a box girder. Verlinde, 2, Bd de l’Industrie, BP59, The size of the chain bags presented another 28501 Vernouillet Cedex, France problem. The two hoist assemblies, although Tel +33 23738 9626 they fitted well with the design, could not get e-mail [email protected] web www.verlinde.com

26 – July/August 2011 – Steel Times International thyssen_Layout 1 7/20/11 9:31 AM Page 1

Handling RFID identification in the steel sector

Successful application of RFID on steel slabs has been implemented at ThyssenKrupp by mounting the RFID chip on a tag folded out 90° from the main label and has resulted to faster logistics shipping slab from TKS Brazil to USA and Germany.

WITH the start of production at the new Laser printing IDs ThyssenKrupp steel mill in Santa Cruz, Brazil, a S+P developed a self-adhesive label where the radio frequency identification system (RFID) transponder part is folded at a right angle to the for tracking the steel slabs produced there also slab, like a flag, via a simple perforation, so that came on stream. it can be read (Fig 1). Another benefit: The Shortly before the slabs are despatched from S+P labels can be printed on widely available Brazil, the RFID labels are glued to the steel Lexmark laser printers in which an additional slabs – in this way their route can be tracked RFID unit encodes the chips. Simultaneous automatically through all the transhipment printing and RFID programming minimises the The RFID transponder is located on a tag ports and stations to the furnace roller tables of number of work steps and potential errors, the folded out at 90° to the main label and the processing plants in Atlanta, USA and more so as the successful encoding of the RFID programmed by the same laser printer Duisburg, Germany. tag is verified during printing. that also adds a bar code and text ID for At the beginning of the project even The laser printers proposed by S+P sur- additional security renowned RFID system developers and passed comparable solutions with thermal transponder manufacturers dismissed the idea: transfer printers, not only in their functionality, RFID in the steel industry – they believed to be but also with regard to purchasing and mainte- unloaded in the respective transhipment ports of beyond the limits of this technology. But nance costs. Rotterdam and Mobile and here the labels are ThyssenKrupp in Brazil really wanted to take Extensive tests showed that the flexible also read via antennas that are mounted on the the opportunity of a new steel plant to optimise labels proved to be extraordinarily robust cranes and sorted accordingly without any man- operations and the associated worldwide ship- against the enormous physical impact during ual intervention – and placed in interim storage ping and logistics via an integrated system for loading and transport. In spite of the adverse facilities or go for direct onward transport. the automated tracking of slabs. conditions (large temperature fluctuations dur- Should a RFID label be impossible to read In principle, RFID technology offers many ing transport, rain, sea water, holding times) these slabs are placed in a separate area by the options. RFID transponders are small; they and despite the slabs hitting or rubbing against crane and the ID later captured manually using store the identity of the labelled product and each other, more than 90% of the labels across the barcode or full text. The benefit is that the make it possible to read this information via the whole logistics chain could be read in a fully large unloading cranes in the ports can work at antennas from a distance of several metres. automated process at the commencement of maximum speed without any interruptions and However, there are special requirements for the project. so the costly waiting times for ships in port are RFID identification in the steel industry. While the readability of the RFID signals in reduced significantly. For one, the radio waves of the readers are an environment dominated by metal had been This pattern continues in all the loading sta- reflected by the metal which creates problems regarded as the main challenge, in practice tions – sea ports, inland ports and interim stor- during reading. And then fastening the tags to reading the RFID tags via flexible labels with a age facilities – all the way to the processing the metal also causes problems because the tab standing out at 90° was markedly faster and plants. slabs, each weighing around 25t, rub against easier to solve than everyone had thought. In the new rolling mill in Calvert the RFID each other during transport by ship or rail Developing the special adhesive with which labels are also used to verify the correct which can cause labels to become detached or the labels were glued to the rough slab surfaces sequence of the slabs on the reheat furnace destroyed. and to which they had to stick reliably despite table, just before they go into the furnace. However, against these project risks there wet conditions or surface factors such as scale A reading rate of over 90% is already being was an enormous efficiency potential in elimi- turned out to be the much greater challenge, achieved. This degree of automation means an nating the manual reading of the labels by bar- explained Karl Tochtermann S+P’s contribu- enormous increase in efficiency compared to code or full text identification which can cause tion to the success of the project. traditional methods. Loïc Feinbier’s team are costly loading delays. The advantages that the still working on the optimisation of reading port magnetic cranes offer with regard to speed Fully automated slab tracking rates, for instance, by modifying the reading of loading could then be fully enjoyed. Also, the When the first steel slabs were loaded in Santa points or by crane loading via defined transport risk of mix-ups associated with manual alloca- Cruz in September, the RFID system also went corridors. tion can be virtually eliminated. into operation. The slabs are labelled simulta- neously at the two stops of a labelling station Standards Towards optimum identification which had been especially developed for this Within the ThyssenKrupp group, the Centre of In cooperation with the experts at S+P Samson purpose. Competence for Supply Chain Visibility has a GmbH, Germany, the Centre of Competence In the system, the data of the slabs which, on cross-divisional function and sees slab tracking for Supply Chain Visibility at TKS developed a average, weigh 25t is aligned and the labels are as just one of many potential application sce- practical RFID based identification system. generated via the laser printer. Personnel at the narios. Consequently, the group is already The specifications ranged from verifying the station clean the slabs with angle grinders at working with established standards such as the reading distances in realistic environments to pre-defined positions and apply the labels. The Electronic Product Code (EPC) and EPC- the question as to whether the RFID tags would perforation on the label ensures that the non- compatible transponders and readers are used. leave any harmful residues when they are adhesive part with the transponder stands out Alongside this project, an IT platform has been destroyed when the slabs are processed further. at a right angle. developed that can be adapted for other appli- Loïc Feinbier, responsible for providing Afterwards the slabs are transported to the cations by adding a new business logic and it is RFID-based logistics solutions for the plant’s own loading port. Here the benefits of to serve as an infrastructure base for other ThyssenKrupp group, said “We had already the system immediately become clear: When RFID solutions in the production and distribu- worked with other identification companies the ships are loaded the transponder data is tion logistics within the group. and system developers. We knew that an RFID captured via antennas on the magnetic crane tag that was at an angle to the steel slab surface and ticked off automatically in the loading list. Contact could be read. However, the problem was that Then the slabs are shipped to their destination S+P Samson GmbH, Udo Kahlenberg, Head of R&D the suggested solutions either did not have suf- plants. Industriestr. 32, 86438 Kissing, Germany ficient adhesion or would have required special The slabs from Brazil supply TKS’s plant in Tel +49 8233 846-125, Fax +49 8233 846-225 processes and systems for fastening the tags in Duisburg and the newly built ThyssenKrupp mobile +49 160 97 83 07 20 the Brazilian plant”. plant in Calvert in Alabama. The cargo is e-mail [email protected] web www.sp-samson.com

30 – July/August 2011 – Steel Times International www.steeltimesint.com combilift kamag_Layout 1 7/21/11 10:20 AM Page 1

Handling

Straddle Carrier saves time and space

The 30t Combilift Straddle Carrier can unload a truck in just 10 minutes

The 30t lift Straddle Carrier, originally developed to lift shipping containers, is proving its worth lifting heavy section beams, not only in terms of speed and safety, but also by enabling increased stacking density in the yard by requiring only 1m wide aisles rather than the 3m needed by sideloaders.

STRUCTURAL steelwork contractors and fab- frame and wheels of the Straddle Carrier are ricator Caunton Engineering has taken delivery positioned either side of the load. This has of one of Combilift’s newest products, a enabled aisle widths between stacked product Combilift Straddle Carrier, which is being put to be set at just 1m, compared to the 3.5m pre- to very effective and space saving use in the viously needed (for manoeuvring forklifts). Vision becomes reality storage yard of the company’s premises in The space this has created in the yard will [ Nottingham. make it much easier for Caunton to deal with with transport vehicles from SCHEUERLE & KAMAG Caunton offers a one stop solution to most any delays in customers’ projects without steel construction needs and has been involved impacting on their own production schedules. in prestigious award winning projects in the Previously, its ability to store finished prod- Slag pot transporters in a platform or commercial, leisure, transport and public sec- ucts was limited if customers had to put back U-frame design, slab and coil trans- tors and others. Due to the volume of materials delivery, but the extra capacity now avoids on- porters, pallet lifting transporters with handled – over 25 000t of steel a year – a site congestion, and also allows Caunton to buy cabin on top or under the platform – streamlined logistical process is a crucial ele- in quantity when the price is advantageous. ment of the company’s operation. The low level transportation of very heavy we offer efficient special vehicles for Safer operation, better use of space and and potentially dangerous loads has also con- metallurgical applications. much quicker procedures were the main factors tributed to better health and safety procedures behind the decision to go with the Straddle as risky lifting at height is no longer necessary. Innovative technology developed Carrier according to Production Director Mark In spite of its size the Straddle Carrier’s ability from decades of experience is behind White. “We asked our handling consultants to turn on its axis makes for impressive our names. Reliability and functiona- Windsor Materials Handling for some advice manoeuvrability, and the low set, easy to access on heavier capacity machines capable of coping operator cab affords excellent 360° visibility. lity are the features that our vehicles with 16t loads, and together with Combilift’s In addition, a three wheel patented design is offer. Stephen Wells they recommended we look at available and ensures maximum stability with the Straddle Carrier, which had just been intro- all three wheels permanently in ground contact duced into Combilift’s range.” even when travelling across rougher surfaces. The Combilift Straddle Carrier was devel- Substantial investment in R & D (9% of its oped as a cost effective solution for handling annual turnover) keeps the company at the containers and similarly oversized loads, and is forefront of innovation in the materials han- therefore ideally suited for Caunton’s bespoke dling industry. loads such as girders and prefabricated items www.scheuerle.com that range from 12m to 23m in length. Contact Since taking delivery of the machine, which Combilift Ltd, Gallinagh, Monaghan, Co Monaghan, Ireland www.kamag.com has a 30t lift capacity, Caunton has seen consid- Tel 00353 47 80500, Fax 00353 47 80501 erable benefits and has much better control of e--mail: [email protected] web www.combilift.com/ its logistics. For example, a delivery truck can be unloaded in just 10 minutes. Windsor Materials Handling As the name of the machine implies, the www.windsormaterialshandling.co.uk

32 – July/August – Steel Times International www.steeltimesint.com Stemcor_Layout 1 7/20/11 10:04 AM Page 1

Processing

Stemcor makes strong recovery from recession

Stemcor is an independent steel trader. Turnover (£ billion) Profits/(losses) pre-tax (£ million) Its four main areas are raw materials trading, steel trading, distribution and 2010 5.1 2010 83.9 stockholding. It was formed in London in 1951 and now has 125 offices in 45 2009 3.5 2009 (16.6) countries around the globe. 51.9 By Greg Morris, Deputy Editor 2008 6.3 2008

2007 4.3 2007 65.4 IN its 2010 Report and Accounts, Stemcor Holdings Ltd reported a 45% increase in turnover over 2009 to £5.1bn from 3.5bn in 2006 3.3 2006 51.6 2009, recovering to pre-recession levels. Its pre- tax profit of £84M was the highest achieved to Fig 1 Turnover 2006 – 2010 (£bn) Fig 2 Profits/losses (pre-tax) 2006-2010 (£M) date, although it said its profit attributable to shareholders was below the 2007 level. The vol- Steel tonnes traded (million) Raw materials tonnes traded (million) ume traded increased by 25% over 2009 levels with raw materials accounting for 59% of total 2010 7.7 2010 11.3 tonnage. Steel tonnes traded amounted to 7.7Mt from 6.3Mt in 2009, while raw materials 2009 6.3 amounted to 11.3Mt from 8.9Mt in 2009. 2009 8.9

Core competencies 2008 9.4 2008 11 Raw materials trading Stemcor supplies steel producers with raw 2007 9.8 2007 10.5 materials used in the production process. These include iron ore, pig iron, HBI/DRI, coal, coke, ferroalloys and scrap. Stemcor has mining and 2006 9.4 2006 9.5 processing interests in India which support this part of the business. It also has minority inter- Fig 3 Steel tonnes traded (Mt) 2006-2010 Fig 4 Raw materials tonnes traded (Mt) ests in coal mining in Australia, New Zealand 2006 – 2010 and Columbia. The average price of raw mate- rials increased twice as much as those of steel. Raw materials continue to be the dominant ele- Stockholding demand is still not as strong as it was prior to ment in the tonnage statistics with its y-o-y Stockholding activities are for customers who the recession. This has not constrained steel growth and total volume exceeding that of buy in small quantities for prompt delivery. This prices in Q1 2011 but the situation could steel. Invoiced tonnes of raw materials requires the holding of unsold stock across a reverse if scrap and iron ore prices start to fall. increased 50% over 2009. planned range with good availability on the The long term outlook relies heavily on devel- shelf. Stockholding outlets are close to cus- oping economies where steel consumption per Steel trading tomers and offer immediate availability of plen- capita is still low, such as India, Africa, and Stemcor offers marketing, logistical and finan- ty of steel products. Some offer a processing much of the Far East. These regions will be cial services to secure business. The goods it service for tailoring to exact customer needs, heavy consumers of steel as urbanisation con- trades includes long, flat, tubular and semi-fin- such as surface finishing, decoiling, cutting to tinues and living standards rise. Steel consump- ished products. It also trades specialised prod- length, slitting and profiling. Its stockholding tion in industrialised nations is likely to show ucts such as engineering steels, stainless steels activities are mainly in Europe although there is modest growth with opportunities for growth in and steel products for the oil and gas industry. a plate stockist in the USA and there are ware- niche segments such as engineering, stainless Its steel and raw materials trading is centred on houses in Dubai and Singapore. Volume and and steels for the oil and gas industries. hubs in London, Dubai and Singapore. price increases featured prominently in a suc- According to the World Steel Association cessful year in all regions. (worldsteel) and ISSB cross border trade in Distribution steel has been running at about 37% of finished Distribution activities are for customers who Global background steel production since 2000. In 2009 finished want to buy steel on a duty paid basis delivered Stemcor’s volumes as a trader, distributor and steel production remained static but trade in to their premises on open terms. Orders are stockholder are linked to the cycle of the glob- steel fell to 29%. In 2010 finished steel produc- taken for substantial quantities for forward al steel market. After the recession of 2008/09, tion rose by 15%. Preliminary figures for 2010 delivery, with transport often from distant pro- 2010 was a year of marked recovery for the suggest the percentage of trade has remained ducers by ship. Stemcor’s role is to ensure the global steel industry with production at 1.4bnt, largely unchanged and volumes have only service provided is as good as that of domestic a 15% increase over 2009 and a new record. It increased in line with the rise in production. producers even if the delivery is from far away. enjoyed a resurgence in 2010 and entered 2011 Stemcor’s increase of almost 22% for volumes Customers include stockholders, service cen- on a strong note with prices rising in nearly all of steel products traded in 2010 is encouraging. tres and large end users. The continental markets for all products. GDP per capita European businesses that focus on distribution growth returned to positive numbers and the Growth plans showed the most dramatic recovery within the IMF forecast for 2011 is a world average of 4% Stemcor said it expects to grow its overall share group. Those businesses, especially those based - with Asia at 8%. GDP is correlated to steel of traded steel in the next few years on the back in Germany, suffered in the recession. consumption. of increased steel production and consumption. Overstocking has been addressed and manage- In developed markets such as North America Threats are disintermediation – where steel ment in Germany reorganised. The business and Europe certain sectors of the market are mills deal direct with large customers, and the has developed against the background of a performing well but the construction market rise of domestic steel producers in developing resurgent German economy. Distribution in the remains depressed and this continues to damp- countries. However, new steel producers need UK remained profitable in 2008/09 and 2010, en steel demand, especially for long products. traders to export surplus production, so with its while in Australia its distribution business dou- The fragile financial situation in the developed international network Stemcor is well placed to bled its tonnage. world could pose further risks. Underlying serve them. Domestic markets in many devel-

www.steeltimesint.com Steel Times International – July/August 2011 – 35 Stemcor_Layout 1 7/20/11 10:04 AM Page 2

Processing

oping regions do not have a downstream supply 2008 2009 2010 % 09/10 chain between the producer and end user open- ing up distribution and stockholding opportuni- Tonnes invoiced (‘000) ties to serve the demands of steel buyers. Steel 9 233 6 209 7 453 20.0 Stemcor said it could increase its market share Steel-making raw materials 5 834 6 303 9 483 50.4 in developed countries by providing more value Total 15 067 12 512 16 936 added services such as slitting and processing. Its strategy is to expand its step in every step Tonnes sold as agents (‘000) of the supply chain via organic, greenfield and Steel 202 123 270 119.5 acquisition growth. It believes there is still Steel-making raw materials 5 146 2 588 1 825 -29.5 scope for developing its international trading Total 5 348 2 711 2 095 business. It is expanding its infrastructure geo- graphically, particularly in emerging nations. It Tonnes handled (‘000) plans to establish an office in every country Steel 9 435 6 332 7 723 21.9 where there is scope for flows of steel or raw Steel-making raw materials 10 980 8 891 11 308 27.2 materials and sustained growth. Total 20 415 15 223 19 031 There are also product areas it intends to develop, targeting areas such as power and util- Turnover (£’000) 6 288 667 3 540 437 5 141 233 45.2 ities, oil and gas, and automotive. It is also seek- Profit/(loss) on ordinary activities before tax (£‘000) 51 916 (16 557) 83 892 - ing new mining investments. Group shareholders’ funds (£’000) 234 319 186 478 241 860 29.7 It will continue to build a global network of stockholders because it believes the stronger it is in stockholding the more direct placing Table 1 Operational and financial statistics power its trading and distribution units can offer steel producers. the negotiations that are underway in steel Mining Expansion downstream complements its stockholding. Two of the negotiations have Its mining activity is located in Orissa, India activities, enabling it to use its purchasing come to fruition in 2011 and more are expect- and consists of Aryan Mining and Trading power as a trader to provide competitive advan- ed to be concluded later this year. New devel- Corporation (AMTC) iron ore mine, Brahmani tage to its own stockholders and its stockhold- opments in 2010 included three operations River Pellets Ltd (BRPL) with beneficiation ing customers. It plans to increase its distribu- which focus on steel distribution. In Norway a and pelletisation plant currently being con- tion activities to end users by shifting to large new liaison office was established enabling the structed and a 10% stake in Mid East global end users, typically firms serving the con- company to penetrate a previously inactive mar- Integrated Steel Ltd (MISL) which operates an struction, oil and gas, ‘white’ and ‘yellow’ and ket. The first steps were taken towards building iron ore mine in Barbil, Orissa. AMTC automotive industries. an intra-China distribution and stockholding increased its volumes invoiced which, com- A key step is to invest in mining to secure the scheme with the creation of Stemcor Trading bined with the increase in raw material prices, supply of raw materials to feed its international (Shanghai) Ltd. In Mexico the Stemcor de saw its turnover more than double. Exports trading activities. It is focused on garnering Mexico office was established by Stemcor USA. from MISL increased and benefited from inter- profit from its Indian investments and will con- The office in Mexico City will help gain partici- national prices increases. AMTC received per- sider other investments of the opportunity aris- pation in the market with its customs clearing mission to increase its mining capacity to 3Mt/y, es particularly in iron ore and coal mining, coke and invoicing capabilities. while it has received in-principle approval for its production facilities and physical operations in Meanwhile a raw materials trading depart- plans to build a beneficiation plant and slurry. scrap processing and handling. ment was established in Sydney, Australia while BRPL is awaiting forestry permission to com- Chairman Ralph Oppenheimer was upbeat Serbian rolling mill Metalfer was acquired. The plete 4km of slurry pipeline before it can be about the company. In his statement he report- former group customer manufactures fully on-stream. Permission and construction ed Stemcor had made a strong recovery from deformed reinforcing bars for sale in Serbia and work is expected sometime in 2011. It will be the damaging effects of the worst recession neighbouring countries linked by pipeline to AMTC.
since the 1930s and was well placed to improve Its 2009 start ups performed well with two of profitability in future years. Its presence in key the three – Global Metals (Australia) and Contact developing nations which are forecast to grow Stemcor Automotive and Processing Stemcor Holdings Ltd, Level 27, CityPoint, 1 Ropemaker Street, at a double digit rate gives it an advantage. (Germany) reporting a profit. The third, London, EC2Y 9ST, UK Tel +44 (0) 20 7775 3600 It made only two small acquisitions in 2010, Stemcor Special Steels based in the UK report- Email [email protected] but Mr Oppenheimer said this does not reflect ed a loss which was expected. Web www.stemcor.com Penn Stainless installs heavy gauge cut-to-length line PENN Stainless Products, USA, has recently Penn Stainless is a full line supplier and installed a heavy gauge cut-to-length line from processor of stainless steel sheet, plate, bar, Herr-Voss Stamco. This new line, which structural, pipe and tubular products. Penn includes a Herr-Voss Stamco Precision serves domestic and international customers in Leveller®, will allow Penn Stainless to supply stainless, high-temperature, corrosion, Duplex customers with plate and sheet product of and PH alloys. Besides levelling, Penn Stainless superior flatness. Herr-Voss Stamco provided offers extensive cutting services, including: the cut-to-length line along with turnkey instal- plate shearing, sheet shearing, plasma, HQ lation and commissioning. The line is currently plasma, and dynamic water jet, as well as in full production. machine, saw and Amada production cutting.
The line can process stainless steel coils weighing up to 50 000lbs (22680kg) x 78” Contact (1981mm) wide, with a thickness range of Penn Stainless Products, Inc, 190 Kelly Road, Quakertown, PA 0.090” to 0.375”. (2.2 – 9.5mm). The cut-to- 18951 USA. length line includes an overhung mandrel-type Tel +1 800 222 6144 / 215 536 3053; Fax +215-536-3255 uncoiler, a three-roll breaker, entry-crop shear, e-mail [email protected]; Web: www.pennstainless.com Precision Leveller®, vinyl applicator, down-cut shear, drop-type stacker, line marking, pack lift Herr-Voss Stamco and run-out conveyors. www.herr-voss.com Tel 800-380-3180 (USA)

Penn Stainless Products heavy gauge cut-to-length line

36 – July/August 2011 – Steel Times International www.steeltimesint.com cold_Layout 1 7/20/11 10:10 AM Page 1

Processing

A new coating for cold forming stainless steel A specialised metallic lubrication and extrusion coating, produced without the use of hazardous chemicals, has been developed to enable cold forging of stainless steels so eliminating machining, reducing component costs and improving properties. By Mark Jennings*

A ground breaking development in cold form- ing techniques looks set to revolutionise the way in which stainless steel components are manufactured. Pioneering work carried out by Dawson Shanahan has led to the development of the first commercially viable method of cold forming both martensitic and austenitic stain- less steels without any of the associated com- plexity of traditional methods or the need to resort to using hazardous chemicals. This cut- ting edge technique now means that large vol- umes of exceptionally robust and ultra high pre- cision parts can be produced quickly and effi- ciently, opening up a world of opportunities for component manufacturers operating in a diverse range of sectors from the automotive and aerospace industries, through to medical, electronic and optical instruments.

Traditional shaping of stainless steel A stainless steel blank and finished Thanks to a new lubricant coating, austenitic and Stainless steel parts have generally been pro- cold formed component martensitic steels can now be cold formed in a duced using a number of methods and while similar way to copper, brass and aluminium these can deliver high precision components they are not without their downsides. For exam- shape of the punch and die. By working with by the research and development department at ple, parts produced in industry have predomi- the material and eliminating the need for trim- Dawson Shanahan, eliminates the problem of nantly been milled, turned or otherwise ming and cutting, cold forming can cut waste by galling, to prevent damage being caused to the machined, with these processes producing sub- up to 80% in comparison with traditional components and tooling, which often presents stantial quantities of waste material, which, ulti- machining processes. itself in the form of scores or surface imperfec- mately, has to be paid for. These methods have As cold forming is carried out at ambient tions, thus maintaining consistent quality in fin- been used for many years but they can be limit- temperatures, the process can be completed ished parts. ed in terms of the demands of modern industry. much faster than can conventional options, sav- Most critically, finished parts produced in this For example, they are often energy inefficient ing significant production time. As a result, manner underwent independent verification by and, although are suitable for low volume jobs, components can be made to order extremely laboratories in Sheffield, which confirmed that they can be particularly time consuming if large quickly, cutting lead times and the need to store the process maintains all of stainless steel’s quantities of a part are required. high volumes of spare parts on site. Another, desirable characteristics. Hot forging, another method of producing perhaps more obvious, advantage of producing The advantages of this new process will be of stainless steel parts, also has its drawbacks. By components at ambient temperatures is the sig- particular benefit to those areas of industry its very nature it is an extremely energy intensive nificant reduction in energy consumption, help- requiring ultra high precision parts, including technique due to the high temperatures that are ing to reduce costs still further, as well as the laser applications, where cold formed nozzles required to make the metal workable. The carbon footprint. Indeed, these benefits can significantly increase cutting accuracy, or in inherent dangers of this method, such as the offer a lowering of the cost of a component by industrial engines where the parts are used to need to work with and handle hot metal blanks as much as 70% in many instances. boost overall reliability, while cutting CO2 and and finished components also presents concerns Just as importantly, the cold forming process particulate emissions. for safety. Furthermore, most components will can improve the mechanical properties of the Equally, other stainless steel components still require some kind of machining to finish the finished part as, unlike machining where sec- made through cold forming, such as diesel parts, adding yet more steps to the process, tions are usually cut across the grain structure injectors for example, are generally more reli- which translate to increased cost and time. of the metal, the direction of forming and the able especially when used with biofuels, as Equally, conventional cold forging methods geometry of the part is aligned with that of the these fuels can place greater stresses on conven- also raise serious health and safety issues due to grain. Cold forming can also produce highly tionally manufactured parts. the hazardous chemicals and acid based lubri- polished surfaces without the need for exten- With growing demands from industry, com- cants that are required to take the metal to a sive finishing, while achieving often complex bined with the need to reduce wastage rates workable state. Indeed, the oxalate baths and internal geometries. and energy consumption for both economic coatings used in traditional techniques are and environmental reasons, an increasing num- potentially extremely dangerous and harmful if Cold forming stainless steel ber of manufacturers are looking to adopt more they come into contact with the skin or eyes, While the technique has long been used with efficient and cost effective methods of produc- causing severe irritation and burns. other advanced engineering metals such as cop- ing stainless steel components. Thanks to this per, aluminium and brass, the inherent strength new cold forming technique, engineers can now Cold forming of stainless steel has meant, until now, that the meet these demands and produce ultra robust, By comparison, cold forming is a particularly use of cold forming as an alternative to more high precision stainless steel parts that accom- simple process that produces metal compo- conventional processes has been something of a modate the diverse requirements of companies nents at low, usually ambient temperatures distant hope for most engineers. throughout industry.
without removing any material. A simple blank, However, this latest development now means which has been sawn or cropped from a round that stainless steel, as well as other exotic met- Contact bar or wire, or a cold headed pre-form is placed als such as titanium, can be cold formed using a Dawson Shanahan Ltd, Cranborne Industrial Estate, within a die and a punch is pressed into the specialised metallic lubrication and extrusion Potters Bar, EN6 3JN, UK blank. With forces being as high as 2000 coating and without the need for hazardous Tel +44 (0)1707 602 000, Fax +44 (0)1707 602 049 tonnes, the blank then takes on the interior chemical solutions. This unique shell, created e-mail info@dawsonshanahan web www.dawson-shanahan.co.uk

*Engineering Director Dawson Shanahan UK Ltd

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India Karnataka – An open door for global steel producers The State of Karnataka in South-West India has attracted proposals for steel projects totaling up to 57Mt/y capacity and worth $55bn in investment in the past two years as a result of the active support of the State government, delays in approving projects by the competing states of Orissa, Jharkhand and Chhattisgarth, and because of its substantial ore deposits. By Dilip Kumar Jha*

KARNATAKA – a mineral rich state in South *Correspondent in India West India – has emerged as a preferred desti- nation for global steel majors. Through its fast clearing one-stop system for investors, the state government has cleared as many as 166 projects for steel and raw materials in the past two years. According to an official with the state’s mining department, the government has successfully attracted investment proposals worth over INR 2500bn ($55.3bn) in this period. Tempted by the huge growth prospects of steel demand in India due to the Federal government’s extend- ed focus on infrastructure in the country, global Existing major steel Main and major steel plants steel majors including ArcelorMittal, Posco and plants and states of Severstal have stated interest in setting up steel India plants in Karnataka. Pic courtesy Joint Plant Besides easy access to the mineral resources Committee required for steelmaking, the state offers geo- graphical advantage for steel exporters. Karnataka is bordered by the Arabian Sea to the Year Value Karnataka. Bellary-Sandur-Hospet is the epi- west and has 11 ports in all. The state has one center for high grade iron ore mining in the major port - the New Mangalore Port – and 10 2002-03 15.24 state. Total iron ore reserves of Bellary-Sandur- minor ones for shipping activities worldwide. All 2003-04 20.93 Hospet sector has been conservatively estimat- these have large investment plans for infrastruc- 2004-05 44.80 ed at around 1000Mt, but in reality it could be ture upgrading and hence, huge potential for 2005-06 59.20 double this if deeper unexplored ores are steel consumption locally. To the north lies the 2006-07 87.91 included (Table 2). state of Maharashtra with India’s business capi- 2007-08 101.97 tal, Mumbai. Karnataka covers an area of 2008-09 72.75 The State initiative 191976km2 or 5.83% of the total geographical 2009-10 46.93 The Bharatiya Janata Party - led state govern- area of India. It is the eighth largest Indian state 2010-11 (April - Sept) 19.10 ment took a bold step in July 2010 to ban iron by area, the ninth largest by population. ore exports from its territory to protect interest Bangalore is the state capital. Table 1 Value of minerals trade (INR billion) of the proposed steel manufacturers arguing Presently the State boasts a 3Mt/y integrated that the reserves will be exhausted if exports works owned by JSW (Jindal South West Steel) fast track of growth in recent years due to high continue. Although the Supreme Court of India and a tube and pipe works owned by Jindal SAW. demand from the global market especially from (SC) has now ordered the government to re- China. A rapidly growing demand from the start shipment of iron ore, investors are assured Mining facts domestic market has shown a need to expand that the local government will extend all possi- According to the Geological Survey of India, mining activities beyond the current level. ble help to attract steel plants to the State. The Karnataka has iron ore reserves of 8277.5Mt The state has primarily four mineralogical state government also facilitates land acquisi- constituting 16.5% of India’s total reserves. The types of iron ore resources: magnetite (Fe3O4), tion for steel projects and offers adequate state has huge resource base of magnetite ore hematite (Fe2O3), titaniferrous magnetite incentives to landowners. Since the SC has (87% of the State total) in the Western Ghats, (Fe2O3 with admixed TiO2 and/or V2O5 impu- already ordered closure of 19 mines that were but mining here is presently banned due to the rities) and goethite and limonite (hydroxides of together excavating 2Mt/y of ore illegally, the enactment of Coastal Regulation Zone Act. iron and aluminum). Karnataka is primarily state government assures developers that the Therefore, most of the iron ore mining takes known for high grade iron ore. Japanese steel mining lease of these mines will be canceled in place for heamatite ore in the districts of major Nippon Steel and two South Korean favour of new domestic steel projects. The state Bellary, Chitradurga and Tumkur. With this steel majors import high grade iron ore from government is also working on plans to provide large resource base, the state produces around the public sector owned National Mineral mining leases to steel to give adequate iron ore 40Mt of iron ore of which 70% is in the form of Development Corporation (NMDC) in reserves to producers. Land acquisition will not43៉ fines and 30% lump. This is about one-fifth of India’s production. Karnataka had been export- Type of iron ore Reserves (kt) ing about 30Mt of ore each year, one-third of Proved (1) Probable(2+3) Total Remaining Total the total iron ore shipment from the country STD111 STD121 STD122 Reserves Resources Resources (Table 1). The state imposed a ban on iron ore Hematite 394839 25865 107263 527967 620357 1148324 exports in July 2010, but this was lifted in April Magnetite 202125 - 18375 220500 7663347 7883847 2011 following a decree from the Supreme Total 596964 25865 125638 748467 8283704 9032171 Court. Prior to the ban, in the first four months Note 1: STD111 Proven reserves certified by GSI of the last financial year (April 2010 – March Note 2+3: Est from boreholes in mine not certified 2011), exports amounted to 7.41Mt. The iron ore mining industry has been on the Table 2 Ore reserves in the Bellary-Sandur-Hospet sector

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Conference report CRU 2011 Latin American iron & steel trends conference: Steel profits under pressure CRU’s second Latin American Iron & Steel Trends Conference reinforced the diagnosis of the previous event that the situation of miners is much better than that of steelmakers, both as a worldwide comparison and also among Brazilian players. By Germano Mendes de Paula*

CRU’s second Latin American Iron & Steel cases of coking coal and scrap these disruptions that the output of carbon crude steel will Trends Conference was held in late-April 2011 were essentially weather related. As can be seen increase 5.9% in 2011 and by 6.3% in 2012. in Rio de Janeiro. Some 120 delegates attended in Fig 1, Australian exports of metallurgical coal For coking coal, CRU is expecting that a to hear forecasts of world and Brazil’s steel con- diminished substantially in early-2011, largely slowdown in the rate of growth in demand will sumption – Brazil accounting for 75% of the because the floods in Queensland. For iron ore, be accompanied by a recovery in supply; some- region’s steel production in 2010 – and the increasing domestic demand and the decision thing that has already commenced in fact, but it impact of a volatile raw materials market on the by some Indian states to impose export tariffs – will be more prominent in the second half of profitability of the industry. Inevitably, China since rescinded by the Federal court – was the this year. was an important topic of conversation. most important factor for the supply restriction. Australian exports of metallurgical coal are Paul Scott (CRU Analysis) examined the Mr Scott also presented CRU’s forecast for expected to pass 160Mt in 2012, marginally conditions of steel and raw material prices. steel demand, steel production and steel profit higher than the level registered in 2010. According to him, prices for finished steel rose margin on a quarterly basis up to 2012. He For iron ore, Indian exports would be tem- sharply (almost 30%) from December 2010 to stressed that the world apparent consumption porarily higher in 2011, but regress to a plateau March 2011, in particular as a consequence of of rolled steel products is expected to follow an of 100Mt, similar to 2010. higher flat steel product prices. A key determi- upward trend during this and next year, rising The most interesting part of the CRU’s pres- nant of this trend was the pressure on produc- from roughly 350Mt in 2010-Q4 to over 400Mt entation was related to the input costs (Fig 2). tion costs, as the record levels of crude steel in 2012-Q4. Nevertheless, the rate of growth in It forecasts that raw materials prices will gener- produced translated into firm demand for steel- steel demand would slow quite significantly to ally fall during the rest of this year and through making raw materials. 6.6Mt per quarter from 2011-Q2 to 2012-Q4 2012, although they will remain at high levels At the same time, there were significant dis- from what was seen recently (10.5Mt per quar- through the forecast period. Iron ore is expect- ruptions to the supply of raw materials. In the ter from 2009-Q1 to 2011-Q1). CRU estimates ed to cost $150/t in 2012-Q4 and metallurgical

16 450 650 From 14 Total exports Iron ore spot price, cif China (63.5% Fe) - LHS Queensland 400 600 Coking coal spot price, fob Australia - LHS 12 350 #1HMS, c&f Pohang - RHS 550 10 300 500 8 250 450 6 200 400 4 150 350 2 100 300 0 50 250 2007 2008 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 Fig 1 Australian exports of metallurgical coal, 2007-2011 (Mt) Fig 2 Steelmaking raw material prices, 2009-2012 ($/t) Source CRU Analysis Source CRU Analysis

1000 US$/t US$/t

Operating cost Price 1100 140 900 Oil Brent 1000 HRC 120 800 900 800 100 700 700 600 80 600 500 60 500 400 300 40 Brent - oil Crude 400 200 20 100

300 Midwest USA - coils steel rolled Hot 0 200 2000 Q1 2003 Q1 2006 Q1 2009 Q1 2011 Q1 Q1 Q2 Q3Q4 Q1 Q2 Q3Q4 Q1 Q2 Q3 Q4 2010 2011 2012

Fig 3 Average rebar price and operating costs 2010-12 ($/t) Fig 4 Hot rolled coil and crude oil prices, 2000-2011 ($/t) Source CRU Analysis Source Usiminas/CRU, Index Mundi

*Professor in Economics, Federal University of Uberlândia, Brazil. e-mail [email protected]

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18 250 120% 16 100% 14 200 12 80% 150 10 60%

US$/t 08 100 40% 06 50 20% 04

Freight % of spot price 0 0% 02 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 00 Iron ore spot (US$/t) Freight as % of spot price Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Coaking coal/iron ore spot price CIF China

Fig 5 Iron ore spot prices ($/t) and freight’s as a proportion of the Fig 6 Coking coal/iron ore spot price (January 2004 = 1.0) iron ore spot price (%). Source: Itaú BBA/Bloomberg Source: Itaú BBA/Bloomberg

50 % 43% 45 41% 40 35 30 25 20 13% 15 10 11% 5 0

1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09 1Q-10 2Q-10 3Q-10 4Q-10

Flat steel EBITDA Mg Long steel EBITDA Mg

Fig 7 Brazil’s flat and long steel EBITDA margins, 2008-2010 (%) Fig 8 Chinese merger & acquisition abroad, 2005-2010 Source: Itaú BBA/Bloomberg Source: Itaú BBA/Bloomberg

coal, $220/t. Therefore, operating costs are like- low nowadays, lower than previously. existing logistics; d) the time and costs of ly to have peaked in 2011-Q1, then follow a In his attempt to analyse the determinants of developing greenfield logistics; e) declining gradually downhill tendency. steel prices, Usiminas’ director also demon- iron ore grades; f) the increasing of taxes and Considering demand and supply of both steel strated the high correlation between worldwide royalties; g) the lack of an experienced labour products and raw materials, the profit margin HRC prices and the São Paulo Stock Exchange force; and on hot rolled coils (HRC) will grow from $100/t Index. Therefore, he affirmed that the steel in 2011-Q1 to around $160/t in 2012-Q4. For market mood has a lot to do with the financial – The conduct of the ‘Big 3’ (Vale, Rio Tinto, long products, although the trajectory will be market mood. BHPBilliton), which have been expanding similar, the profit margin will continue to be He brought other evidences of steel prices supply, but at a disciplined pace. These play- lower those of flat steel products. Respectively, correlations comparing them with inventories ers are responsible for a large share of the the margin is forecast to move from zero to and imports, but the key idea is that steel com- new supply as a result of better projects, approximately $100/t. Thus, steel companies panies are facing unprecedented cost pressure assets and track record. would survive the profit squeeze, supposing and cost fluctuations. that the sharper period was 2011-Q1, but the This new phenomenon is evidently derived Mr Assumpção believes that Africa could be short-term perspective is not very good. from the shortening of the term period of iron the new frontier for iron ore miners. Large proj- ore and coal contracts from annual to monthly ects, based on low cost, tend to be developed in Cost pressure & cost volatility contracts. the continent. Mr Roy Vivian (Usiminas) discussed world steel Mr Marcos Assumpção (Itaú BBA Bank) However, the risks are substantial, not only market conditions. According to him, global declared a positive view of the worldwide iron for building logistics, but also due to the unsta- steel consumption per capita has grown just ore market. He mentioned that the supply bot- ble political situation/regulatory framework and 13.7% from the early 1970s until today. While tlenecks will continue, due to: absence of qualified labour force. He estimates the 1980s and 1990s were decades of depres- that it would require eight years for projects in sion for the steel business, the period 2003- – The increasing cost of production for the Simandou area of Guinea, West Africa, to 2008 can be considered the glory years for the Chinese iron ore miners, which is associated reach nominal capacity. industry. Nonetheless, the current and forward with the decline of their domestic iron ore Concerning global iron ore demand, Itaú situation can be described as the era of uncer- grades; BBA Bank’s analyst is also optimistic. The main tainty. The new status of price volatility is clear- drivers are related to: ly indicated in Fig 3. – A reducing export volume from India as a Mr Vivian also highlighted the difficulties to consequence of the expansion of its domestic – China and India’s infra-structure require- increase the steel profit margin as the HRC steel industry. Indeed, the country may even ments and urbanisation: these two most pop- price is pegged to the iron ore price. In addition, become a net importer of high-quality iron ulous nations still have a lower degree of he showed a high correlation between HRC and ore; urbanisation; crude oil prices (Fig 4). Based on this evidence, he concluded that even though steel is not a – The difficulties faced by the junior mining – The emerging countries have been catching commodity per se, the market treats in this way. companies to deliver new projects, such as: a) up: since 2005, steel consumption intensity The underlying message is related to the steel- the scarcity of financing; b) obtaining envi- (kg/US$1000 of real GDP) of emerging maker’s pricing power, which he believes to be ronmental licenses; c) troubles in accessing nations have been higher than developed

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countries; even though the number of pas- – Fourthly, coking coal prices have increased and other Latin American nations became large senger car per 1000 inhabitants is only 32 in more than those of iron ore (Fig 6). While suppliers of raw materials to China. China, against the world average of 132 or Brazil is a top exporter of iron ore, it needs to Investments by China in Brazil so far the European Union’s figure of 487. import all of its needs of metallurgical coal, announcements totalled $29.5bn in 2010. this trend reduces the country’s cost com- However, only 44% were in fact confirmed, Summing up, he concluded that the panora- petiveness. while 29% were still in negotiation and 27% were ma for iron ore miners is very comfortable, ben- only announced but without further action. Mr efiting from value transferred from steelmaking Bearing in mind all these factors, Mr Soares also verified that the preferential way of to raw material supply. Assumpção concluded that Brazilian steelmak- this investment was by merger & acquisitions ers have currently limited pricing power. In this (57.5% partial purchases and 25.8%, complete Brazilian steel industry sense, the sustainable profit margins are lower take-over), followed by joint ventures (11.5%) Mr Assumpção continued by scrutinising the than before (Fig 7). Furthermore, the industry and by greenfield projects (5.2%). situation of the Brazilian steel industry. He stat- is facing high energy costs, increasing labour Concerning the distribution of projects by ed that the good times were over; the new real- cost, and considerable fiscal burden and inter- sector, oil & gas has the leading position (with ity is harder due a combination of features as est rates. Consequently, there are strong disin- 54.7% participation). Mining (22.3%) and the follows: centives to implement new steel capacity proj- steel industry (11.85%). Thus, it is evident that ects in Brazil, due to both high opex and capex the concentration is on natural resources, in – Firstly, imports are a new reality. Brazil used per tonne. general, and in the iron and steel business, in to have a low degree of import penetration of To regain competitiveness (or generate prof- particular. steel products, but imports surged in 2010. its), Mr Assumpção recommended Brazilian In this context, Wuhan Iron and Steel This volume has decreased in 2011, but to steel companies to: a) invest in up-stream raw (Wisco) has announced the largest investments, the detriment of prices. Consequently, the material integration; b) to focus on down- consisting of purchasing a minority stake in the price premium has declined. Furthermore, stream value added; c) to adopt cost cutting ini- iron ore miner MMX (which it has already the domestic price has become more volatile. tiatives; d) to react fast aiming to combat done) and plans to erect a greenfield steel site imports; e) to lobby government to eliminate in association with EBX (the holding company – Secondly, the strong currency has resulted in import tax incentives. It is crystal-clear that the belonged to the Brazilian billionaire Eike higher costs and has reinforced the import money is coming mainly from upstream (min- Batista, who is also the controlling shareholder risks for steel products and for high content ing) activities. of MMX). This is presently considered only a of steel manufactured goods. These factors proposal without a final decision. contributed to pressure profit margins too. Chinese investments in Brazil This experience underlines the Chinese pref- Mr André Soares (China-Brazil Business erence for brownfield rather than greenfield – Thirdly, the cost of freight as a proportion of Council, CBBC) looked at Chinese invest- investments as well as the preference for iron the iron ore spot price has declined from ments in Brazil, a topic quite controversial at ore rather than steel. approximately 100% in 2007-2008 to some present. According to him, until 2010, there There is little doubt that investing in iron ore 10% in 2011 (right axis of Fig 5). were few Chinese investments in Brazil com- projects in Brazil (and elsewhere) are more Consequently, the benefit derived from logis- pared to other nations (Fig 8). This is even attractive than investing in steel projects. In the tics to the Brazilian steel mills in comparison although, in the previous decade, Brazilian case of greenfield projects, this is even more with iron ore imports has declined. exports to China have skyrocketed as Brazil evident.

៊ 39 Karnataka – An open door for global steel producers be a problem in Karnataka, unlike Orissa and Company Proposed investment Project details Jharkhand – the other two top mineral rich (INR billion) (US$ billion) states in India – where global steel majors such ArcelorMittal 300 6.63 6Mt/y integrated steel plant and 750MW power generation as Posco and ArcelorMittal have been strug- Brahmani Industries 360 7.96 6Mt/y integrated steel plant with captive power plant in gling to set up steel production units, said an Karnataka Bellary. In Phase 1, 1.9Mt/y with a captive power plant of official with the state steel ministry. 68MW capacity Bhushan Steel 279.28 6.17 6Mt/y integrated steel plant with 600MW co-gen project Mega steel projects Hazira Steel 177.60 3.92 Carbon steel products 6Mt/y capacity in Bagalkot Karnataka’s transparent and investor-friendly JSW Steel 151.32 3.34 To enhance installed capacity of steel plant at Bellary from industrial policy coupled with the allocation of 10Mt/y to 16Mt/y free mineral locations awarded to steel compa- Posco 300 6.63 6Mt/y steel plant in Bagalkot nies has resulted in proposals for up to 57Mt/y Essar Steel 220 4.86 6Mt/y carbon steel plant at Bagalkot of capacity in the past two years. Several 6Mt/y NMDC and Severstal 90 2.00 2Mt/y, expandable to 5Mt/y projects have been put forward (Table 3). Tata Metaliks – – 3Mt/y 6Mt/y steel projects are proposed by ArcelorMittal and Posco. The two companies Table 3 Proposed steelmaking projects in Karnataka combined have proposed an investment of INR 600bn ($13.3bn). In addition, India’s Essar the steel plant. The MoU would allow Varun to plant. It will have an initial capacity of 2Mt/y Steel is investing INR 220bn ($4.8bn) to setup get a preferential allotment of mining licenses which is expandable to 5Mt/y. NMDC and a 6Mt/y capacity carbon steel plant at Bagalkot. in Karnataka, giving its mining efforts a boost Severstal each will have a 50% shareholding in The group also plans to setup a 2000MW gas and opening up a new area for business devel- the jv and will appoint the senior management based power station costing INR 70bn opment. team. Rana Som, CMD of NMDC, estimated ($1.5bn). Tata Metaliks has also expressed interest in an investment of $2bn for the project. Bramhani Industries Karnataka, promoted setting up an integrated steel project of 3Mt/y The government’s pro-active approach has by the current Minister Janardhan Reddy, will in the Haveri district of Karnataka. The compa- reaped reward in the form of MoUs. But, the invest INR 360bn ($7.9bn) to setup a 6Mt/y ny is engaged in the production of pig iron, proposed steel plants are yet to start building steel plant in Bellary. castings, iron ore fines, coke breeze and lime- and have to face two primary challenges for the Other than these ultra mega projects, a num- stone. mining sector: land acquisition and environ- ber of small and medium size companies have NMDC Ltd has entered a joint venture with ment control. BS Yeddyurappa, the chief minis- proposed investment in Karnataka to cash in on OJSC Severstal, a leading steel and mining ter of Karnataka believes that the government’s the opportunity. company in Russia, to set up a joint venture compensation package formula is friendly for Steelware exporter, Varun Industries Ltd, steel plant in Karnataka. Severstal will use its losers of land and hence, there will no problem signed a MoU with the government of captive coking coal mining subsidiary in Russia for land acquisition in the state. Secondly, steel Karnataka to set up a steel plant at cost of INR and, the jv will use its Indian iron ore mining producers have been told to install adequate 3.04bn ($62.7bn) at Bagalkote district. The subsidiary to ensure long term supply of these pollution control equipment so that the damage government allotted 500 acres of land to set up critical raw materials for the proposed steel to the environment will be minimised.

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Heat recovery Analysis of potential and specific problems of heat recovery in the EAF

The off-gas of an EAF represents the greatest proportion of heat lost – typically 180-220kWh/tls – but this can be captured by means of an evaporative cooling system which generates pressurised steam for further use. The main challenge is efficient steam buffering due to the batch mode of the EAF and finding a viable use for the steam since generally more is produced than is required in-house. By Carsten Born & Ralf Granderath

WHILE there are very many ideas and prod- Tenova’s evaporative ucts to optimise the operation of an EAF there cooling iRecovery are only three main targets for such optimisa- off-gas ducting tion: Increasing product quality, increasing fur- produces high nace life or lowering energy input. pressure steam In recent years the focus has clearly turned to reducing energy needs. Many interesting tech- Input kWh/ % of total ilar operating conditions but for larger EAFs nologies, practices and products have been tls energy (between 121 and 160t tapping weight). The developed such as slag management, optimised Electrical Energy 400 55.4 columns describe the various operating meth- charging schemes or intelligent furnace control Energy Chemical Energy (burners) 80 11.1 ods; the classification into ‘low’ and ‘high’ chem- systems (eg EFSOP)(1). While this is without Input Chemical Energy (oxidation) 220 30.5 ical energy is chosen freely. In real life the differ- doubt an approach providing convincing results, Oil + Hydrocarbons 22 3.1 ence in chemical energy is a range where most the amount of energy lost in the off-gas and Total Energy Input 722 100 EAFs lie between the values in Tables 2 & 3. cooling water is very large. Once a modern EAF Steel 388 53.7 The main result evident from this grouping is is equipped with all the available optimisation Energy Slag 46 6.4 that the size of the EAF has only a very small tools it is increasingly difficult – and therefore Output Off-Gas (sensible) 112 15.5 impact, but the method of operation makes a expensive – to reduce the energy input further. Off-Gas (chemical) 122 16.9 significant difference. Most top charged EAFs This is the point where heat recovery offers the Water Cooling (shell & roof) 54 7.5 have between 180 – 200kWh/tls off-gas energy greatest potential for energy optimisation. Total Energy Outputs 722 100 content. This does not mean that furnaces with Table 1 shows the energy balance of an US- lower off-gas energy content are necessarily based 150t/h EAF for stainless steel as an Table 1 Energy balance for a 150t/h stainless more cost effective to operate as the price for example. The energy losses in the off-gas of an steel EAF(2) chemical energy compared to electricity is com- EAF (sensible heat energy plus chemical ener- monly lower and so may result in a better ener- gy) are approximately 30% of the total energy energy that must be in the off-gas at the fourth gy price per tonne of steel although the techni- input, this being four times more than the ener- hole. But not only is this indirect method lack- cal efficiency is inferior. gy in the cooling water. So the foremost conclu- ing in precision, it is not usually available as The average off-gas heat output also sion is: commonly, cooling systems have no means of depends, of course, on the tap-to-tap time. – Recovering heat from the EAF means reco- measuring how much of the same cooling water vering heat from the waste off-gas. is shared between the shell, the roof and the Energy recovery off-gas duct. To see how much of the energy content can be Energy content of off-gas Searching for a reliable method, a different extracted in a heat recovery system a short sur- This first conclusion poses the unavoidable way was chosen by Tenova engineers: the devel- vey into heat recovery technology must be question: How much off-gas is there from a opment of a mass and energy balance that taken. particular EAF and what are the main key driv- allows determination of the energy content of Heat recovery for industrial furnaces – ers that influence the off-gas energy content? the off-gas. This approach requires greater depending of the type of furnace – means the Attempting to measure this by instrumenta- effort but is more practical since most plants production of steam in the first place. tion is, in most cases, not the way to go. have much better data on energy input than For the EAF a technology milestone was set Experience shows that hardly any steel plant measuring the off-gas parameters. in 2009 when Tenova installed a heat recovery has a reliable method of measuring off-gas tem- The mathematical model developed by the system for the EAF of Georgsmarienhütte peratures (at least not at the fourth hole) and process engineers from Tenova Re Energy, GmbH using its new ‘iRecovery’ technolo- not many steel plants have a measurement sys- based on the work of Tenova Goodfellow engi- gy(3)(4). tem for the off-gas flow. The basic formula neers who developed the EFSOP control sys- Like a conventional cold water gas duct cool- ‘energy content = temperature x flow’ is simply tem and the intelligent EAF (iEAF), was used, ing system the iRecovery uses a tube-tube con- unavailable. and the results were compared with the reverse struction looking much the same as the conven- In some cases there are opportunities to calculation method – as far as available – and tional but the difference is that it operates at reverse calculate the off-gas energy by using dif- found to fit very well. much higher temperatures and pressures. While ferent indicators: If the water flow and temper- The results are shown in Table 2 for a classi- conventional cold water cooling typically uses ature change (ΔT) of the cooling water circulat- fication of EAFs by tapping weight and type of an input water temperature of 20-40°C and ing through the off-gas duct heat exchanger operation – low and high chemical package heats the water by 5-20°C, the iRecovery system piping is measured, as well the water consumed input, a Consteel EAF and a furnace charged works with water at its boiling point at 10-30 in the downstream gas quench tower and also with DRI. bar pressure thereby raising the boiling point to the off-gas temperature at the bag house inlet, Table 2 shows values for smaller EAFs (up to 180-250°C. The heat is largely extracted from it is possible to come close to calculating the 120t tapping weight) and Table 3 values for sim- the off-gas by partial evaporation – the need to

Tenova Re Energy GmbH, Graf-Adolf-Platz 6, 40213 Düsseldorf, Germany Tel +49-211-540976-0, e- Mail [email protected]

www.steeltimesint.com Steel Times International – July/August 2011 – 45 Tenova_Layout 1 7/20/11 12:19 PM Page 2

Heat recovery

Energy output kWh/tls Energy output kWh/tls Low chemical High chemical Consteel DRI Low chemical High chemical Consteel DRI energy energy Furnace charge energy energy Furnace charge

Liquid steel 385 385 385 385 Liquid steel 385 385 385 385 Slag 50 50 50 50 Slag 50 50 50 50 Hot heel 30 30 30 30 Hot heel 30 30 30 30 Scrap preheating 0 0 50 0 Scrap preheating 0 0 50 0 Off-gas content 180 240 130 280 Off-gas content 170 240 130 260 Radiation losses 10 10 10 15 Radiation losses 10 10 10 15 Cooling water 70 75 70 80 Cooling water 65 70 60 80 Total output 725 790 725 840 Total output 710 785 715 820

Table 2 Specific energy output of EAF 80-120t tapping weight Table 3 Specific energy output of larger EAFs 121-160t tapping (kWh/tls) weight (kWh/tls)

3 of air dilution (6%O remaining) but this time Vol 16960m PCC x 4 2 Dilution Air 1 only able to recover 17438kW of heat from the Duct 1 Duct 2 Duct 3 off-gas duct alone. Further, if excess dilutant air O2 6% is in-put leaving 12% O2 after post combustion EAF the amount of heat recovered drops to 12868kW and the efficiency falls to 55%. Duct 4 There are thus three main factors governing Particle load Particle load 28.28g/m3 21.04g/m3 the heat recovery potential of an EAF: Vol 31436m3 – The operating method which determines the Duct 5 wc Input 23282kW overall energy content of the off-gas; Input 18937kW Dust traps x3 – The off-gas temperature after the iRecovery Efficiency 81.34% Vol 3m3 Duct 6 wc Dilution Air 2 system determined by the heat transfer sur Tmed 350°C face; Waste heat Inlet fan – The control of the dilution air. Air cooled duct boiler The size of the EAF influences the absolute Flow 0.5t/h energy content in the off-gas but its contribu- Vol 31345m3/h tion to the heat output per tonne of steel pro- Temperature 1602 1226 817 360 347 331 350 duced is little changed. Profile °C 1539 633 317 261 261 Ta bles 4 & 5 group the potentials for energy recovery of two furnaces with and without dilu- Fig 1 Heat recovery from EAF off-gas achieved using an iRecovery duct and an additional tion air control. Table 4 is for a tapping weight post combustion heat transfer surface. Air dilution controlled to 6% O2 after combustion of 100t and Table 5 for 150t. These examples (all volumes m3 at NTP). Energy recovery efficiency 81% of recovery potential refer to the various fur- nace operating conditions previously compared. overcome the Latent Heat greatly increasing and cost-effective way to reach the required the energy that can be recovered by a given vol- temperatures at the bag house inlet. When an Challenges in heat recovery ume of water. iRecovery is designed for partial iRecovery system is designed, dilution air The potential for heat recovery from the EAF is evaporation of the water, typically not more should be controlled and in most cases reduced large and with the Tenova iRecovery an than 5-12%, to leave spare capacity in the cool- for optimum efficiency. This is for two reasons: approved standard technology is available. ing circuit. – Heat transfer is more efficient at higher tem- However, presently nearly all EAFs work with- The possibility of recovering useful energy peratures, in other words recovering, say, out heat recovery. So where are the problems, from the off-gas depends on the temperature of 10MW of energy between 1400°C and what are the real challenges? the coolant as it exits the cooling tubes. If this 1000°C requires less investment than reco- is achieved by circulating a large volume of vering 10MW between 900°C and 500°C. No 1: Using recovered energy water exiting at, say, 40-50°C there is practical- – All dilution air is sucked in at ambient tem- The effective use of the recovered energy is def- ly no use for it as an energy source and the only perature and leaves the system at an elevated initely the biggest challenge in all heat recovery possibility is to cool the water in a cooling tower temperature, typically around 350°C. That projects. thereby wasting the heat captured. If the same means that the energy content between In iRecovery, heat recovery means produc- amount of energy is removed as steam at, say, ambient temperature and 350°C is lost to the tion of steam. Some steel plants have large 250°C, the energy can be used for a variety of iRecovery, which significantly reduces the sys- steam distribution networks with steam purposes as discussed below. tem efficiency. But it is not possible to reduce demand for vacuum steel degassing, steel pick- The size of the heat transfer surface deter- the dilution air to zero since some is required ling, heating, production of compressed air, air mines the temperature at the outlet of the for post combustion. iRecovery always makes conditioning, oxygen production etc. Ideally iRecovery system. This is dependant on: sure that the O2 content in the off-gas is suf- these steam demands adds up to the amount of – Length of off-gas duct; ficient for complete combustion of the CO steam that is generated using iRecovery. In this – Additional radiation heat transfer surface present. case the heat recovery steam goes to a take-over such as a post combustion chamber or Fig 1 provides an overview for a system in point and the consumption of oil or gas in the settling box; which the dilution air is controlled to leave 6% boiler house to generate steam is drastically – Additional convection heat transfer surface O2 content after combustion. The value of 6% reduced. in a U-tube waste heat boiler. is a good and safe compromise that guarantees Unfortunately this is the exception. In 90% complete combustion under all circumstances of all heat recovery projects there is not a single It is evident that the amount of heat recov- but still provides good efficiency for the heat sink to use all the steam but the demand is ered increases as the outlet temperature of the iRecovery system. If an additional heat transfer from a combination of different components. coolant after heat recovery falls; but a concrete surface is provided in the post combustion Vacuum degassing units are a wide spread value can only be given when the off-gas flow chamber a steam outlet temperature of 317°C steam user but consume typically not more than volume is known. may be achieved and 18937kW recovered from 20-35% of the steam available from an EAF the 23282kW input giving an energy capture iRecovery unit. Other metallurgical processes Role of off-gas air dilution efficiency of 81%. such as steel pickling are also only minor steam When heat recovery is not employed it is wide- In contrast, for the same power input, a drop consumers(5). spread practice to cool the off-gases by sucking in efficiency of energy recovery to 75% may be Plant heating is the next potential use, unless in large amounts of dilution air; this is a simple expected from a furnace with the same degree this is already performed by a low temperature

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Heat recovery

Energy No dilution Dilution Energy No dilution Dilution content in air control control content in air control control off-gas at off-gas at 4th hole Off-gas temp Off-gas temp 4th hole Off-gas temp Off-gas temp 475°C 315°C 475°C 315°C Top charged, low chemical energy 18 9.9 14.6 Top charged, low chemical energy 25.5 14.0 20.7 Top charged, high chemical energy 24 13.2 19.4 Top charged, high chemical energy 36 19.8 29.2 Consteel 13 7.2 10.5 Consteel 19.5 10.7 15.8 Top charged, 85% DRI, 15% scrap 28 15.4 22.7 Top charged, 85% DRI, 15% scrap 39 21.5 31.6

Table 4 Usable energy recovery for a 100t tapping weight EAF (MW Table 5 Usable energy recovery for a 150t tapping weight EAF (MW per melt) per melt)

heat recovery system, possibly capturing low grade heat at 90-100°C from other plant such as reheat furnaces. In any case, in many regions of the world such use is only needed for part of the year. There is always one way to consume all the steam produced, and this is power generation. But, for economic reasons, because of the high Capex cost of installing a turbine generator, this is not the best choice. If there is a possibility to use steam apart from power generation, it should be used. Also selling steam to a neigh- bouring plant is a possibility that should be evaluated. Many industries use steam; tyre pro- duction, composite board manufacture, oxygen production, lime sand and brick production are just a few examples. Selling steam to a plant in the neighbourhood may well be a better eco- nomical result than power generation. No 2: Constant availability If another plant nearby is willing to buy steam and the price offered is attractive, the available steam may not match its demand profile. Say they require steam for 6000 hours a year and iRecovery duct in position on EAF at Georgsmarienhütte the EAF runs for 7000 hours a year. Unfortunately all the studies and evaluations in side; now the customer remains responsible for process steam while the greater part is used for the experience of the authors indicate the time steam availability when the EAF is down. A sec- power generation; (it becomes illogical when eg range will not fit. The customer will need steam ond difference is that the two independent con- 7000MWh/y of natural gas which is normally when the EAF is shut down – typically for 100h trol systems for the iRecovery and the cus- burnt in a boiler house is replaced by heat to 400h per year. A typical example is a weekly tomer’s boiler house must be combined. recovery and at the same time a burner in the maintenance shift that occurs during the nor- Both problems are solvable; they just make waste gas duct of the EAF consumes mal production time of the customer. The same the project more complicated. Quite often 5800MWh/y for superheating). Depending on situation arises with plant heating; office problems of this kind are not technical but con- the specific parameters this can negate the eco- employees will not be happy when the heating tractual problems. nomical value of a project. is off, say, every Wednesday from 8am to 2pm! Given the fact that it is mainly steam turbines Thus, redundancy needs to be taken into No 3: Saturated vs superheated steam that require superheated steam the alternative consideration. In plants where in the past steam Sometimes the prejudice is heard that heat is to install an Organic Rankin Cycle (ORC)(7) was produced in a boiler house this is not a recovery for an EAF cannot work due to its turbine in which an organic fluid in a closed cir- problem if the boiler is retained. But it must be batch mode of operation; without constant cuit is heated and cooled to drive a turbine. maintained and kept in a stand-by mode. This steam supply no steam demand can be satisfied. This alternative turbine concept has some can be achieved by passing a small amount of This is not a problem; it is true that a con- advantages compared to a steam turbine. Apart the iRecovery steam into the boiler on stand-by. stant steam supply must be guaranteed, but a from the possibility to supply it with saturated In this way 1-2% of the energy from heat recov- set of tools for steam buffering is part of the steam at a lower temperature, even hot water or ered will be used to keep the boiler under pres- iRecovery technology. Power-off-times up to other lower energy carriers can be exploited sure without the need for additional primary around 30 minutes can be bridged. and it is much more automated than a steam energy. However, these are additional costs. But still one problem remains: It is not a turbine, thus lowering the total cost of owner- The costs for maintenance and personnel are problem to buffer saturated steam, but it is ship (TCO). almost the same for the boiler even although (nearly) impossible to buffer superheated On the other hand its efficiency is much most of the time it is in the standby mode. steam. Due to the working principle of the so lower which reduces revenue. The decision Nevertheless, the fuel savings made from not called Ruth buffers(6) which store the energy as between the two concepts must be carefully having to fire the boiler still make the replace- hot water under pressure which converts to considered in every project. ment of boiler house steam the most efficient steam as the pressure is released, it is only pos- use of a heat recovery steam. sible to generate steam at 2-5°C above the sat- A short survey on economical The situation becomes more difficult when urated steam graph. But the typical demand potential there is no boiler house for backup purposes on plant for superheated steam is a steam turbine, The amortization period of an iRecovery proj- the plant; a typical example is when steam is and here superheating to 100-200°C above the ect depends on three points: sold because there is no steam network. Most saturated steam temperature is necessary. a) The most important point is the timing. likely there is a boiler house at the steam-buy- This problem can be solved with the use of When the project is part of a new furnace or the ing plant – the steam that is now bought is like- an external superheater or by avoiding the need cooling system must anyway be revamped the ly to have been produced there in the past. to use superheated steam. iRecovery need only justify the cost difference So basically the situation is the same; a boil- The external superheater has the disadvan- between it and a conventional system. er house can be used as backup, whether it is on tage that it consumes a relatively large amount iRecovery brings additional costs of a maximum the steel company’s site or the neighbouring of primary energy. This is especially the case of 20-25% compared to a cold water circulation plant’s. The difference is from the contract when a smaller part of the steam is taken out as system because the equipment is of higher51៉

48 – July/August 2011 – Steel Times International competition_Layout 1 7/20/11 12:31 PM Page 1

Competition Barriers to product innovation in EU steel companies Mature steel companies in the EU are not generally regarded as good investment opportunities and an analysis of the industry can reveal why. Strong product innovation is needed to change this, but there are substantial barriers requiring a move from a cost cutting culture to one of new product innovation. By Keith Walker*

THE steel companies in the EU can be confi- dently regarded as mature from a business per- Threat spective, with a long history that shares a great of new competitors many common features across the various countries. Such maturity, in terms of longevity, is a feature of other industries as well but many of them produce far greater, and more stable, returns for investors. One key reason for this is repeated product innovation. Mature companies which develop new prod- Power Intensity Power of supplier ucts can avoid having to compete on price, but of customers of competition companies in the steel industry, new products are relatively rare. This leads to the well-known situation Steel Industry where the products are regarded as a commod- ity and the products offered by different com- panies are considered to be equivalent. Only the offer price (and sometimes service condi- tions) influences customer purchasing deci- Threat sions. This is poor competition. of substitutes Using the ‘5 forces’ model developed by Porter(1), it is apparent immediately that strong returns would not be expected from EU steel Fig 1 Porter’s Five Forces model can be used to assess the likely returns within an industry companies (Fig 1). If these forces are strong, research shows that investment returns are low. probably not even be recognised by most peo- drive for more and cheaper steel is well over. In the case of steel, the main companies supply- ple working in the steel companies. However, The focus from governments is now upon envi- ing raw materials are very large and consolidat- not all choices are made by using rational analy- ronmental and other impacts on the welfare of ed with great power. Also, customers can sis beforehand. Many are made almost uncon- citizens and EU steel companies sit uncomfort- choose between a huge range of steel compa- sciously, in line with the company’s value set, ably within the five forces mentioned above. nies selling broadly equivalent products. New shared goals and culture. But why would all of It is interesting, as an aside, to consider entrants into the EU market from elsewhere in the EU steel companies share these features? another industrial sector in light of this and that the world with lower labour costs are possible, is farming. The same Europe, just after the sec- and there is certainly a threat of other materials Common interest ond World War, drove for a lot more food at lot substituting for steel. Finally, competition It is worth taking a step back in time to Europe lower costs. This too came to a halt after it was between steel companies, based on price, is just after the second World War, in the first successfully achieved. Attention then turned to very strong. But whilst this rather gloomy analy- instance. The governments in all countries des- the environment impact of what had been sis may describe the steel industry in the EU, perately needed to re-build infrastructure and done. Even cheaper food flooded in from the any particular company could change its for- history shows a strong push from governments rest of the world. The EU farming response is tunes considerably if it were to offer new prod- to make a lot more steel, and to make it more based on product innovation: that is now, ucts with additional customer benefits. cheaply so that it was more affordable. Output organic produce. But why do steel companies struggle to pro- rose quickly and significantly and countries duce a stream of new steel products? It would within Europe focussed on process develop- Cost vs innovation certainly be of significant power to any compa- ment to reduce costs. They shared research It now starts to become easier to see the barri- ny to be able to offer patented, differentiated results with each other, which is still reflected in ers to product innovation within EU steel com- products which customers would prefer and the EU’s Research Fund for Coal and Steel panies. Even though steel is certainly cheap (providing they offered tangible benefits) pay (RFCS) programme. Therefore, the steel com- when considered from a society viewpoint, the more for. There a many reasons and some of panies all broadly share the same processing strong drive to make it even cheaper is now the key ones are very deep-rooted. But it is plant, and also broadly the same unit costs. The driven by intense competition between compa- worth pausing for a moment to reflect on other plants were made huge, focussing on nies with little else to offer their customers but aspects of innovation in the steel industry. If the economies of scale. The European steel indus- lower prices. Low cost has become embedded track record on process innovation is consid- try made a terrific job of meeting the drive for in companies’ cultures and, unlike farmers, the ered, it is quite incredibly successful. The rate more and cheaper steel. option of increasing costs to make products of new process development is fast and signifi- At the same time, engineers developed stan- with superior customer benefits is not often cant. Additionally, there are even a good num- dards for steel products with the aim of making considered. Put in terms often used in the man- ber of novel products being offered, but the it much easier to use products from any steel agement research into innovation, there is a vast majority are not new steel products but producer because they would be equivalent. high ‘receptive context’ within steel companies instead products made out of steel down- This made a good deal of sense in a Europe for anything which lowers costs. Everyone read- stream. It cannot, therefore, be claimed that struggling to re-build, but its legacy remains ily agrees that such ideas are good ones and steel companies are inherently unable to inno- now in the commodity nature of steel products. they are greeted with enthusiasm by everyone vate and so the barriers to new product devel- from accountants to engineers. Benefits are opment must stem from other factors. In fact, Changed focus often financially large because the plants are the barriers must logically be down to the And so, following a great deal of time, the EU also large, driving the enthusiasm further. behaviour of the people within the steel compa- steel industry is steeped in a long tradition of Implementation of process development proj- nies: in effect, they are choosing not to make focus on cost, making broadly the same prod- ects is quick and with zeal. The result is that new products. ucts with broadly the same processing plant. But everyone working in the company constantly This seems a strange situation and would unfortunately, at society level in the EU, the seeks to come up with new ideas for reducing

*Dr Walker was formerly with Corus Group and is now MD of the steel consultancy SteelFolk e-mail [email protected]

www.steeltimesint.com Steel Times International – July/August – 49 competition_Layout 1 7/20/11 12:31 PM Page 2

Competition

cost, in order to obtain the recognition which is certain to come from colleges. Even long-shot ideas are discussed in full and experiments are High Cost falls at Useful product Product common. In this sort of culture, it is staggering margins higher production Life, margins decline how much optional effort employees will put from users volumes – others lower into even the smallest reduction in costs. This with adopt ‘receptive context’ is a very powerful driver of highest Fig 2 Each new behaviour in employees because, effectively, it benefits product goes informs them about how to obtain recognition through a life cycle. and, often, reward. The early stages are It would appear rational, therefore, to con- the most attractive clude that there is no receptive context for new in terms of returns products in EU steel companies, and this is broadly so. It does not take long to see why not, Volumes Production/Sales however. The huge manufacturing plants love long production runs of the same steel grades, because unit costs are lowered. Any plant trial or experiment which might disrupt this is Time looked upon with disfavour, if not dislike. And new products always have a product life cycle to develop new products simply by reinforcing Changing attitudes (Fig 2) which naturally begins with low sales the low cost value set. The solutions to many of these ‘technical’ barri- volumes, meaning short production runs which Therefore, as is commonly the case, the most ers (getting metallurgical expertise, patenting are undesirable from a cost viewpoint. In addi- significant barrier to product innovation in EU skills etc) are available to management if they tion, new steel products often take a long time steel companies is simply inertia. This does not wish to proceed with more new product devel- to reach the stage where financial benefits flow, imply a lack of willingness or drive but simply opment activity. However, returning to the cre- due to necessary testing which is often lengthy. its scientific meaning, in that something large ation of a receptive context for the necessary Much better to focus efforts on short-term wins and stable takes a lot of moving, especially at ideas for new products, this is a far more com- from cost reduction. first. It is likely to be almost impossible to find plex matter. It means changing the behaviour of The result is that employees do not waste the resources to make radical and rapid change often thousands of individuals within the com- time trying to come up with ideas for new prod- to the universal set of shared values within a pany. A brief consideration of the difficulties in ucts, especially when their skills most probably large steel company. However, certainly starting changing attitudes to safety will provide the allow them to look for cost reduction ideas some drive to achieve a new set of products reader with a good measure of the challenge. instead. There is sound reasoning behind fol- would be worthwhile for any firm. To reach the There are, however, ways to start such a change. lowing the easiest path to recognition and stage where a stream of new products is made, Since it is likely to be so difficult to weaken reward. This behaviour is fully understandable earning highly margins in the early stages of the cost focus, and arguable unwise, new product but it traps the company into a never-ending product life cycle, is strategically sound, but it is development should at least not conflict with existence of low profitability based on fierce worth noting that such products must stem low costs – but most importantly, it should not competition on price. This is especially so when from a deep understanding of what adds real do so in the perception of employees. Taking one considers the thoroughly-researched theory benefits for customers and must provide those every care to undertake as much of the early that 300 ideas are required to end up with just benefits in full. development and trials with people not one successful implemented project. There are It is also worth noting that development of required to achieve smooth operations is a hundreds of ideas for cost reduction, but those new steel products requires strong metallurgical strong starting point. In order to create numer- for new products are scarce. In certain compa- capability, and another significant obstacle is ous new product ideas, people will need to nies, directors have tried to encourage their the shortage of graduate metallurgists that are spend a lot of time with customers, so more managers to generate more new products, but readily available in the EU. In order for a com- people may be necessary. Planning on-line trials with so few ideas flowing from their people, pany to obtain the financial rewards from such for periods when the plants are not fully loaded they were forced to pursue weak ideas and the a stream of new products, it is, of course, essen- is another opportunity. But most of all, avoid initiative rapidly failed. The reason is that noth- tial that the intellectual property rights are employee perception that lower costs are being ing was done at top level to generate a receptive owned by the company otherwise competitors demanded at the same time as new products context for new product ideas. The existing will quickly follow suit. Broadly speaking, EU which make that task harder. This will provide shared value of low cost conflicts so strongly steel companies have historically shown a very a basis for growth of a receptive context for new that something must be done to weaken this low level of patent activity for steel products, steel products within the company.
first, and that takes such a change in mind-set unlike other areas in the world, probably due to that it never happens. Probably without realis- the pan-European technical cooperation which (1) Michael E Porter of Harvard Business ing it, top management continually choose not has been the norm. School 1979

៊ 48 Analysis of potential and specific problems of heat recovery in the EAF

specification and additional components such say, 5% in energy price delivers a totally differ- Simmons, Ralf Granderath, Carsten Born: Heat recovery for as a steam drum or steam buffers are necessary. ent result. the EAF of Georgsmarienhütte, Germany, AISTech In most cases this is no problem. iRecovery The right point in time to plan an iRecovery Conference, Pittsburg, 2010. should be considered as standard for any new system is always when there is a high demand 4 Steel Times International Vol No35 No 1 Jan/Feb 2011 p furnace. for process steam, otherwise iRecovery should 39-41 b) The demand for process steam/heating be taken into consideration when an existing 5 Carsten Born, Ralf Granderath: The Challenge of Heat energy and the possibility to sell steam. When cooling system needs revamping or a new fur- Recovery in Integrated Steel Plants, AISTech Conference, the only possibility is for power generation, the nace is planned. Indianapolis, 2011. amortization period is typically twice as long. 5 Wolf-Dieter Streinmann, Markus Eck: Buffer storage for c) The price of energy in the particular loca- References direct steam generation, 2005. Available online at www.sci- tion. It is evident that if the steam generated 1 Doug Zuliani, Vittorio Scipolo, Carsten Born: encedirect.com replaces expensive natural gas fuel or electric Opportunities to Reduce Operating Costs, Increase 7 Steel Times International Vol 35 No 2 March 2011 p33 power this will give a shorter payback time than Productivity and Lower GHG Emissions in Electric and when replacing ‘cheap’ gas or electricity. Oxygen Steelmaking, Stahl und Eisen 129 (200) However, when the discussion is whether to 2 Doug Zuliani, Vittorio Scipolo, Joe Maiolo: Opportunities Contact install an iRecovery system, the anticipated for Increasing Productivity and Lowering Operating Costs Tenova Re Energy GmbH, Graf-Adolf-Platz 6, increase in energy prices must be considered. while Reducing GHG Emissions in Steelmaking, AISTech 40213 Düsseldorf, Germany When a project at today’s prices may not be Conference, Pittsburg, 2010. Tel +49-211-540976-0 very attractive, a forecast annual increase of, 3 Dr Henning Schliephake, Francesco Memoli, Jim e-mail [email protected]

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History

Pioneers of Steelmaking: Part 3 – The science of steel UNDERSTANDING the nature of steel was the aim of many researchers of the eighteenth and nineteenth centuries when another mysteri- By Fathi Habashi ous ferrous material(1) became the focus of attention – iron meteorites. In 1808 Aloys von Laval University, Quebec City, Widmanstätten (1754-1849) in Vienna docu- Canada mented another remarkable structure revealed [email protected] Previous Parts of this series are by a polished and etched surface of an iron mete- Fig 1 A polished published in April and orite. Widmanstätten was born in Graz, Austria and etched May/June STI Vol 35 Nos 3 & 4 studied natural science at the University of Graz surface of an iron and in 1806 sold his inherited printing business meteorite of his father and moved to Vienna to take over showing the position of the director of the newly founded 1 Damascus steel René-Antoine, Torben Olof Bergman, Widmanstätten Imperial Technical Museum. In 1808 Emperor see Part 1 STI April 2011 p60 the French naturalist the Swedish chemist structure Franz sent him a meteorite that fell in Agram (the present Zagreb in former Yugoslavia, which at that time was part of the Austrian Empire) in 1751 to study. Widmanstätten polished, etched and inked the surface, and made a print on paper (Fig 1). When he noted the characteristic Fig 2 Schema’s pattern, he then studied other meteorite samples interpretation of the in the collection. Widmanstätten The characteristic pattern evident on pol- structure ished and etched sections of meteorites is now known as the Widmanstätten structure. The background to this innovation was the fact that the Widmanstätten family owned a printing shop, and therefore printer’s ink and blocks University of Abo and at Uppsala under Tübingen obtaining a PhD degree. Upon his were known to him for experimenting. Bergman. There he investigated steels, wrought return to Vienna, he was appointed lecturer for The German physicist Ernst Chladni (1756- iron, and cast irons and stated that their charac- mineralogy and chemistry. In 1862 he was 1827) who was interested in meteorites, visited teristic properties were related to their content appointed vice curator of the Imperial Vienna in the spring of 1812 and witnessed the of a ‘black combustible material’ that remained Mineralogical Cabinet and in 1868 became printing of the meteoritic patterns. He included after dissolving the metals in acid. The residue curator. In 1873, he was appointed full profes- a number of lithographed illustrations of whole was called plumbago (the chief constituent of sor for mineralogy and petrography at the and sectioned meteorites made directly from charcoal). The work was published in Latin as University of Vienna. In his book ‘The the etched surface in his book ‘Feuer Meteore’ ‘Dissertio Chemica de Analysi Ferri’ by Bergman Microscopic Constitution of Meteorites’ pub- published in 1819 in Vienna. and Gadolin in 1781 and was an important con- lished in 1883 Tschermak explained how the tribution to the understanding of steel. Widmanstätten pattern formed. The bands that Early Investigators A French translation was published in Paris in appear are the edges of plates arranged parallel Little was known about the metallic state until 1783 and an English translation was made by to the faces of an octahedron which is the form the latter half of the nineteenth century. Cyril S Smith in 1968. Gadolin was professor of crystallization had taken. An octahydron is a bi- Understanding the nature of steel required a chemistry at the University of Abo from 1797 to pyramid composed of eight equilateral trian- knowledge not only of its chemical composition 1822. gles. They must have been in a liquid state, but also its phase analysis. This had to wait until At the start of the nineteenth century, the cooled very slowly, and did not form in the pres- the development of a number of analytical tools German metallurgist Carl Johann Karsten ence of oxygen. Depending on the angle of cut, which came into general use at the beginning of (1782-1853) succeeded in separating an acid the crystals often exhibit triangles, squares or the twentieth century. The attempts to uncover insoluble residue from cast iron and establish- other regular geometric patterns (Fig 2). the nature of steel were, therefore, due to the ing its chemical composition as an iron-carbon The study of meteorites was a motivation for researches of the early scientists: Réaumur, compound containing 6.7% carbon. It took the British chemist Henry Sorry (1826-1908) to Bergman, and others. many decades before it was generally agreed invent metallographic for the study of steels in The French naturalist René Antoine that its composition was indeed iron carbide 1863. Further, the many similarities between Ferchault de Réaumur (1683-1757) was the (cementite) Fe3C and that the conversion of meteoritic materials and engineering alloys first to suggest in 1722 that cast iron contained iron into steel was due to iron’s combination caused metallurgists in the years between 1900 carbon. This was confirmed in 1781 by the with carbon. Hence, the influence of the car- and 1937 to study nickel-iron meteorites in par- Swedish chemist Torbern Olof Bergman (1735- bon content of steel upon its hardness was allel with their research into the nature of low- 1784) in a thesis submitted by his student realised. carbon and low-nickel steels. Both of these Johannes Gadolin (1760-1852) in 1781 at the Karsten was born in Butzow, Mecklenburg, alloys found important engineering applications University of Uppsala and in 1786 by the studied in Rostock then in 1801 moved to during that period. At the same time, metallur- French scientists C A Vandermonde, C L Berlin to various jobs in the mining industry. gists were determining the Fe-Fe3C and Ni-Fe Berthollet, and G Monge. From 1820 he taught at the Mining Academy in phase diagrams and unravelling the various Bergman was born in Katrineberg, Sweden Berlin. Here he produced a large number of aspects of solid-state phase transformations in and became professor of chemistry at that metallurgy books the most important being many alloy systems. University in 1767, then rector a few years later. ‘Handbuch der Eisenhüttenkunde’ (Handbook of He published about 50 memoirs and disserta- ferrous metallurgy) published in 1816. Suggested readings tions, all in Latin, on a variety of subjects deal- The mystery of the Widmanstätten structure F Habashi, ‘Meteorites. History, Mineralogy, and ing mainly with topics in inorganic chemistry was eventually resolved by the work of Gustav Metallurgy’ Interdisciplinary Science Review 23 and metallurgy. He had a number of distin- Tschermak Von Seysenegg (1836-1927) who (1), 71–81 (1998). Available as a free download to guished students who contributed to the dis- was born in Littau near Obnütz in Moravia members of IoM3 website once logged on covery or isolation of new metals. Gadolin was then part of the Austrian Empire. He studied http://www.iom3.org/content/journals or for pur- born in Abo in Finland which, at that time mathematics and chemistry at the University of chase by non-members at http://www.ingentacon- belonged to Sweden. He studied at the Vienna, and mineralogy at Heidelberg and nect.com/content/maney/isr ᔢ

52 – July/August 2011 – Steel Times International www.steeltimesint.com