Steel times international jan feb 2015

January/February 2015 – Vol.39 No.1 – www.steeltimesint.com

IRON ORE BRAZILIAN STEEL CONFERENCE ANALYSIS & TESTING

STEEL TIMES INTERNATIONAL – January/February 2015 – Vol.39 No.1

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CONTENTS JANUARY/FEBRUARY 2015

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January/February 2015 – Vol.39 No.1 – www.steeltimesint.com

IRON ORE BRAZILIAN STEEL CONFERENCE ANALYSIS & TESTING

STEEL TIMES INTERNATIONAL – January/February 2015 – Vol.39 No.1

EDITORIAL Editor Matthew Moggridge Tel: +44 (0) 1737 855151 matthewmoggridge@quartzltd.com Consultant Editor Dr. Tim Smith PhD, CEng, MIM Production Editor Annie Baker

2 Leader 4 News The latest steel industry news from around the world 9 India update Chinese steel threatens Indian mills 11 Latin America update Turkey’s exports to Latin America 15 USA update Chinese steel threatens Indian mills

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New Year Predictions 18 A ‘muddle-through’ year lies ahead, according to NLMK 19 China is the key factor, says EUROFER Iron ore 21 The survival of the fittest Conference report: Brazil 22 Excess capacity and trade friction

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Rolling 36 Absolute encoders reduce breakages Perspectives 38 Minimising costs and waste

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Contents jan feb.indd 1

History 40 Shaping the modern world January/February 2015

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LEADER

After China, is Turkey the villain of the piece?

Matthew Moggridge Editor matthewmoggridge@quartzltd.com

As 2015 dawns, it looks as if China will continue to be the elephant in the room.

In this issue Axel Eggert, directorgeneral of EUROFER, the European Steel Association, says that China is ‘the key factor determining market conditions in the steel market’. As China’s steel demand falters, excess steel production is seeking out (and finding) export markets throughout the world.

While the Americans have been very vocal in their condemnation of those dumping steel products on their doorstep – and have taken decisive legal action too – the problem stretches further afield.

The Latin American steel industry, for example, has started to issue press releases through ALACERO (the Latin American Steel Association) highlighting the growing amount of Chinese steel products being dumped on its front lawn.

China, says ALACERO, shipped 7.4Mt of finished steel to Latin America between January and November 2014 – 56% more than during the same period in 2013.

As Anthony de Carvalho from the OECD’s Steel Unit pointed out at the recent Brazilian Steel Institute’s 25th Annual Conference in Sao Paulo, global

steel capacity doubled between 2001 and 2013, increasing at a rate of 5.6% per annum and reaching 2.1 billion tonnes by 2013. China, he said, accounted for 77% of the escalation.

But while China continues to be the big bad wolf and can be guaranteed plenty of air time at steel conferences in 2015, it’s important to remember that China is not the only ‘bad guy’ on the block when it comes to steel dumping.

Turkey doesn’t receive as much negative air play as the Chinese, but SteelFirst’s Vera Blei, speaking at the aforementioned Brazilian steel conference in Sao Paulo, described Turkey as a new threat for steelmakers in general – and for Latin America in particular.

The Turks have it all to play for – a highly adaptable private sector, an entrepreneurial spirit and, above all, a prime geographic location thanks to coastal plants that provide ‘major logistical advantages and cost efficiencies’.

China is widely recognised as the villain of the piece, but perhaps the global steel industry’s nemesis has a sidekick – and in addition to magic carpets and baklava he sells a fair amount of steel.

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January/February 2015

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4 NEWS IN BRIEF Falling iron ore prices drive lower profit Integrated steel maker US Steel is losing its cost advantage over competitors like Nucor as the price of iron ore shrinks to an all-time low. As the raw material used to make steel slips 48% from its 2011 high of US$200/tonne down to US$70/tonne, analysts predict that more cost-cutting measures will be needed.

US Steel is planning to replace multiple blast furnaces with electric arc furnaces.

Salary cuts for Nippon top brass Fires and four power failures at Nippon Steel & Sumitomo Metal Corp’s Nagoya Works in Japan – which are likely to result in an estimated 32 billion yen (US$271 million) loss for the steel maker – are behind 20% pay cuts for some of the company’s senior management.

Those who received lighter pay cheques over Christmas include president Kosei Shindo, chairman Shoji Muneoka and vice chairman Hiroshi Tomono.

Yoshitsugu Sakamoto, former head of the Nagoya works, receives a 30% pay cut.

IET calls for long-term support package Paul Davies, head of policy at the Institution of Engineering & Technology (IET) in the UK has praised the British Government’s Chancellor of the Exchequer, George Osborne, for announcing in his autumn statement measures to support innovation.

According to Mr Davies, while the Government’s extra finance will help lead the next generation of technologies – such as printable electronics, robotics and carbon fibre composites – a long-term package of support is needed.

Plastics company partners with JFE Steel Formosa Plastics Group (FPG) has invited Japanese steel maker JFE Steel Corp to form a partnership to run Formosa Ha Tinh Steel Corp in Vietnam. A deal is likely to be signed within the next two months.

According to a report in the Taipei Times, JFE Steel Corp is likely to hold a 10% share in the company.

For more steel industry news and features, visit www.steeltimesint.com

INDUSTRY NEWS

Injuries reduced by 40%, says Russian steel maker NLMK Group claims it has reduced the amount of injuries at its Russian sites from the beginning of 2014 by 40% and by 50% yearon-year at its Lipetsk plant.

According to the company, “systematic efforts have delivered a 41% year-on-year reduction of the Lost Time Injury Frequency Rate per one million man-hours since the beginning of the year.”

NLMK believes it was able to achieve these results by using a preventive approach to organising OHS (Occupational Health & Safety) management.

Victor Togobetskiy, NLMK director of occupational health and safety, said that the company has made radical changes to its OHS management system during the year and that important initiatives aimed at improving working conditions and minimising occupational risks, along with new rules and requirements allowed the company to ‘significantly reduce’ the amount of injuries suffered.

“Our key goal is to achieve accident-free operations and to consistently reduce the level of occupational hazards,” he said.

Togobetskiy discussed the results of implementing best global OHS practices at NLMK Group’s second conference on occupational health and safety held in Lipetsk earlier this month. Divisional heads and employees responsible for OHS participated in the twoday conference.

Since the beginning of 2014, NLMK has been running its “Searching for Safety” and “Risk Management” programs, which are aimed at identifying and mitigating risks that could lead to occupational incidents. The company is implementing a single methodology for identifying potential hazards; risk assessment; and advanced risk management practices and is encouraging staff to get actively involved in the process.

EU must tackle protectionism Unfair trading practices by nonEU steel-producing countries have proliferated since the global crisis, claims EUROFER director-general Axel Eggert.

According to Eggert, the countries concerned are undermining the level playing field for EU steelmakers and weakening their margins.

“For Europe to keep its global leadership in this strategic sector with hundreds of thousands of highly skilled employees, trade policy needs to be reactive and effective, forcefully tackling third market access and raw material export restrictions, and enforcing the EU’s trade remedy instruments without inhibition against unfair trade practices,” Eggert said.

According to Eggert, securing an international level playing field has become increasingly challenging. He said that Free Trade Agreement (FTA) negotiations with major emerging, resource-rich economies have not been concluded and that there was a growing number of protectionist

measures in all steel regions of the world outside of the EU. Imports have absorbed what EUROFER has described as a ‘moderate rebound in EU steel demand, has grown 4% over the first three quarters of 2014. Finished steel imports rose by 22% over this period and domestic deliveries by EU mills increased only 1.5% as EU mills lost market share to steel suppliers from abroad. The margins of steel makers in third countries are protected by domestic policies.

Eggert believes that the EU should use the weight of its own vast domestic market to tackle third country market protectionism. He said that leverage towards third countries is critical for the EU especially in domains where World Trade Organisation disciplines and enforcement are weak, such as subsidies and raw material restrictions.

EUROFER argues that EU member states should support the European Commission’s proposal on the modernisation of EU trade remedy instruments to update An-

ti-Dumping and Anti-Subsidy Regulations, inter alia allowing the imposition of duties which better reflect the real injury caused to European industry (the EU’s “lesser duty” rule).

EUROFER says that market Economy status should not be granted to China as the Chinese economy ‘as a whole’ does not function on the principles of the free market and does not meet EU technical criteria.

January/February 2015

Industry News jan.indd 1

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INDUSTRY NEWS

MMK’s cold rolling mill is ready for automotive Since it’s launch in 2012, Russia’s Magnitogorsk Iron & Steel Works’ (MMK) Mill 2000 cold rolling plant has achieved an output of 2Mt, including 450kt per annum of continuous galvanising capacity and 650kt of combined continuous annealing/galvanising capacity.

The plant is producing steel products for Russia’s automotive industry and for international car manufacturers and, it is claimed, this means that the company’s products are produced to the highest international standards.

According to MMK, the plant’s technical design parameters mean that it can produce cold-rolled and galvanised products that meet international standards for surface quality and thickness. Ferrozinc and phosphate coverings are added to protect against corrosion.

The Mill 2000 plant has opened

www.steeltimesint.com

Industry News jan.indd 2

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Zero growth for Latin American finished steel The Latin American Steel Association (Alacero) has reported zero growth for the Latin American finished steel market during the first nine months of 2014. Regional crude steel production for the region remained static when compared with 2013 figures and finished steel imports continued to gain market share and now account for 33% of regional consumption.

Emirates Steel wins prestigious Gold Award

up opportunities for MMK to supply big name car manufacturers such as Ford, Volkswagen and Renault-Nissan, all of whom have production hubs in Russia.

Hyundai is showing an interest too as test models have been sent to the company, which, so far, has not used Russian-produced rolled-

steel on its automotive production line.

Mill 2000, claims MMK, produces high-quality cold-rolled and galvanised steel for the automotive industry, household appliances and the construction industry.

It has an annual output capacity of 2Mt.

ArcelorMittal boosts capacity ArcelorMittal is to invest 15 million Euros on expanding production capacity at its Bourg-en-Bresse plant in Eastern France following a two-year extension of a fiveyear partnership agreement with Technip, a project management, engineering and construction company serving the global energy industry.

In September 2013, the two companies signed the agreement with a view to the world’s largest steel maker supplying high strength steels for the manufacture of flexible pipes for deepwater and ultra-deepwater oil and gas fields, some for use at depths in excess of 1,500 metres.

ArcelorMittal’s Bourg-en-Bresse facility produces the steel needed for the deepwater flexible pipes. A press release issued by the steelmaker pointed out that ‘...the agreement signed in 2013 sustained the operations at Bourg-enBresse...and this agreement will reinforce it’.

According to ArcelorMittal Bourg-en-Bresse has become Technip’s supplier of choice for ‘highend technological and innovative solutions’. Technip flexible pipe manufacturing plants located in

NEWS IN BRIEF

UAE steel maker Emirates Steel has been awarded the Gold Category of the prestigious Sheikh Khalifa Excellence Award (SKEA 2014).

CEO HE Saeed G Al Romaithi said the company was honoured to receive the award, which acknowledged Emirates Steel’s ‘dedication and efforts in focusing on our customers and providing them with world-class steel products.’

Interest rate cut will benefit Chinese steel industry The People’s Bank of China’s decision to cut interest rates by 0.4% to 5.6% will benefit the Chinese steel industry.

China’s central bank hopes that the move will lower market interest rates and private financing costs and that manufacturing, agriculture, hardware and decoration – major steel consumers – will benefit from the decision.

Source: China Metals

Loss maker steel company sells subsidiaries Chongqing Iron and Steel Company has sold two subsidiaries and one piece of land for a total of 840 million yuan (US$135.7 million).

The Chinese steel maker has already sold a cold-rolled sheet asset for 350 million yuan (US$56.5 million) and, for the period January to September 2014 has reported a loss of 1.5 billion yuan (US$242 million).

Source: China Metals

France, Brazil and Malaysia are supplied by the Bourg-en-Bresse facility.

In addition to the commercial contract the two companies have also signed a research and innovation contract designed to strengthen technological progress at the Bourg-en-Bresse plant, which is developing custom products designed to meet Technip’s requirements.

Patrick Laudamy, CEO of ArcelorMittal Bourg-en-Bresse, said that the investment in the plant demonstrates the giant steel maker’s confidence in the technical speciality marketplace. He said that the plant had become Technip’s preferred partner for the supply of high-strength steels and that ArcelorMittal was strengthening its teams and production capacity accordingly.

Good news for Chinese steelmakers Shagang Group, China’s largest private sector steel maker, saw profits rise 102% year-on-year for the first 10 months of 2014. Meanwhile, the Chinese Baosteel Group and the Australian company, Aurizon, signed a memorandum of understanding (MOU) with the China Development Bank and ANZ Bank to push ahead with resources-based projects.

January/February 2015

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6 NEWS IN BRIEF

INDUSTRY NEWS

UK steel firm boosts workforce UK-based AIC Steel (part of the AIC Steel Group) plans to create 40 jobs before the year-end, boosting its workforce to 120 after winning 23 contracts worth £9.6 million within six months.

The company plans to recruit surveyors, engineers, project managers and steel fabricators at its new £10 million UK headquarters, opened recently by Minister for Trade and Investment Lord Livingston.

The company’s new base occupies an area of 28,000 sq m and boasts an output capacity of approximately 25kt of structural steel destined primarily for the UK construction industry.

Michael Treacy, CEO of AIC Steel UK, said: “AIC Steel has a reputation for delivering work on a global scale and our recent UK-based contract wins, including the re-development of Bristol City Football Stadium, adds to our portfolio of signature projects.”

Action needed on Chinese finished steel, says Alacero Between January and September 2014 Chinese steel makers exported 6Mt of finished steel to Latin America, prompting the Latin American Steel Association (Alacero) to call for government action to stem the flow.

The amount of Chinese steel imports into Latin America was up by 54% over the same period last year whereas the amount of finished steel exported to the rest of the world during the same period frame was up by 44%.

In terms of its share of Chinese exported steel, the Latin America region accounted for 10.3% and was surpassed only by South Korea (14%).

Latin America received 611kt of Chinese finished steel in September 2014, up 46% on September 2013 but down 15% on the August 2014 figure of 715kt.

According to Alacero, the main destinations for Chinese finished

steel were Brazil (1.5Mt); Chile (946kt) and Central America (836kt) – a share of 25%, 16% and 14% respectively.

Over the nine-month period (January to September 2014) the most important percentage growth of finished steel imports from China when compared to the same period last year was registered in Argentina (+ 136%); Mexico (+136%); Paraguay (+123%); and Columbia (+103%).

Chinese finished steel imports into Mexico ‘continue to show a constant increase’ claims Alacero, receiving 521kt between January and September 2014 and accounting for a 9% share of regional Chinese imports.

Looking at Chinese imports by product, flat steel accounted for 67% between January and September 2014 with ‘other alloy steel coils and sheets top of the pile (1.5Mt); hot galvanised

steel (834kt) and cold-rolled coils (788kt).

Long steel imports reached 1.6Mt and consisted of wire rod (870kt) and bars (572kt).

There are currently 11 complaints and requests against Chinese unfair trading practices in Latin America, which represent 35% of the ongoing actions in the region. Actions taken by the governments of Brazil, Columbia and Mexico represent 25% of all regional measures.

“The problem is serious and growing,” claims Alacero. “It affects the productive and financial viability of the Latin American companies.”

Alacero recently called for immediate action by regional governments ‘to ensure regional competitiveness against a Chinese industry that bases its production and trade on SOEs and government subsidies’.

NLMK continues upgrade Future Award for German companies SMS Siemag, Saltzgitter Flachstahl GmbH and the Technical University of Clausthal have received a German Future Award for a horizontal thin strip casting of steel project.

According to SMS Siemag, the three project partners ‘evolved a new steel casting process that requires much less energy than conventional methods’. It also ‘offers the prospect of producing a whole new generation of steel materials...which can reduce energy consumption’.

The new process will benefit the use of steel in the automotive industry.

January/February 2015

Industry News jan.indd 3

Russian steel maker NLMK Group has commenced phase two of its programme to reduce the environmental impact of its Stoilensky iron ore facility.

The plant produces iron ore concentrate and sinter ore and is estimated to hold commercial reserves of around 5 billion tonnes.

On completion, ‘this facility will mark a complete switch to a more efficient way of handling, trans-

porting and storing waste ore after beneficiation’, claims NLMK. “The new technology, unlike the old gravity-fed system, makes it possible to extract liquid from tailings and transport thickened waste ore,” says NLMK, adding that it will also save 80% of industrial water, which was previously used in transportation and instead will be recycled and returned to the beneficiation process.

Yuri Larin, general director of the plant, said the project was ‘one of the most important elements in Stoilensky’s development’ and that upgrading the plant’s water circulation system would ensure operational stability and increase production efficiency. “These have already led to an increase in capacity of approximately 1Mt/yr without significant additional investment,” he said.

It is claimed that the new system will reduce the environmental impact of the plant, improve the throughput of the tailings transportation system and save energy.

Electricity consumption at the tailings department will drop 9% to 13.9 million kWh, due to the change in the way water is supplied to the beneficiation plant.

The transition from old to new technology will finish in 2018. www.steeltimesint.com

1/21/15 4:08 PM

INDUSTRY NEWS

Crude production up 0.1% World crude steel production for November 2014, based on the 65 countries reporting to the World Steel Association (worldsteel) was 131Mt, an increase of 0.1% when compared to November 2013.

China’s crude steel production for November 2014 was 63.3Mt, a decrease of 0.2%, and elsewhere in Asia, Japan produced 9.2Mt of crude steel, down 1.1% and South Korea produced 5.9Mt, up 5.5%.

In the European Union, Germany produced 3.6Mt of crude steel

in November 2014, a decrease of 1.9% compared to November 2013. Italy produced 1.9Mt, down 13.9%, and France 1.4 Mt, an increase of 5.8%. Spain produced 1.2Mt of crude steel, down 1.9%.

Turkey produced 2.8Mt of crude steel in November 2014, down 8.6% on November 2013.

Meanwhile, Russia produced 5.8Mt of crude steel, up 5.8% over November 2013, and Ukraine produced 1.8Mt, down 28.6% compared with the same period last

year, worldsteel claimed.

The USA produced 7.2Mt of crude steel in November 2014, an increase of 1.5%, and Brazil’s crude steel production for the period was 2.8 Mt, up by 2.4% over the previous year.

The crude steel capacity utilisation ratio for the 65 countries in November 2014 was 73.5%, 2.5 percentage points lower than in November 2013. Compared to October 2014, it was 1.2 percentage points lower.

For a full country by country listing visit: www.worldsteel.org/statistics/crude-steel-production.html

Chinese crude production down In October 2014 China produced 67.5Mt of crude steel, down 0.3% when compared to the same period last year. The daily average figure was 2.1Mt, down 3.3%. The figure for January to October 2014 was 685.3Mt, up 2.1% year-onyear. The expected annual crude steel production figure for 2014 is likely to be 823Mt. Pig iron output was down 3.1% while output of steel products was

up 2% in October. Between January and October 2014 pig iron output was just under 600Mt. Steel output over the period was up 4.7% to 934.4Mt. Chinese steel stocks were up 10.78% at roughly 14Mt, according to CISA, a rise of 1.36Mt. The average daily crude steel output of China’s major steel makers between 11-20 November 2014 stood at 1.6Mt, a rise of

Tata develops new steel grade

Tata Steel is developing a new grade of steel designed to improve the manufacture of tractor wheels and other large off-road vehicles.

The plan is to employ the same thinking behind the development of safety-critical steel for the rail and oil industries.

The new steel grade is called DD13WR and it is claimed to allow www.steeltimesint.com

Industry News jan.indd 4

manufacturers to form, flash weld and cold roll the steel with less chance of splitting and rim failure.

The company claims it has worked closely with its customers with a view to establishing how it can improve its products and reduce manufacturing costs.

Phil Clements, the company’s sales director for the lifting and

44% from the period 21-31 October.

Chinese steel exports were up 0.35% from September at 8.55Mt. Between January and October exports amounted to 73.89Mt, a jump of 42% when compared to the same period last year. Imports of steel rose 4.1% to 12Mt and iron ore imports rose 16.5% to 778.4Mt. Source: China Metals. excavating sector, says that close collaboration with customers has enabled Tata Steel to develop the products its customers need.

Wheel rim manufacturing is a risky business as it includes a number of steps that put high stresses on the steel during the production process. Weld failure and splitting lead to an increased need for manual inspection followed by ‘significant reworking’ to remove the defect or scrapping the whole wheel.

Tata Steel’s research and development centre in the United Kingdom has played a pivotal role in the development of the new steel grade. Scientists at the centre received samples of weld failures from tractor wheel manufacturing sites across Europe and used them to develop the new product.

The new grade is characterised by ‘a cleaner, more tightly controlled chemistry’ claims Tata Steel. Sulphur levels were reduced to improve formability after welding and thereby reduce splitting failures and rejections.

DD13WR will be manufactured in Tata’s Port Talbot steelworks.

DIARY OF EVENTS

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January 2015 26-29 Steel Fab Expo Centre, Sharjah, UAE. Middle East trade show for metal working and metal manufacturing and the steel fabrication industry. Organised by Expo Centre Sharjah.

For further information, log on to www.steelfabme.com 29 2nd Coaltrans UK Kingwood Hall Hotel, London, UK. A one-day coal industry conference bringing together key elements of the industry to discuss critical issues.

For further information, log on to www.coaltrans.com/UK

March 16-18 World Steel Conference Sofitel Rio de Janiero, Brazil. Organised by CRU. A major steel industry conference with a global outlook.

For further information, log on to www.worldsteelconference.com

May 04-07 AISTech Cleveland Convention Center, Cleveland, Ohio, USA. A major global steel event.

For further information, log on to www.aist.org

June 08-11 Metallurgy Litmash 2015 Expo Centre, Moscow. Organised

by Messe Dusseldorf.

International trade fair for metallurgy, machinery, plant technology and products.

For further information, log on to www.metallurgy-tube-russia.com 16-20 METEC Trade Fair & 2nd ESTAD 2015 Congress Centre, Düsseldorf, Germany.

A major exhibition and conference highlighting the latest and most sophisticated technological advances in the global metals industry. The conference, organised by the Steel Institute VDEh, takes place between 15-19 June.

For further information, log on to www.metec-tradefair.com For more steel industry news and features, visit www.steeltimesint.com

January/February 2015

1/21/15 4:08 PM

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INDIA UPDATE

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Chinese steel threatens Indian mills Indian steel mills are facing a double whammy. Falling demand from domestic consumer sectors have negatively affected the Indian steel industry and a sharp increase in imports from China has threatened the very survival of India’s steel mills. By way of damage limitation, Indian mills have reduced their operating capacity by 80% or more. By Dilip Kumar Jha* THE steep decline in operating capacity has come at a time when demand from the infrastructure and construction sectors have been subdued due to fewer new projects in the pipeline. Investments in the construction sector reached an all-time low in the financial year 2013-14 owing to the scheduled general election. Since then, the trend has continued. Also, the then United Progressive Alliance (UPA) government kept new infrastructure proposals on hold in the face of coal scam allegations. Now, after its huge victory in the general election, the National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP) speeded up clearance of infrastructure projects, raising the hope of a restoration in steel consumption.

A proposed high speed train link between Mumbai and Ahmedabad and several other large-scale projects have given steel mills a much-needed shot in the arm and they now expect a sharp increase in steel consumption over the coming years. Indian Prime Minister Narendra Modi has envisaged a INR 15,000 billion ($185 billion) investment in infrastructure

by FY 2016-17.

“India’s outlook is improving following the election of a new government which is promising pro-business reforms. In 2014, India’s steel demand is expected to grow by 3.4% to 76.2Mt following a growth of 1.8% in 2013,” according to a worldsteel forecast, which has revised steel demand growth upwards from its earlier projection of 3.3% in April 2014. Structural reform and improving confidence will support a further 6% growth in demand but elevated inflation and fiscal consolidation remain key downside risks. Moody’s Investor Service stated that steel consumption in India would pick up once the government’s infrastructure spending policies are put in place.

Rising imports India’s steel imports between April and November 2014 exceeded 2013’s full year figure due to accelerated dumping from China. During the current financial year (April 2013 – March 2014), India recorded

steel imports of 5.45Mt. Between April and September 2014 Indian steel imports reported a sharp 33% increase to 4.19Mt. Imports from China, however, have jumped by a staggering 108%. According to Nirmal Chandra Mathur, director, Jindal Steel, at the current speed of growth India’s steel imports will exceed 9Mt, almost double last year’s figure of 5.45Mt. Meanwhile, India’s steel consumption between the April and September of the current fiscal 2014-15 remained flat, showing just 0.8% year-on-year growth due to poor off-take by the construction and automotive sectors. Total finished steel consumption, a key indicator of economic health, was 36.58Mt during the April-September period, according to data compiled by the Joint Plant Committee (JPC), a unit of the Steel Ministry. India, the world’s fourth largest steel maker, had consumed 36.28Mt of steel during the India’s steel imports Financial year (April-March)

Quantity (millions tons)

2014-15*

4.19

2013-14

5.45

2012-13

7.93

2011-12

6.86

2010-11

6.66

2009-10

7.38

Source : Joint Plant Committee, Government of India, * April – September period.

India’s finished steel production Financial year (April-March)

Quantity (millions tons)

2014-15

----

2013-14

87.67

2012-13

81.68

2011-12

75.70

2010-11

68.62

2009-10

60.62

Source : Joint Plant Committee, Government of India

April-September period of the last fiscal (April 2013 - March 2014). World Steel estimates that India’s crude steel output was 62.41Mt between January and September 2014 compared with 61.79Mt in the corresponding period of 2013.

The Indian steel industry has proposed that the government levies anti-dumping duty as high as 40% to protect the interests of domestic steel manufacturers.

India levies between 2.5% and 10% on imports of various grades of steel.

Mathur said that China has protected the interest of its own producers.

Now, it is the Indian government’s turn to safeguard domestic steel mills.

Meanwhile, acting on complaints from the industry, the Commerce Ministry has started investigations into anti-dumping duty. Steel producers have started to exert pressure on the government for speedy action. Reaping the benefits from a host of advantages including lower rates of interest, cheaper raw materials and encouragement from the government, Chinese steelmakers are increasingly exporting steel, which has impacted large, medium and small producers in India.

Indian consumers are being encouraged to import cheap steel from China. A S Firoj, an analyst, said that a tonne of rebar produced in India can cost up to $244/ tonne more than imported steel from China. Most Indian companies are not in a position to bring down the cost of their production as domestic iron ore prices are still running high, even as the price of the raw material globally has nose-dived to a five-year low. Chinese mills are getting their raw material cheaper.

Conclusion Indian steel companies are surviving on the hope that the Indian government will act sooner rather than later to protect their interests. With the “Make in India” mission announced by Modi, and several reformist measures already taken, steel demand is expected to rise in the coming months.

TV Narendran, managing director of Tata Steel, said that the reforms announced by the new government are yet to translate into an on-the-ground economic revival in India. He said that rising imports were likely to keep domestic prices in check and that costs in India were being pushed up by the scarcity of iron ore. According to Narendran, steel demand has been disappointingly flat over the last six months. He hopes that a stable political climate will bring reform and spur steel demand in fiscal 2016 if not the second half of the current financial year. t

* India correspondent www.steeltimesint.com

INDIA UPDATE.indd 1

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11

LATIN AMERICA UPDATE

Turkey’s exports to Latin America Turkey has been the focus of many trade defence cases globally and steel industry observers would be forgiven for thinking that Turkish steel makers should be seeking out new destinations for their products. In Latin America their exports have been concentrated in Brazil, Peru and Central America, says Germano Mendes de Paula* this article analyses Turkish steel exports to Latin America and is based on the aforementioned yearbook (for the period 2011-2013) and updated information (for the first half of 2014), both provided by Alacero, whose estimations were built on Turkish Customs Authority data. The data regarding 2014 was annualised and pays attention only to steel products despite the availability of data for raw materials, steel manufactured goods and indirect steel trade.

IT can be argued that Turkish exports are one the largest “headaches” of Latin American steel makers. Indeed, the theme “Turkey” has gained momentum in steel conferences organised in the region.

In addition, the Latin American Steel Association (Alacero) recently published the Turkey-Latin America Foreign Trade Yearbook 2011-2013, emphasising that: “This yearbook is the first edition regarding trade between Turkey and Latin America, answering the concerns among some of Alacero’s members regarding the growing imports from this country”.

Bearing such apprehension in mind,

General view The Middle East has been the largest

external market for Turkish steel.

Nevertheless, steel demand in the region has been constrained due to armed conflict in the area, and domestic capacity expansion. Moreover, since 2010, there have been several anti-dumping cases worldwide against Turkish steel exports and in this context Turkish steel makers need to look for new markets, including Latin America.

Turkey exported 1.06Mt of finished steel to Latin America in 2011 (Fig 1) increasing to around 1.27Mt between 2012-2013.

In H1 2014 it reached 616kt, which is equivalent to an annualised 1.23Mt.

1,500 1,272

1,265

1,232

2011

31

30

2012

27

23

2013

30

25

2014

39

19

31

5

5

4

4

1,061

1,000

22

7

7

3

7

26

3

7

5

18

10

6

1

500

0%

0 2011

2012

2013

2014a

Fig 1 Turkish steel exports to Latin America, 2011-2014 (kt)

5

14

5

2011

20

41

5

13

5

2012

20

30

2 6

15

4

2013

30

31

9

17

80%

90%

63

2012

70

8

2013

72

2014a

70 10% Rebar

20%

14

1 30%

Wire rod

40%

50%

Bars

Light sections

60%

40% Peru Paraguay

60% Central Am Venezuela

80%

Colombia Argentina

1

100%

Chile Mexico

Fig 2 Destination of Turkish steel exports to Latin America, 2001-2014 (%)

2011

0%

20% Brazil Ecuador

4

70%

Heavy sections

Fig 3 Composition of Turkish long steel exports to Latin America, 2011-2014 (%)

2 100%

2014a

18

22

Brazil

7

22 20% Peru

Central Am.

7

24

47

0%

6

Chile

80%

Ecuador

3 7 0

2

10

2

8 1 12

3

18 60%

40% Colombia

5

Venezuela

6

2

3 10 100%

Mexico

Fig 4 Destination of Turkish rebar exports to Latin America, 2011-2014 (%)

* Professor in economics, Federal University of Uberlândia, Brazil. E-mail: germano@ufu.br www.steeltimesint.com

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LATIN AMERICA UPDATE

Therefore, supposing that H2 2014 will be similar to the first half, it would result in a mild retraction of 2.7% in comparison with 2013.

Latin America was responsible for 8.4% of Turkish steel exports in 2011. This ratio improved to roughly 9.5% in 2012 and 2013, but diminished to 8.8% in 2014.

It can be concluded, therefore, that the region is already a relevant market for Turkish steel exports, despite the long distance between Turkey and Latin America.

Between 2011-2014, long steel products have been responsible for around 98% to 99% of Turkish steel exports to the region.

The rest was flat steel products (mainly hot rolled sheet), as seamless tube sales were immaterial.

Performance by country As illustrated in Fig 2, Brazil has been the biggest target for Turkish exports accounting for 31% of the amount in 2011 and 39% in 2014. Peru, on the other hand, reduced its share from 30% to 19%, respectively. For Central American nations, the ratio fluctuated between 18% and 26%. More importantly, Brazil, Peru and Central America accounted for between 73% and 81%.

Fig 2 also demonstrates that, between 2011 and 2014, Colombia, Chile and Ecuador combined received between 14% and 20% of Latin America’s Turkish steel exports. Venezuela peaked at a 7% share last year due problems faced by local producers, while Mexico and Argentina have been practically immune to Turkey’s exports.

Performance by product Looking at long steel products, Fig 3 shows that rebar has contributed 63% to 72% of total exports. Light sections were the second largest product, with a 13% to 17% share. Wire rod diminished from 14% in 2011 to just 1% in 2014, while heavy sections fell from 5% to 2%, respectively.

Bars expanded from 5% to 9%.

Rebar generates the largest profit margins in Latin America, due to a combination of big market size and a reduced number of gauges. For instance, in Brazil, there are only eight main rebar diameters, varying from 6.3mm to 32mm.

In this sense, Turkish steel exports directly affect the cash cow of local producers.

Fig 4 shows the distribution of Turkish rebar exports to the region. Brazil’s jumped from 20% in 2011 to 47% in 2014. Meanwhile, the respective figures

from Peru were 41% and 22%. Central American participation expanded from 18% in 2011 to 24% in 2013, returning to its original value in 2014. Again, the combined share of Brazil, Peru and Central America oscillated between 72% and 87%. The participation of Mexico was equivalent to 2% in 2012 and 2013, but was null in 2011 and 2014. Argentina was out of reach of Turkish rebar exports.

The export performance of steel products depends on various factors, such as exchange rates, governmental policies (such tax rebates) and trade defence cases (anti-dumping and countervailing duties).

Regarding the latter, the imposition of anti-dumping duties tends to stimulate trade diversion and cause more trade friction. Turkish steel has been the object of many trade defence cases worldwide, which might suggest that it needs to discover new destinations for its products.

In this context, it might be expected that the Turkish steel industry adopts a diversified approach to exporting to Latin America. However, the opposite is true, as exports have been concentrated in Brazil, Peru and Central America. This situation tends to encourage trade defence cases and, accordingly, trade diversion towards other nations in the region in future. t

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USA UPDATE

15

The heat is on for aluminium The long-running battle between aluminium and steel in the automotive industry rolls on, but now that steel manufacturers are perfecting a range of advanced high strength steels (AHSS) there is a sense that steel might have ‘the miracle metal’ on the run. Or does it? By Manik Mehta* YOU might be forgiven if you thought that the use of steel for the automobile industry had become a permanent feature of car production. That was in the past; but now the automobile industry faces the question of whether to continue with the use of a lighter version of steel or try the lighter, but more expensive aluminium for the vehicle body. Will aluminium, often referred to as ‘the miracle metal’, become a ‘game changer’ for the automobile industry, as some of its supporters say?

The automobile industry still consumes a large amount of steel, although aluminium’s use can considerably improve a vehicle’s fuel efficiency. Analysts have told Steel Times International that the new US regulations prescribe that fuel efficiency should be enhanced by doubling the mileage from an average 27.5 miles per gallon two years ago to 54.5 miles per gallon by the year 2025.

Working overtime to fight threat The steel industry, feeling threatened by the advent of aluminium, is now working overtime to produce a lighter version of steel that would be appreciated by the automobile industry, which is a major customer of the steel industry.

The steel industry was alarmed when the Ford Motor Co. started experimenting with aluminium for its F-150 pick-up truck, Ford’s best-selling vehicle in the United States for at least 30 years. Besides Ford’s

F-150, certain models of Audi, Jaguar and Range Rover have also used aluminium bodies.

The automobile industry is the secondlargest user of steel. According to steel consumption data available from 2013, some 40% of the metal is used in construction, and 26% by the car industry.

With steel having been used for such a long time in car manufacturing, there is, obviously, a lot at stake for the steel industry which is expected to fiercely compete against aluminium producers.

The Calvert, Alabama, steel plant of German group ThyssenKrupp, acquired by ArcelorMittal in partnership with Nippon Steel & Sumitomo Metals Corporation (NSSMC), for $1.9 billion in February 2014, produces extremely thin sheets of high-strength steel. The new joint venture, abbreviated as AM/NS Calvert, is expected to generate ‘incredible synergies’.

Hoping that its lightweight, highstrength steel will fill in the new market gap, ArcelorMittal believes that it can deliver the kind of metal car companies want in the future.

ArcelorMittal recently released the results of a design study showing that the use of high-strength steels can considerably reduce the weight of a pickup truck by some 383lbs and thus meet the US regulations to be implemented in 2025 on fuel-efficiency goals. The world’s largest steelmaker said that US weight

reduction goals in cars are achievable by 2025.

AM/NSSMC announced two important investment projects that will further enhance the capabilities of its AM/NS Calvert joint venture with a capacity to process 5.3Mt of flat-rolled carbon steel products annually. According to Andy Harshaw, executive vice president of ArcelorMittal USA, additional improvements are needed to reach nearfull capacity levels.

A US$40 million slab yard expansion project is underway to increase AM/ NS Calvert’s slab staging capacity and efficiency. The hot strip mill currently consists of three bays with the capacity to stage around 335kt of incoming slabs, significantly less than the staging capacity required to achieve the 5.3Mt target.

An additional US$6.7m will be invested in the facility’s existing number four continuous coating line, which will significantly increase ArcelorMittal’s North American capacity to produce press hardenable steels, notably Usibor, an aluminium-silicon coated high strength steel claimed to be one of the strongest steels used in automotive applications.

ArcelorMittal says that the steels produced by the company today are up to 10 times stronger than the mild steels used by the steel giant just a few years ago.

But aluminium producers are building

* USA correspondent www.steeltimesint.com

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USA UPDATE

their own case to oust steel from car production. Alcoa Inc., Ford’s aluminium supplier for the F-150, has been arguing that ‘physics’ is on the side of aluminium.

Alcoa’s executives contend that the miracle metal can match steel in strength, while it is one-third of steel’s density. Alcoa feels that despite the huge investments being made by steel suppliers to produce the lighter but stronger metal, steel manufacturers cannot change the density of the material they produce.

According to the consultancy and research firm Ducker Worldwide, at present fewer than 1% of all cars have an all-aluminium body, but this percentage is expected to rise to 18% by 2025.

Aluminium is used, at present, mainly in engine parts and car hoods, but Ducker believes that by 2025, it will account for 75% of pick-up truck body parts, doors, hoods and lift gates, 24% of large sedans, 22% of SUVs and 18% of minivan body and closure parts.

So what does this portend for steel?

Steel may face fierce competition from aluminium, but steel’s biggest advantage is price. Consider this: basic automotive steel costs around $815 per ton, while a ton of comparable aluminium costs a

staggering $4,800. However, aluminium producers, like Alcoa, argue that the ‘miracle metal’ is still cost effective because of its low density.

This price advantage is also making steel producers more determined to put up a fight against aluminium in the huge automobile market which the former perceive as their “stronghold”.

Companies like US Steel and Kobe Steel have opened up production sites in Ohio to compete with aluminium. Even though the aluminium pitch at Ford took the steel industry by surprise, many in US steel circles had foreseen such a move following the introduction in the USA of fuel emissions regulations.

However, it will not be easy for steel producers to dislodge the aluminium suppliers’ argument; the former will have to ensure that the automobile industry does not slam the door in their face while showing a “keen interest” in the merits of aluminium for use in the car body.

Meanwhile, steel prices have been characterised by what experts described as “inexplicable behaviour”. While US steel prices have steadily risen, they have remained quite low elsewhere in the world. Economists expected the

price differential between the high level prevalent in the US and the lower ones in the steel supplying countries to narrow down, but this has not happened so far despite a 37% import surge in July and an expected 33% average rise by year-end, according to the American Iron and Steel Institute (AIST).

Strong market expectations encouraged the country’s two leading steel producers, US Steel and Nucor, to make an upward revision of their third quarter outlook.

But there is another side effect of this development: the price rise puts domestic steel companies on the defensive, weakening their argument that they were harmed by rising foreign steel imports.

Meanwhile, Kevin Dempsey, senior vice president of public policy at the AIST, recently testified before the Trade Policy Staff Committee under the US Trade Representative that China had gone back on its pledge 13 years ago, on admittance to the World Trade Organisation (WTO), to liberalise its economy and align its trading practices with international norms.

Dempsey urged the US government to adopt a more aggressive strategy in addressing China’s trade-distorting practices.

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18

NEW YEAR PREDICTIONS

A ‘muddle-through’ year lies ahead Konstantin Arshakuni, director of strategy and business development at Russian steel maker, NLMK Group, believes that BOF steel makers with no mining assets – or highly efficient mining assets – will shine the brightest in 2015 1.

What are your plans for 2015?

In 2015 NLMK Group will pursue its Strategy 2017, which was unveiled at the beginning of 2014. The primary focus is structural reduction of costs either through operational excellence, business process improvements and/or through a number of small-scale high-return projects that will continue to strengthen our cost leadership in the global sector.

And certainly we are focusing on sales enhancement, where we have a number of small-scale projects that, as a sum of the parts, will support our position as a supplier of choice for steel users and keep our run rates above 95%. To summarise – cost reduction and sales growth, and, according to the numbers, NLMK was well ahead of the pack this year, and we were just warming up.

2. How is your company approaching the New Year – with caution and pessimism, with boundless enthusiasm and optimism or somewhere in between?

We are traditionally quite conservative when it comes to projections assessing various scenarios of market developments.

Our fundamental advantages – low cost, high quality steel and an extremely efficient sales strategy – are intact.

3. Is 2015 going to be a good or a bad year for the global steel industry?

Generally speaking, 2015 is going to be a ‘muddle through’ year for steel makers since steel demand will continue to creep up at low single digit numbers while overcapacity issues are here to stay for a while. In 2015 we may see higher margins for BOF steel makers due to depressed iron ore and coking coal prices, supported by certain scrap prices due to a global scrap shortage. Presumably,

2015 trends might be negative for pure coking coal and iron ore producers (especially those with a higher cost base) and certainly positive for non-integrated BOF steel-makers with a healthy balance sheet and a lean cost structure (with scrap based/EAF steel-makers somewhere in between).

4. Are you expecting any groundbreaking ‘industry moments’ and if so, what will they be?

Ground-breaking ‘industry moments’ are not likely to happen in 2015 as there is no real background for them:

there was no major break-through since the invention and commercialisation of the LD-converter in the 1950s. But at the value-chain level we might witness remarkable changes of margin shifting from ‘mining’ to ‘steel making’, for the first time since the crisis of 2008-2009, and, I think, this trend will persist for a while.

5. Will any particular steelmakers shine more brightly than others in 2015 – and if so who and why?

Most likely, BOF steel-makers with no mining assets or with highly efficient ones may have the highest margins due a number of factors, including depressed coking coal and iron ore prices. NLMK Group enjoys both highly efficient BOF steel-making at its Lipetsk site, and one of the lowest costs of iron ore production globally at its Stoilensky open-pit mine which gives us a huge advantage over our competitors.

6. In your opinion, which region of the world will be under the spotlight of media attention in terms of steel production in 2015?

China, China and China and a little bit India. But investors should be focused on selected, most efficient companies with the highest potential and clearest strategy rather than on regions as a whole.

Konstantin Arshakuni, director of strategy and business development at Russian steelmaker, NLMK Group – “It will be a challenging year.”

January/February 2015

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NEW YEAR PREDICTIONS

19

7.

Who will shine as a steel industry personality in 2015 and why?

I wouldn’t dare to predict.

8.

Who was your steel industry personality of the year in 2014 and why?

Oleg Bagrin, president of NLMK Group.

Despite a tough market environment he managed to turn around the company in just two years, making it one of the most profitable steelmakers in the world.

9.

Likewise, did any particular steel company stand head and shoulders above the rest – and why?

My opinion is definitely biased, but seriously speaking the issue of leadership is more about proper assets configuration and an effective production chain, management genius and corporate culture. It’s time when companies get rid of fat and accumulate muscles for a future

leap to supremacy. And this is how this industry has worked for centuries.

10.

Where the steel industry is concerned, will 2015 be a better or

worse year than 2014?

It will be a challenging year, which can, however, bring a number of opportunities for steel companies with sustainable competitive advantages. t

China is the key factor Intelligent public investment in 2015 will strengthen Europe´s competitiveness and stimulate growth, says Axel Eggert, directorgeneral of EUROFER, the European Steel Association. He said that the main concern for EU steel producers will be the continuation of elevated import levels, particularly from China

1.

What are your plans for 2015?

EUROFER plans to help shape an EU business environment that supports industrial investment, growth and jobs in the European steel industry and its value chains. In particular, the EU’s climate and energy policy needs to be shaped in a way that it does not disadvantage EU steelmakers vis-à-vis its global competitors. Crucially, the reform of the EU ETS (Emission Trading System) must prevent any direct and indirect costs at the level of most efficient installations for sectors at risk of carbon leakage to ensure a sustainable industrial policy.

We expect continued high import pressure driven by low-priced Chinese and Russian steel exports targeting the EU market as third markets are closing. EUROFER will continue intensive import monitoring now covering all

basic steel products. Also, we will focus on proliferating third country protectionism – its impact on our business in the EU and abroad as a basis for increased reactivity and effectiveness in combating such practice.

2. Is 2015 going to be a good or a bad year for the global steel industry?

Steel market conditions are foreseen to remain muted in 2015, although a moderate strengthening of demand is to be expected in line with the mild further rise in activity of the steel using sectors in the EU. However, imports are to remain on a high level, thereby

Axel Eggert: steel market conditions will remain muted in 2015

www.steeltimesint.com

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NEW YEAR PREDICTIONS

exerting severe margin pressure on EU steel mills. Difficult business conditions for the EU steel sector will continue as long as demand growth remains dull and imports remain on an elevated level”.

3. Are you expecting any groundbreaking ‘industry moments’ and if so, what will they be?

The most important groundbreaking industry moment is intelligent public investment because it will strengthen Europe´s competitiveness and stimulate growth.

The European Investment Plan could support steel demand in 2015 as long as it prioritises infrastructure such as railways, roads, waterways, harbours, buildings and flood protection; and on innovation for large-scale industrial projects, including energy efficiency and low-carbon projects.

4. Will any particular steel companies shine more brightly than others in the new year – and if so who and why?

EUROFER does not comment on the performance of individual member companies

International Trade Fair for Metallurgy, Machinery, Plant Technology and Products

5. In your opinion, which region of the world will be under the spotlight of media attention in terms of steel production in 2015?

As usual China is the key factor determining market conditions in the steel market.

Too optimistic scenarios for domestic steel demand and the required crude steel production levels have resulted in a substantial capacity build-up in China in recent years.

However, due to the fact that China may be reaching the peak in steel demand earlier than previously anticipated, there is a mismatch between current levels of steel demand and available steelmaking capacity.

As a consequence, excess steel production is being exported to the international steel markets, thereby distorting traditional steels flows, fuelling competition and depressing steel prices and profit margins.

China fine-tuning its domestic supplydemand balance would be a major step forward to improve stability in the global market place”.

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6. Will 2015 be a better or worse year than 2014 for the steel industry?

2015 should see growth of activity in the steel-using industries becoming more balanced and more harmonised across the sectors, supported by a positive outlook for investment and exports in combination with better access to finance.

Output in the steel-using sectors is foreseen to gain some momentum as economic recovery in the EU continues its track of modest but gradual growth and the negative impact of uncertainty and weak sentiment wanes. Total output in the steel using sector in the EU is foreseen to increase by slightly over 2.5%. Steel demand is expected to see a fairly similar increase in 2015.

The main concern for EU steel producers is the continuation of elevated import levels. As mentioned before, China is the key factor in the current distortion of international steel trade flows, thereby fuelling fierce competition, eroding margins and increasing the risk of more protectionist behaviour. t

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IRON ORE

21

The survival of the fittest?

The golden age of super-charged prices and eyewatering profits are over for iron ore producers. The new iron age, it is argued, will be characterised by a Darwinian struggle for survival – and only the fittest will survive. By Michael Schwartz* IN a provocative but thoughtful article published on the influential mineweb. com, Reuters correspondent Andy Home recently asked whether the spot iron ore market is sinking as new ore is released into the market and whether, indeed, it will be a question of the survival of the fittest.

So how did Andy Home express his concerns? Well, first he looked at the benchmark price for 62% iron ore as assessed by the Steel Index.IO62-CNI=SI. This has just fallen below the $89/t level for the first time since September 2012.

In much more assertive tones, Home then declared, “Gone is the golden age of super-charged prices, eye-watering profits for producers and boom times for iron-rich regions such as the Pilbara in Australia.

The new iron age will be characterised by a Darwinian struggle for survival, from which only the fittest will emerge.”

Nothing if not forthright, but how true is it? This writer approached several iron ore producers to comment on Home’s statement, including Black Iron, a Canadian iron ore exploration and development company advancing its 100%-owned Shymanivske Project (located in Krivyi Rih, Ukraine) to production.

Black Iron’s CEO Matt Simpson points out that, “… in the long run, a successful iron ore business is the one that can best manage its margins (ie, keep the production and transportation costs low).”

Many will struggle Simpson agrees with the comment that there will be a “survival of the fittest” among iron ore companies, but believes “this has been a historical reality for quite some time.” He supports his view with the 2013 report by Wood Mackenzie and BMO Capital Markets: over half the world’s producing iron ore mines operate at total cash costs greater than $50 per tonne, “… which suggests many will struggle and/or go out of business if current market prices

remain or fall lower.” Simpson is, however, keen to stress that Black Iron, “... will be able to produce at less than $45 per tonne, and our shipping distance is 2025% shorter to China.”

Jimmy Wilson, BHP-Billiton’s iron ore president, also predicted this scenario of low-cost iron ore. Earlier this year, at a conference in Perth, Western Australia, he predicted that, “Significant low cost supply will enter the market” and that “over the next five years supply growth is expected to exceed demand growth” and that “the majority of supply growth will be low cost, largely from Australia and Brazil (with) no major African projects expected to be developed by 2018.”

China’s contradictions Andy Home also looked at China, where it was precisely those “turbo-charged” prices of two years ago that led to major iron ore investment. Unfortunately, reliable information on the realities of Chinese iron ore can be difficult to obtain.

For example, official figures from China’s National Bureau of Statistics (NBS) indicate ore production up 11% year-onyear for July and year-to-date up 9%.

The problem lies in NBS releasing only crude totals, without, say, any indication of grades. Quite simply, NBS may be wrong – a possibility underpinned frankly

by Macquarie Bank analysts commenting, “one thing we do not use at all is the crude ore number produced by the NBS” (Commodities Comment, July 22, 2014).

So is China still as influential on prices as it was a few years ago? Jeffrey Wilson, once again speaking in Perth, looked at the indicators: Chinese crude steel production to peak at 1.1 billion tonnes by 2025, moderation in China’s steel growth, and lower pig iron production as the use of scrap grows.

For Wilson, any decline in Chinese consumption will be counter-balanced by India and South-east Asia primarily, but

also to a lesser extent by Latin America and the former Soviet Union states. In addition, BHP-Billiton will be ready to compete in terms of quality, as stringent pollution controls in China are increasingly affecting local steel producers, while larger furnaces will need better-quality raw materials to function efficiently.

Matt Simpson of Black Iron believes that China, because of its sheer population size and internal demographic shifts, still exercises considerable influence over the steel and iron ore markets. And yet, “… there are other countries with significant populations that are undergoing, or will undergo, similar demographic shifts, particularly Brazil, the Middle East and India. And there are other geographies that require significant infrastructure upgrades.” Hence a need for iron ore...”

In fact, Simpson strikes a note of warning: “Focusing purely on China, especially on the China growth rate, can be misleading.

Many forget about the other key global geographies, and just as many seem to be concerned about China only growing at mid-seven per cent rates. There seems to be concern and disappointment that China is slowing down as a result of no longer posting double-digit growth rates.

China, however, is growing at mid-seven percent on a base that is now two-times larger than what it was when the country started its double-digit growth. So reality is, China growth and China demand are still just as strong as ever.”

Conclusions Black Iron agrees with the prediction of “the survival of the fittest” but considers that it is nothing new; low-cost production will enable certain companies to survive.

More unpredictable is the role of China in the immediate future; statistics are not automatically reliable, and a whole range of factors, such as environmental stipulations and the rise of other markets, further complicate the situation. t

* Freelance mining journalist www.steeltimesint.com

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Excess capacity and trade friction Excess capacity is a lingering problem for the Latin American steel industry and while China is usually discussed in association with global trade friction, Turkey has raised its head above the parapet and is targeting the Americas with long products. Germano Mendes de Paula* reports from the Brazilian Steel Institute’s 25th annual conference in São Paulo.

AÇO Brasil (or the Brazilian Steel Institute) organised its 25th conference in midAugust 2014 in São Paulo. Approximately 600 delegates, including senior management from Brazilian steelmakers, attended the event, which reinforced its status as the country’s most important steel seminar.

The agenda tackled relevant domestic and international issues and where the former was concerned the original plan was to discuss macroeconomic and sectorial themes. However, the last programmed panel, dedicated to Brazilian macroeconomic perspectives, was cancelled following the death of presidential candidate Eduardo Campos in a plane crash. While the conference was cut short by this tragic accident, the event was nonetheless characterised by some very good presentations.

Excess capacity Anthony de Carvalho, from the OECD’s Steel Unit, stressed four main trends in his presentation on excess capacity. He argued that a surge in excess capacity has been observed in the recent years and is likely to persist for some time. Furthermore, government subsidies and interventions make it harder for the market to adjust capacity. According to de Carvalho, the profitability of the steel industry is unsustainably weak, trade friction in the sector is increasing and government interventions are also hindering marketbased mergers and acquisitions He pointed out that in the period 20012013, global steel capacity doubled, increasing at a rate of 5.6% per annum and reaching 2.1 billion tonnes in 2013.

China accounted for 77% of the escalation, but other emerging markets (such as India and Iran) also expanded rapidly from low levels. Meanwhile, OECD capacity had enlarged very little.

“Excess capacity is likely to linger into the near future.”

The Chinese government has released guidelines for steel capacity closures and market concentration. However, total capacity closures totalled 57.8Mt in China during the period 2010-2013, while new capacity achieved 192.5Mt (Fig 1).

Between 2013 and 2015, China will continue to lead capacity additions (with a 41% share), followed by other Asian nations (30%), and the Middle East (14%).

The remaining regions will contribute 3% or less individually. By 2015, China will account for 45% of world steel capacity, while Europe, NAFTA and Japan combined will retain a 26% share.

The consequence of excess capacity is quite clear: low profitability. Fig 2 shows a strong correlation between capacity utilisation ratio (plotted in relation to the left hand side) and EBITDA margin (on the right hand side). In the context of lower Latin America will remain a major target market for Turkish steel producers

* Professor in Economics, Federal University of Uberlândia, Brazil. E-mail: germano@ufu.br January/February 2015

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CONFERENCE REPORT

80

100

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45,0

9,4 2011 New capacity

2012

15

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0 2010

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40 20

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Closure

10

75 70

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65

0 1990 1992 1994 1996 1998 20002002 2004 2006 2008 20102012

Fig 1. New capacity and closures in the Chinese steel industry, 2010-2013 (Mt).

Fig 2. Capacity utilisation ratio and EBITDA margin, 1990-2012 (%)

Source: OECD Steel Unit

Source: OECD Steel Unit Global overcapacity is estimated at Outlook >450 Mtpa finished steel equivalent 1

Global overcapacity1 is estimated at

>450 Mtpa finished steel equivalent 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 Global demand 600 400 200 0 2004 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Average 83% 86% 70% 78% 74% 75% 78% 81% utilisation

EBITDA margin Percent 20

2005

18 16

2006 2007

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14 12 10 8 6 5

2004

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2013 2009

70

2011

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76

78

80

84 88 82 86 Capacity utilisation percent

Fig 3. Global capacity and demand, 2004-2020 (Mt of finished steel equivalent)

Fig 4. Capacity utilisation and EBITDA margin in the global steel industry, 2004-2013 (%)

Source: McKinsey

Source: McKinsey

profits, not surprisingly, the number of anti-dumping and countervailing duty initiations has enlarged.

Mr de Carvalho’s recommendations can be summarised as follows: a) to remove protectionist measures, restrictions and subsidies that support new capacity; b) to ensure that any new investments are sustainable in the long-run; c) to encourage and, if necessary, assist the phasing out of facilities which are not economically viable; d) to guarantee that state-owned enterprises act according to market principles; e) to foster consolidation in particular, but not exclusively, in some emerging economies.

On the same panel, in his presentation entitled Solving Overcapacity in the Steel Industry, Michel Van Hoey, from consulting firm McKinsey, argued that global overcapacity (measured by the difference between crude steel nameplate capacity and finished steel apparent demand) is equivalent to 450Mt of finished steel equivalent. This amount is distributed among China (246Mt), Europe (60Mt), the USA and Canada (46Mt), CIS (34Mt), Latin America (30Mt), Japan (23Mt) and India (21Mt).

Van Hoey also believes that excess capacity is likely to linger into the near future. Fig 3 demonstrates that in 2020 it would surpass 400Mt of finished steel equivalent. The utilisation of installed capacity will gradually improve from 74% in 2013 to 75% in 2015, 78% in 2017 and even 81% in 2019. www.steeltimesint.com

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Van Hoey also showed the relationship between growing overcapacity and EBITDA margin deterioration in the global steel industry. He highlighted that empirical analysis suggests that capacity utilisation needs to exceed 83% for the industry to make sustainable returns (Fig 4). In order to reach this goal, the worldwide steel business will need to close some 300Mt of capacity at the current demand level, which will cost approximately $30bn.

He estimated that the cost of closure (including labour and clean-up costs) would surpass $150/tonne in integrated mills and $50/tonne for minimills and downstream activities located in mature steel regions. The respective figures are $50 and $15 per tonne in emerging nations. Accordingly, $17bn would be spent upstream in mature regions, $8bn upstream in emerging areas, $2bn in downstream in developed countries and $1bn in downstream in developing nations.

The final part of Van Hoey’s presentation was dedicated to the unilateral and multilateral levers that can reduce overcapacity. He made six suggestions, which in some cases would require an upfront anti-trust review: • Unilateral closures: players unilaterally and independently reduce excess capacity according to their own timetable; • Unilateral closures and off-take agreement: some players close all or the majority of production and negotiate an

agreement to source the required steel from remaining players, potentially at preferential rates; • Unilateral closures and leasing: closures the same as above but in addition, players negotiate a lease of capacity, potentially at preferential rates; • Combined upstream steel utility: upstream capacity is pooled into a sub-set of entities with joint ownership; • Asset specialisation with off-take agreement: two or more players agree to specialise in certain products and either exit non-core areas or swap assets; • Alliances or “code sharing”: players agree to collaborate in certain areas and reduce/eliminate production where one partner is stronger and relies on the other for future production needs.

He concluded by stressing that the industry should seek to remove overcapacity through a combination of unilateral and multilateral actions. During the Q&A session, he avoided answering direct questions about effective capacity that could be eliminated, as 300Mt seems to be unrealistic due the governmental and social pressures.

Jefferson de Paula, CEO of ArcelorMittal Long Steel Central and South America, also on the excess capacity panel, said there were three main motivations that explained the problem. First, the structural drop in demand, which affected the European Union and Japan the most and, to a lesser extent, the USA and Canada. He January/February 2015

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Crude steel capacity (Mt) 2000-2005 +274M

Crude steel consumption (Mt)

2000-2013 +586M

2000 2002 2004 2006 2008 2010 2012 13

2000-2005 +224M

2000

2002 2004

2000-2013 +335M

% 45 40 35 30 25 20 15 10 5 0

2006 2008 2010 2012 13

2000

2010 2012 13 2002 2004 2006 2008 Total steel trade (Mt) (RHS) Total steel trade, as % of global production Total steel intra-regional trade, as % of global production

Fig 5. Chinese crude steel capacity and crude steel consumption, 2000-2013 (Mt)

Fig 6. Global steel trade, 2000-2013 (Mt and % of the production)

Source: ArcelorMittal

Source: Accenture

400 350

70%

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50%

15,000

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40% 30%

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0 2000 2001 2002 2003 2004 2005 200620072008 200920102011 2012 20132014 Durable Non-Durable

Fig 7. Chinese exports of durable and non-durable goods ($bn). Source Accenture

said that European steel demand in 2013 was 32% lower than it was in 2007.

Second, the increase in capacity beyond demand, was particularly relevant in China’s experience. Fig 5 shows that crude steel capacity in China enlarged by 586Mt from 2005 onwards. Meanwhile, crude steel equivalent consumption improved by 335Mt. Subsequently, in the examined period, China added 251Mt of excess capacity.

Third, government and trade union pressure against closures is stronger in China, European Union, Japan and CIS countries and moderate in the Americas.

The key issue is that in the steel business, there are high barriers to entry, but maybe even greater barriers to exit.

Mr de Paula analysed two experiences concerning the pressures against steel plant closures, both in Europe. The intention of ArcelorMittal to shut down the blast furnace at its Florange mill (with a 1.3Mt/yr capacity) met with robust resistance from the French government due to the social impact of job losses.

In Italy, the government seized Ilva and approved a decree in 2012 to save the Taranto steelworks (11.5Mt/yr capacity) and its 12,000 employees.

He emphasised that, in the context of excess capacity, the Chinese steel industry has negatively affected the profit margins of its competitors, as in most state-owned companies (belonging to the provinces and municipalities), profit is a secondary goal. Chinese steel makers have access January/February 2015

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500 450 400 350 300 250 200 150 100 50 0

HR sections Wire rod Rebar Export share

10%

0 2005 2006 2007 2008 2009

2010 2011 2012

0%

Fig 8. Turkish long product output, 2005-2012 (kt). Source: SteelFirst

to low cost capital as well as lower fixed costs and an artificially depreciated exchange rate. Not surprisingly, there has been an increasing surge of Chinese direct and indirect steel exports. As for recommendations, Mr de Paula preferred to pay attention to Brazilian competitiveness, both in general and sectorial terms.

Looking at these three interesting presentations, there was more convergence than divergence. Excess capacity is a crucial hurdle that has to be solved and it is likely to take considerable time and money.

Global steel trade and Turkey John Lichtenstein, from Accenture, discussed global steel trends and divided his presentation into two parts – direct and indirect steel trade.

According to Lichtenstein, global steel trade is still below its 2007 peak of 445Mt and continues to decline as a proportion of global steel output, diminishing from 39% in 2000 to 27% in 2013 (Fig 6). The drop in inter-regional trade has been even sharper, retracting from 16% to 10%.

Lichtenstein stressed that crude steel utilisation rates varied significantly. In 2012, for example, the global average was 74%, but in Mexico, it was equivalent to only 64%. The respective figures for other key nations and regions were Europe (67%), India (69%), Brazil (74%), Russia (75%), Japan (77%), the USA (78%), China (86%), Turkey (89%) and

South Korea (94%). This considerable dispersion stimulates a strong dynamic for international trade and trade frictions.

Direct steel exports from China have been a crucial feature of the global business.

According to Lichtenstein, the Chinese share of total steel trade has expanded from 7% in 2005 to 15% in 2013. In the same direction, participation in intraregional trade has improved from 3% to 8%, respectively. From 2009 to 2013, Chinese direct steel exports amplified by 233% in the Americas, by 155% in Asia, by 151% in Europe and by 85% in Africa.

At current levels, the Americas is set to import over 12Mt of steel from China in 2014, which would be a new record.

Lichtenstein highlighted that indirect exports of steel have grown 40% post2009, reaching a level equivalent to almost 80% of direct (semi-finished and finished) steel exports in 2012. In addition, as can be verified in Fig 7, Chinese exports of durable goods have grown much faster than non-durable goods in the post-crisis period, even considering a 18% drop in Q1 2014. The compound annual growth rate (CAGR) of durable goods exports reached 4.6%, against 3.1% obtained by nondurable goods, from Q1 2000 onwards.

Machinery and transport material have been responsible for the bulk of the durable goods trade.

India and Brazil, on the other hand, have exhibited the sharpest growth in indirect steel imports, with respective CAGR of 20% and 18% during the 2003-2011 www.steeltimesint.com

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7,000 6,000 5,000 4,000 3,000 2,000 Fig 9. Turkish flat rolled deficit, 2005-2012 (kt).

Source: SteelFirst

1,000 0

2005

2006

period. In the meantime, the USA showed a 2% CAGR and Mexico, 1%. Another relevant trend is that exports of fabricated steel structures have increased faster.

Lichtenstein stressed that the battleground was shifting from direct to indirect steel trade, in which manufactured goods and construction-related products gained momentum. This has important implications for steel companies and steel industry associations, as it has required them to focus on full value chains and to develop innovative operating and leadership models.

While it is impossible to attend a steel conference without hearing about China, this is not the case where Turkey is concerned. Having said that, SteelFirst’s Vera Blei attempted to redress the balance by describing Turkey as a new threat for steel makers in general and for Latin American steel makers in particular.

She mentioned that Turkish crude steel production had enlarged from 23Mt in 2006 to 35Mt in 2013, becoming the eighth largest steel producer in the world. A minor production retraction was expected in 2014. Turkey’s steel industry growth is derived from a combination of factors: • A highly adaptable private sector: Turkish steel makers have switched from billet to rebar to wire rod to light sections depending on current market needs; • An entrepreneurial set-up provides for a strong focus on costs allowing conversion of scrap to finished products at a lower cost than many competitors; • Accelerated early growth through abundant cheap scrap, particularly from the former USSR and Eastern Bloc, in the late nineties and noughties; • Geographic advantage: coastal locations provide major logistical advantages and cost efficiencies. In addition, regional market deficits in long products or inefficient producers in neighbouring markets.

Blei explained that approximately 70% of Turkish production is long steel products, of which rebar is the most important.

Fig 8 shows that the export ratio of the Turkish long steel products has hovered around the 50% mark. These exports www.steeltimesint.com

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2007

2008

2009

2010

2011

2012

MBR’s 5-Year Middle East & Africa Strategy Study

were fairly diversified in 2013. A major destination is the Middle East and North Africa (MENA) with a 52% participation.

Western and Eastern Africa received 14%, followed by Latin America (11%). Asia is equivalent to 10% of international sales, but the market is under pressure from cheap Chinese products. NAFTA and Europe have 8% and 5%, respectively.

During 2014, the Turkish steel sector experienced many troubles. Conflicts in Syria, Libya and Egypt adversely affected exports. Despite the retraction of shipment volume to Iraq, the country remained Turkey’s largest export market, but Turkish steel export volumes fell by 6.7% year-on-year to 10.6Mt in the first seven months of 2014. In this context, the Turkish Steel Exporters Association (CIB) revised its 2014 export target down by 6% to 17.5Mt. Despite this, exports will remain the focus for longs producers and Latin America will remain a major target market.

The Turkish steel industry is increasing its flat steel production. As illustrated in Fig 9 Turkey’s flat steel deficit has increased from 4.5Mt in 2005 to almost 7Mt in 2007 and since then the predominant trajectory has been a decline of up to 3Mt in 2012. While flat product mini-mills will look to export markets (Europe, MENA initially), Latin America could become a major target market as well.

Blei declared that the cost of import scrap (based on HMS No1&2) delivered in Turkey is at $400/tonne. The conversion costs are estimated to be, on average, $212/tonne, while the most efficient mills can achieve $200/tonne. She estimates that rebar pricing will remain around $200-250/tonne over ferrous scrap, the consequence being a low profit margin.

However, she declined to provide figures on margins during the Q&A session. It seems, however, that a tax rebate is crucial for long steel exporters to survive.Turkish steel producers have been quite aggressive in boosting exports. As a consequence, 17 trade cases have been opened against Turkey by 13 countries since 2010. Again, trade frictions are a major trend in the business, and similar to the problem of excess capacity, it will take long time to solve (or at least to mitigate). t

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HANDLING & SCHEDULING

The one-crane solution in action Nucor’s melt shop in Jewett, Texas, has shaved US$10.2 million from its capital expense and operating costs and is approaching zero unplanned, crane-related downtime in eight years, says Doug Maclam* WHEN Nucor began designing a new melt shop for its Jewett, Texas, mini-mill in 2002, the centrepiece of the design was what came to be known as the “onecrane solution.” Nucor conceptualised the $100 million mini-mill expansion with a single crane for each critical function: one charge crane, one ladle crane, one caster-maintenance crane, and one billet-handling crane. Industry-watchers were sceptical, both of the single-crane approach and the unconventional cranes selected, as it was the first time a US steelmaker had purchased hot-metal cranes of this capacity featuring AC variable-frequency controls.

Nucor’s primary motivation for the new melt shop was to improve the costcompetitiveness of its operation. Since the mill’s products are merchant-grade bars, angles and light structurals, cost-per-ton is a primary factor in improving market share.

“The team’s mission was to build a melting and casting facility that would provide a competitive advantage in safety, quality and operational performance for years to come,” said John Farris, Jewett’s

maintenance manager at the time and now mill manager. “To accomplish this, our team challenged tradition and searched for different ideas from around the world and in other industries. We could not get comfortable with the traditional notion of a back-up crane and instead decided to find a crane manufacturer capable of building a single crane with built-in redundancy. Konecranes was selected as the partner to innovate our severe duty crane application,” he said.

The concept of purchasing a single crane for each function was revolutionary, particularly in an operation whose goal was zero unplanned downtime for its cranes.

In practice, the one-crane solution saved Nucor significantly in initial equipment, building, long-term maintenance costs and improved safety conditions, and required nearly no unplanned downtime in its first eight years of operation.

An AC-powered approach As Nucor’s material handling partner in this venture, Konecranes worked with the steel producer to design four AC-powered cranes whose extensive redundant

features gave Nucor the reliability of two cranes in one. The AC variable-frequency controls also eliminated some of the worst maintenance headaches of DC–powered cranes.

Tommy Massey, current maintenance manager at the Jewett mill, implemented parameters for tracking all of the costs and downtime attributed to the cranes since their 2004 installation. According to Massey’s analysis of the data and to Damon Burrow, Nucor’s melt shop electrical lead, the AC motors are more economical than their DC counterparts.

“Many long-timers in the industry believe DC is the only way to go because of the amount of torque and life you get out of them,” Burrow said. “We have far fewer problems from AC motors, and they are much less expensive to replace than a DC motor.”

The Jewett melt shop, with a capacity of 1.2Mt/y, replaced an outdated facility at the same site with only 850kt capacity.

Another major factor in Nucor’s costreforming strategies for the new melt shop was overall building cost. Nucor has estimated that the one-crane solution

*Doug Maclam, vice president, sales and marketing, Industrial Crane Solutions, Konecranes (Americas) January/February 2015

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“One of the very best aspects of this whole project has been the co-operation between Konecranes and Nucor in designing the reliability into these cranes.” Tommy Massey, maintenance manager reduced its building cost by 30%, or more than US$4 million.

Replacing three 45t electric arc furnaces (EAFs) with a single 90-ton EAF cut melt time from 70 minutes to 35 minutes at 3,000 degrees. Even so, the new EAF bay with its 225-foot runway is very compact: it would have required at least another 100 feet of runway and two additional bays in both the charge and ladle areas to accommodate a redundant crane, and the added square footage would have required more capacity for the emission control system.

In addition, a traditional two-crane solution would have required purchasing back-ups for the charge, ladle and billet cranes. Instead, Nucor and lifting partner Konecranes met the challenge of reliability in single cranes by essentially combining the mechanical and electrical resources of two cranes into one structural package.

On each of the four cranes, the bridge and trolley are equipped with four to eight drive motors. Even with half the drives out of operation the trolley or bridge can still operate, although at reduced speeds and with longer acceleration times. Similarly, the main hoists on the ladle, charge and billet cranes are equipped with two hoist motors and differential gearboxes that permit them to remain fully functional at reduced speeds in the event of failure of one of the main hoist motors or inverters, as well as a spare AC inverter. A simple switching process is all that is needed to bring the spare inverter on line, further adding reliability to the one-crane set-up.

“Looking at the initial cost of two cranes versus one – you pay more by having redundancy on the crane but not the same cost as buying two individual cranes,” Burrow said. “Having only one crane for each job gives us more time to work on other equipment to keep reliability of the entire facility higher,” he added.

Massey said the downtime cost savings realised through the redundant features www.steeltimesint.com

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is a major plus: “To replace one of those drives might take us 30 hours, and a repair could take 15-24 hours. With a spare installed, in a matter of 30 minutes we can switch the drive and then schedule a repair of the problem drive. It’s given us a significant savings over repair or replace time.” In its first eight years, the mill attributed no significant downtime to the cranes.

Safety considerations According to Massey, the control e-house has provided a safe working environment for maintenance crews engaged in service or diagnosis on the cranes. Work gets done faster with fewer trips up on the crane, and most work can be done inside the 80°F e-house, rather than the 140-145°F ambient temperatures in the melt shop.

He noted that the redundant features, notably gearboxes and drives, allow workers to keep cranes operating without having to address issues while the shop is under pressure for production. Also, the

design of the control systems with the interlocked safety features that are built in to the operating system have had a significant impact on reducing the amount of operational errors that can damage the crane. “The greatest contribution to safety is that the cranes are reliable,” Massey said, so that crews spend less time on the cranes.

The cranes also benefit from a groundbased diagnostics feature; however, given their reliability, the feature is seldom used.

“A maintenance worker can check many conditions without actually getting on the crane, which has rotating equipment and pinch points to think about,” Burrow said.

“The job becomes safer and more effective – fewer hazards need to be mitigated to get the same sort of information you’d normally have to go on the crane to retrieve.”

With an eye to managing costs, the Nucor and Konecranes team also worked to design the cranes with a high commonality of spares, since waiting for parts is not a cost-effective option.

“If we have one hoist motor spare in the warehouse it’s good in one of five spots,” Massey said. “The cost savings is in the inventory value we have to keep to maintain reliability.”

Maintenance planning becomes more important in a single crane scenario, as maintenance must be preventative rather than relying on back-ups. “In a traditional dual-crane system you will have a crane that is always available as your back-up,” Burrow said. “With a single crane system you have to plan out when you will do work and repairs much more in- depth.”

Burrow said that a good example of this philosophy is Nucor’s billet crane, which services both rolling mills and the melt shop and handles 2.4Mt of material per year. This makes the billet the hardest-working crane in the facility, and, therefore, the most difficult to schedule for maintenance.

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In the years since Nucor purchased their four melt shop cranes, lifting technology has continued to advance. Nucor is now upgrading its charge crane to incorporate DynAReg, one of Konecranes’ newest technologies that recaptures the braking energy of the hoist and recycles it into the electrical grid. “On the current drive system there are resistors outside the e-house, exposed to dust, dirt and heat.

With the new DynAReg system there is no need for those high-maintenance resistors,” Massey said.

Cost savings and unexpected benefits Massey and Burrow calculated that

Nucor’s Jewett melt shop saved over US$10.2 million in building, equipment and maintenance costs with its crane program in its first eight years of operation while successfully moving 8Mt of steel. A side-by-side comparison of the cranes they purchased alongside a more traditional two-crane solution shows where the savings can be found (See box p29).

In addition to cost savings, Burrow said that components like the redundant drives and motors led to unexpected benefits.

“We can also use those as troubleshooting tools if we are having problems or want to do maintenance. We can use all these options to get the crane back in operation faster. Before having redundant systems,

we had to completely change a piece of equipment to find out if what we thought was the issue was really it,” he said.

“I would definitely say that the onecrane solution at our facility has changed the way we do things,” Burrow said. “A lot of concerns voiced when we first went with the one-crane solution have fallen by the wayside. We’ve proven over the last eight years that it can be done and done reliably.”

“We’re very happy with the reliability we’re seeing after eight years, as the cranes have not caused any significant downtime. We attribute that to two factors: the design and quality of the cranes themselves, and the preventative maintenance practices we’ve established around a single-crane solution,” Massey said. “One of the very best aspects of this whole project has been the co-operation between Konecranes and Nucor in designing the reliability into these cranes.”

“All of the things we wanted to build in, Konecranes was successful in giving us,” Nucor’s mill manager John Farris said.

“Our operating cost reflects that. With the technology that is available now, and with what’s been proven here, I can’t imagine anyone designing a new meltshop with double cranes today [unless] … specific material handling demands dictated that having two cranes was the only way to do the work.” t

Crane-by-crane: Examining the details All four of Nucor’s melt shop cranes are top-running, double-girder designs featuring AC inverter controls.

Nucor’s radio-controlled charge crane is rated CMAA Class F at 200t, with two auxiliary hoists rated at 75t and 25t.

The crane is also rated at CMAA Class B at 300t for handling major equipment during maintenance outages.

Its process begins when the charge crane picks up an 80t bucket loaded with around 100t of scrap steel, and conveys it to the EAF, ferrying 35 – 40 loads each day. The 5,000 cubic foot capacity bucket required for one charge operation weighs 198t when full. The crane’s 75t auxiliary hoist is used to open the charge bucket, and the 25t auxiliary allows the operator to change furnace electrodes and access areas that cannot be reached by the 75t hoist. The 25t hoist is equipped for magnet use, further enhancing its maintenance value. Total travel distance for the charge crane is only 100 feet, with a vertical lift of 90 feet.

The 200t ladle crane is a virtual twin to the charge crane, but without the 25t auxiliary hoist, and with the addition of an operator’s cab. Both cranes are designed January/February 2015

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for continuous duty in extremely harsh environments. Heat shields protect key areas of the cranes, which are engulfed in flame at each furnace charge and exposed to searing heat during ladle handling in the caster aisle. This crane picks up the ladle of molten steel from a ladle car and moves it to an alloying station and then to the caster, which converts the steel into billets. After depositing the ladle, the crane returns for another load. The ladle crane travels 130 feet from the alloying station to caster, with a vertical lift of 90 feet.

The caster maintenance crane, CMAA service class D, is rated at 100t with a 35-ton auxiliary hoist. It is used to clean the slag out of empty ladles and prepare them for their next use. This crane is also equipped for magnet use on its auxiliary hoist. The caster maintenance crane has horizontal travel of more than 400 feet, and vertical lift of 90 feet.

Nucor’s billet crane, rated CMAA class E, is a two-magnet crane with a 75t main hoist and a 12.5t auxiliary. It has a unique trolley that allows turning the hoisting machinery through 270 degrees of rotation to position the magnets in any orientation required for billet handling.

This enables it to stack billets side-byside until they have a square stack, then rotate 90 degrees to build the next stack, preventing domino-like falls in the 1,200-foot-long billet bay. It handles up to 19 6.25-inch square billets at a time.

The billet crane travels 1,200 feet with a vertical lift of only 50 feet. www.steeltimesint.com

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Overview of cost savings totalling US$10.2 million Nucor has been able to verify the cost savings of the one-crane solution at least partially because Konecranes initially offered pricing on a traditional, twocrane solution that was not selected.

Looking back at those equipment cost numbers, circa 2002, and extrapolating

what costs would have been to operate and maintain seven traditional cranes compared to four redundant cranes, Nucor’s Tommy Massey and Damon Burrow developed a comparison of the two solutions.

For (2) Cranes per Runway, without Redundancy, As-Purchased

assuming that would eliminate the 100 Ton Crane.

Ladle Crane

2,093,174

3,843,000

Charge Crane

2,148,112

3,925,000

for (2)

100 Ton Crane

731,889

-

(100 T not needed if (2) Ladle Cranes purchased)

Billet Crane

1,493,000

2,822,000

for (2)

Spares

655,888

655,888

Lot

Items: for (2)

Source: M. Laughlin, Konecranes, 20-June-2013

Install

792,069

1,092,069

Lot

Building Length

n/a

2,000,000

Additional

n/a

2,000,000

Additional

5,349,015

7,134,72

Using 1.4 as 2nd Crane Maintenance Factor

$13,263,147

$23,472,682

Ladle Bay Building Length Maint. Costs

Source: D. Burrow, Nucor-Jewett, 26-June-2013

Ladle Bay (See Tab 2) Total

10,209,535 Savings

Comparison of equipment costs: Single redundant design versus. 2-crane, non-redundant

Maintenance cost comparison When Nucor’s Jewett melt shop became operational in 2004, crane maintenance costs were divided into three categories for tracking and analysis: 1. Labour that team spends on the cranes 2. Material checked out of MRO inventory 3. Purchases of non-inventory parts and services required for cranes This allows managers to see what part of the crane incurs cost, making it easier to make decisions about where maintenance dollars should go. Nucor’s system monitors 40 different data capture areas on the charge crane.

21% 17% 11% 9%

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DANIELI CENTRO COMBUSTION ULTRA-LOW NOX HEATING SYSTEMS FOR AN EFFICIENT AND SUSTAINABLE STEEL INDUSTRY

State-of-the-art direct and indirect firing, controlled atmosphere heating systems, covering a wide range of industrial furnace applications from reheating to heat treatment processes for steel, aluminum and copper production.

> Temperature uniformity 10 °C > Oxidation < 0.5 % > Emission level 30 PPM

Four significant references out of total 238 VALLOUREC & MANNESMANN Projects including reheating furnaces and four heat treating furnaces with direct and indirect firing systems by means of high-waste gases recirculation fans, completed with in-house developed quenching system for pipes O.D. ranging from 4 to 16”.

Reheating systems

RIVA ACCIAI ITALY 350-tph walking beam furnace for 270-mm thick slabs running coke oven or natural gas equipped with MAB flameless proprietary patented burners.

Ultra-low NOx emissions down to 65 mg/Nm3, low gas consumption below 270 kcal/kg.

Danieli Headquarters 33042 Buttrio (Udine) Italy Tel (39) 0432.1958111

ACCIAIERIA ARVEDI ITALY Latest generation vertical furnace for DP and TRIP steel strip equipped with proprietary premix burners, self-recuperative burners in 2P Inconel radiant tubes and rapid cooling in controlled atmosphere up to 110 °C/s.

Gas consumption 16-20 Nm3/t for commercial steel grades production.

1914 / 2014 DANIELI CENTURY

OMK RUSSIA Two 230-m-long, roller hearth tunnel furnaces for twin continuos casting lines, with slab handling shuttles.

570 t/h productivity for 80-mm thick, 1570 mm wide slabs in low carbon and HSLA steels.

DANIELI THE RELIABLE INNOVATIVE PARTNER TO BE FRONT RUNNERS

www.danieli.com

Pagine 2013 A3 esecutivi 2013_08_08_qxd8_A3 esecutivi 14/01/14 10.12 Pagina 25

DANIELI CENTRO COMBUSTION ULTRA-LOW NOX HEATING SYSTEMS FOR AN EFFICIENT AND SUSTAINABLE STEEL INDUSTRY

State-of-the-art direct and indirect firing, controlled atmosphere heating systems, covering a wide range of industrial furnace applications from reheating to heat treatment processes for steel, aluminum and copper production.

> Temperature uniformity 10 °C > Oxidation < 0.5 % > Emission level 30 PPM

Four significant references out of total 238 VALLOUREC & MANNESMANN Projects including reheating furnaces and four heat treating furnaces with direct and indirect firing systems by means of high-waste gases recirculation fans, completed with in-house developed quenching system for pipes O.D. ranging from 4 to 16”.

Reheating systems

RIVA ACCIAI ITALY 350-tph walking beam furnace for 270-mm thick slabs running coke oven or natural gas equipped with MAB flameless proprietary patented burners.

Ultra-low NOx emissions down to 65 mg/Nm3, low gas consumption below 270 kcal/kg.

Danieli Headquarters 33042 Buttrio (Udine) Italy Tel (39) 0432.1958111

ACCIAIERIA ARVEDI ITALY Latest generation vertical furnace for DP and TRIP steel strip equipped with proprietary premix burners, self-recuperative burners in 2P Inconel radiant tubes and rapid cooling in controlled atmosphere up to 110 °C/s.

Gas consumption 16-20 Nm3/t for commercial steel grades production.

1914 / 2014 DANIELI CENTURY

OMK RUSSIA Two 230-m-long, roller hearth tunnel furnaces for twin continuos casting lines, with slab handling shuttles.

570 t/h productivity for 80-mm thick, 1570 mm wide slabs in low carbon and HSLA steels.

DANIELI THE RELIABLE INNOVATIVE PARTNER TO BE FRONT RUNNERS

www.danieli.com

32

HANDLING & SCHEDULING Twin snorkel RH degasser

CVL Combined RH Vessel and Ladle Lifting System A reliable, safe and maintenance-friendly RH degassing process often eludes steelmakers. While many are available, not all of them are adequate as the space needed and foundations required are too big or won’t fit the existing plant layout, says Dipl.-Ing (FH) Andreas Harter* TO simplify ladle lifting for RH degassing treatment of the steel melt, Primetals Technologies has developed the RH CVL (Combined Vessel and Ladle Lifting System). This serves as a replacement for the expensive vessel winch and ladle winch systems presently in use. It also incorporates a very simple and fast RH vessel exchange mechanism.

Two in one The RH CVL combines ladle lifting and RH vessel exchange. When a vessel needs to be replaced, a fully automated procedure decouples and lowers it using the same cylinders employed for ladle lifting. Using an extension frame on the normal ladle car, the vessel can be lowered onto the car and driven towards the maintenance area.

No crane is required.

According to Primetals Technologies, this is suitable for tight conditions having an existing steel structure and limited plant area constraints.

Compared with several alternative lifting systems for RH degassing the new CVL system offers the advantages of: • The ladle transfer car being available during RH treatment; • Vessel exchange by common lifting system; • Accessibility of snorkel maintenance from each side of the treatment stand; • Use of standard ladle and ladle transfer car; • Linear lifting movement without x-component, which is necessary for defining maximum vessel inner diameter for maximum decarburisation speed due to limited inner diameter of ladle; • Pin orientation of the ladle irrelevant

for best layout configuration; • Best accessibility for online temperature and sampling; • Entering both at pin and lug of ladle; • Redundancy for high availability and emergency tasks; • Structural investment (foundations and steel structure); • Plant size and integration in existing melt shop steel structure.

The ladle is lifted using two separate steel frames. Both have a hook for carrying the ladle. These are capable of engaging a ladle fitted either with lifting lugs or trunnions.

Optionally, the hook can be equipped with a cylinder to enable it to swivel back to obtain clearance for the ladle to pass through beneath the RH vessel in those vessels of ‘drive through’ design.

The CVL system can satisfy all these requirements. All other common RH vessel and ladle lifting systems are unable to fulfil all of these criterion.

Cylinder fixation brackets

Initiation Following several investigations and development projects examining the existing systems, Thomas E Edison of SVAI looked at a simpler approach resulting in the invention of the CVL system (Fig 1).

FMEA (Failure Mode and Effect Analysis), a safety analysis according to the EG machinery directive as well as an internal approval process, moved the idea from the drawing board into reality.

Cylinder Cylinder heat and dust protection Guiding columns Balancer Lifting traverse with guide rollers and vessel entering brackets

The CVL System The vessel is accommodated on the swivel brackets of the treatment stand which are mounted on the steel structure. A hot off take of L or U-shape is normally placed on top of the vessel. A compensator or short piece of suction duct connects this to a gas cooler. The alloy charge pipe is connected to the vessel via an expansion joint and alloy socket.

For online sampling of the melt an automatic sampling lance manipulator is installed at the rear of the vessel.

Hook

Fig 1 Model of the CVL combined lifting system

* Primetals Technologies Germany GmbH, Willstätt, Germany. Email secondarymetallurgy.metals@siemens.com January/February 2015

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HANDLING & SCHEDULING

33

The ladle is raised by two hydraulic cylinders or an electro lifting cylinder. These are installed above the guiding frame in a hanging position. The frame is equipped with wheels to guide it. The guide beams are part of the fixed steel structure and also have the necessary stiffness to withstand the weight of a full ladle.

The guide system is equipped with four main wheels. Two wheels at the top and girder back side and two on the bottom of the guiding system and at the girder front side. These wheels can accommodate the forces experienced during vessel and ladle lifting and lowering. Furthermore, additional smaller wheels are installed for accurate travel. Due to some discrepancies of the cylinder and also the tolerances between the guiding columns, small wheels are also installed to guide the system when travelling in the reverse direction.

vessel onto the exchange frame and place it on the ladle transfer car (Fig 2).

The design pressure of the hydraulics is 350bar. If one cylinder fails, the remaining cylinder is able to lower the ladle or vessel despite the increased pressure. In such an emergency only lowering can be performed.

The piston rod is protected by a telescopic cover one part fixed to the steel structure and the other mounted with screws to the guide beam. This protects the cylinder from metal splashes, heat radiation and also dust from the surroundings.

The sampling system uses a separate simplified assembly and operates without interference of the hydraulic integrity of the main lifting cylinders. Where redundancy of operating components is concerned, they are built-in and all electronic control components are protected by a stainless steel housing.

Changing the RH vessel After a numbers of ladle treatments the RH vessel has to be replaced for maintenance.

With the assembly clear of a ladle, the lifting system is able to enter beneath the RH vessel and using the fixed entry brackets at the guide frame can lower the

Conclusion The demands of steel plants are changing.

Increased production speeds and material flow logistics will increasingly influence the decision to select a particular lifting system. There are a number of modernisations and upgrades necessary

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Fig 2 RH vessel exchange

for existing plants which have to deal with numerous limitations in logistics.

Estimated 20% cost saving Detailed Capital expenditures (CAPEX) investigation and comparison to all other well-known RH plant layouts and lifting systems estimates over a 20% cost saving for a twin RH plant with the highest cost reductions in the building area, design space, grounding and concrete work. For a single RH unit, savings are more modest but significant.

Already three contracts have been signed to install the CVL system at twin RH plants. Start-up of two of these plants is intended this year; a 180t twin RH at JSW Toranagallu, India and a 110t twin RH at Tangshan, China. t

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34

TESTING & ANALYSIS

Chemical composition control

Control of chemical composition is one of the key aims during steel making. Achieving correct composition is essential in order to achieve the required mechanical properties in the final product. In this article the effect of errors due to sampling and chemical analysis are considered by Keith Walker* ALL steel making firms place emphasis on control of chemical composition, since almost all steel specifications stipulate an acceptable range for elements of importance in regard to the mechanical properties of the final product. This may be a minimum and maximum for elements that are deliberate additions to the steel (such as C, Mn, Si, Al) or a maximum for elements that are generally undesirable but difficult to eliminate (such as S, P, Cu).

Capability to achieve the desired ranges or maxima has a great influence on whether a plant can accept orders, with the most demanding grades (ie the narrowest ranges) often being those which produce the best financial returns.

Also, any heats that are out of specification incur considerable cost. It is, therefore, very desirable to achieve competitive composition control.

Many of the factors that affect competitive composition control are well understood and controlled, but they tend to be physical factors, such as control of alloy composition and the accuracy with which they are weighed before being added to the steel. There is also emphasis placed on minimising the amount of highly oxidised slag on the ladle, which not only affects alloy consumption rates (cost) but also control of composition.

In addition, the liquid steel is regularly, if not continuously, stirred to homogenise it, otherwise un-representative samples could be taken.

However, relatively little attention is paid to the effect of sampling and chemical analysis. During steel making, regular samples are taken from the liquid steel and

analysed very quickly, often in less than five minutes, in order to determine how much alloy should be added to achieve the required range for each element present.

It is natural to aim for the mid-point of the ranges required so that the expected bell curve of deviations will sit in the centre of the range, so maximising the proportion of heats that will achieve the specification.

The effect of chemical analysis errors It is important to distinguish between accuracy and precision, which are not the same thing. Accuracy is the capability of the method of chemical analysis to reproduce the same result and depends on the successful calibration of the instrument.

Precision is the width of variation from the correct result. Fig. 1 on the following page illustrates this difference.

Taking accuracy first, the ability to calibrate an instrument depends to a large degree on the use of chemical analysis standards. These standards can be purchased: for example, a piece of steel with a certified carbon content of 0.8%. It is then a matter of ensuring that the instrument delivers this result when the standard sample is analysed. Such standard samples are, however, certified by being analysed by up to 15 different laboratories using the very best analytical techniques. The results are reported on the certificate and the mean is taken as the certified standard. An examination of a certificate for steel at 0.8% carbon shows that the individual laboratories obtained results with a 2 standard deviation range of 0.008%. This is the Worldâ&#x20AC;&#x2122;s uncertainty

about the actual carbon content of the standard sample, and is of note when some specifications stipulate a range of carbon of 0.02%. From these figures, one may expect there to be a systematic difference between different laboratoriesâ&#x20AC;&#x2122; analysis of the same heat of steel, but this is rarely taken into account and can be the cause of dispute between suppliers and customers.

From the standpoint of composition control, little can be done about this source of error other than to ensure that instruments are calibrated regularly.

However, the precision of analysis is another matter. It is of note that the chemical analyses carried out by the laboratories on the standard sample were done using time-consuming analytical methods, whereas in the steel melting shop time is of the essence. Delays for analysis can be very costly, so there is a compromise between the precision obtained and the time taken to achieve the analysis.

Precision Precision is the capability to give the same result for a given sample when it is repeatedly analysed. Most chemical laboratories will be aware of the range of error their methods produce and it will vary not only between different elements, but also with the level at which the element is present. It can be quoted for a given instrument, or even for a range of instruments of a given type, any one of which could be used to produce a result (there is rarely only one in a steel making laboratory for reasons of speed of analysis).

* Steel consultant. Email keith.walker@steelfolk.co.uk January/February 2015

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TESTING & ANALYSIS

The precisions obtained will also depend on the type of instrument used, with the most common being optical emission spectroscopy (OES), combustion and X-ray florescence (XRF). This is a key point for steel makers and can be used to affect their control of chemical composition. For example, the precision error at 1.5%Mn, common in plate grades will be around 0.06% (99% confidence range) using OES and this can be compared with specifications that commonly require control of Mn with a 0.1% range. In other words, even if steel makers perfectly control Mn content, there will still be an apparent range of 0.06% between heats purely because of chemical analysis errors.

Precision can be improved by more sample analyses, but it takes time and only improves by a factor of the square root of the number taken. However, in one plant which previously considered it had a capability to achieve a 0.15%Mn range at 1.5% aim, it was possible to improve this to a 0.10% range capability by analysing the final tundish samples four times rather than once, and taking the mean. It is important to note that the actual variation in the Mn content between heats did not alter at all. They simply reduced the analytical error present to give a fairer representation of their capability, which is possible because time is not usually important for final tundish sample analysis.

Such an apparent improvement in capability can mean the difference between accepting or declining a large line-pipe plate contract. It is also common for XRF analysis of samples at 1.5%Mn to offer better precision than OES, which is more commonly deployed, and this can also be a source of improvement, not least because it can be used for the analysis taken before the final alloy addition, and so can improve control of Mn content.

Of course, this is one example for illustration, and it can be applied to other elements too.

Improvements in precision can also be used to reduce costs associated with elements where a maximum is specified, such as phosphorus. There are two ways: one is to achieve an apparently better control capability, as for Mn. The other is associated with grades for which a product analysis is stipulated. Rolling mills are aware that if they have a specification requiring, for example, 0.015% maximum P, there is a chance that the steel makers will achieve this based on tundish analysis, but when the product it analysed, there is a chance that the level of P is higher, and, therefore, out of specification.

This is so-called “pit-to-product” variation, and taking it into account, the rolling mill requests that the steel makers achieve a maximum P level which is www.steeltimesint.com

k walker.indd 2

somewhat lower than the required product analysis, to allow for it. So the steel plant will incur greater cost to reduce the level of P to lower than is required. However, it is hardly possible for the P level to change between the tundish and the product, and checks will show that the apparent variation is all to do with precision of analysis. By improving precision, by talking to the chemists, this apparent variation can be virtually eliminated.

Since control of elements like P and S to lower levels is exponentially expensive, this can be a great cost saving, but also it will allow the mill to accept orders with lower product analysis maxima than it is capable of because better precision is again showing their true capability.

Where sampling is concerned, it is quite obviously vital that the samples taken are representative of the steel in the tundish, but it is also vital that they are homogenous. In one study, it was found, by measurement, that of all the variation between heats of 0.75%C steel, some

Accurate but not precise

35

produces a much better reflection of the plant’s capability to control carbon content between heats. Again, the actual carbon content does not change, the improvement being entirely a result of better sampling control.

It is important to note that since the chemical laboratory will not know how homogenous the samples are, their reported precision will include any variation due to a lack of it.

As an interesting piece of data analysis, plant metallurgists can check their chemical laboratory precision using tundish analyses, of which there are usually more than one, often three. It will be found that there is often a small difference in the analysis between them, and while this is possible, it is more likely to reflect precision of analysis. It is possible to estimate standard deviation by using the range and although it is generally not so accurate, with large amounts of data the range between tundish analysis from many heats will produce a reliable result.

Precise but not accurate

Fig. 1 Illustration of difference between accuracy and precision

80% of it was due to a lack of sample homogeneity in samples from the tundish.

This is quite staggering, since control of C to tight ranges is often critical in high carbon steels and this was because the samples taken for combustion analysis were punched from what is called a “thick and thin” sampler.

All cast items, such as the aforementioned thick and thin sampler, have a degree of segregation of carbon for metallurgical reasons and it is very difficult to avoid. Punching samples from it inevitably produces samples with different carbon contents, depending on position, because it was not sampling the whole of the metal cross section.

By changing to a sampler consisting of a silica tube into which the liquid steel is sucked, it is possible to cut this into pieces for combustion analysis and sample the entire cross section each time. This avoids the effect of carbon segregation and

In one plant, this was quickly carried out for different elements and the estimation of standard deviation was very close to the precisions reported by the chemical laboratory. In another project, all of the factors affecting control of carbon content were scrutinised, including sampling and analysis, for a 0.8%C grade. It was found that 95% of the variation due to alloy yield was, in fact, all associated with sampling and analysis. The previous assumption about variation in yield was incorrect, but since it cannot be directly measured, this was unknown.

It is clear from that it is unwise to make the assumption that all the analyses coming from the steel plant laboratory are perfectly precise and accurate. Steel plant chemists are of critical importance in many respects, and their expertise in providing better precision – when time permits – can be a source of many significant improvements. t January/February 2015

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36

ROLLING

Absolute encoders reduce breakages Off-gauge cold rolled strip and strip breakages on a manually controlled tandem cold mill at the Bokaro Steel Plant in India has been more than halved by the replacement of unreliable incremental encoders on the screw-down motors with absolute encoders with integral counters along with improved operator display panels providing information on roll force and gap setting at each stand, and for all stands at the final stand. By A Prasad*, R Prasad**, N Thakur**, S Chaudhuri* & D N Mohanty**

COLD rolling of steel strip is a highly developed technology. Present day economics demand that strip in coil form is efficiently reduced in thickness while maintaining high productivity and good quality product of consistent gauge.

Most of the old generation mills have been revamped and modernised with the multiple objectives of achieving higher production, closer dimensional tolerances and a greater product range.

In the case of electro-mechanical screw down, to modify this to servo-hydraulic screw down1 is often too costly.

It is imperative to provide the mill operator with the actual strip thickness values on the exit side of the mill and reposition the stand screw down setting manually if deviation limits are exceeded until the actual strip thickness is back within the required tolerance limits.

This calls for continuous attention by the operator and in the case of a 4 or 5 stand tandem cold rolling mill it becomes difficult for a single operator to control the deviation limits manually. To relieve the operator of this problem and ensure

Motor 145kW DC

Gear box

Motor

consistent performance it is necessary to provide the operator with information on all the rolling parameters at the exit stand so that the mill screw down can be repositioned as required.

Former screw down setting The Tandem Cold Mill (TCM) # 1, at the Bokaro Steel Plant is a 4-stand, 2000mm wide mill installed in the late 70s by the Soviets. The incoming coil thickness varies from 1.8mm to 5.0mm and the outgoing thickness ranges from 0.4mm to 2.0mm.

The maximum operating speed of the mill is 20m/s. The mill has two ElectroMechanical Screw Down mechanisms on each stand for gauge control. Depending on the degree of reduction, the roll force of each stand is decided based on metallurgical considerations. The operator allows the strip to enter each stand at the threading speed of the mill and applies the required roll force at each stand.

A nucleonic thickness gauge is installed on the exit side of the final stand in the mill.

The strip thickness achieved is observed on the exit side of the mill using the gauge.

PLC

Gear box

Once the desired thickness is achieved, the roll gap in each stand is maintained for all the following coils to be cold rolled in that particular campaign. The up / down movement of the screw down mechanism is provided through a spur and worm gear arrangement connected to 145kW DC motors at each stand.

An incremental encoder is installed in the output shaft of the spur gear. The pulse given by the encoder is sent to a counter card in a display unit installed in the control post near each stand. The up / down movement of the screw down mechanism is controlled manually by observing the reading in the display unit (Fig 1).

This system generally provided erroneous readings of the screw down position at each stand. Missed counts of the pulses sent by the incremental encoders to the card led to incorrect readings. Missed counts were either due to malfunctioning of the counter card or of the incremental encoders. One of the major reasons for malfunctioning of the cards was ingress of emulsion or water inside the control

Modibus Modibus

Encoder CANopen 4-20mA Display unit

Display unit

Top backup roll Work roll

4-20mA Display

Work roll Bottom backup roll Laser sensors

Fig 1. Former display unit providing unreliable counter data for setting of stand screwdown

Fig 2. Absolute encoders have replaced incremental encoders on the screw-down motor shaft

*Research and Development Centre for Iron and steel, SAIL, Ranchi, India Contact e-mail ashitpd@sail-rdcis.com **Bokaro Steel Plant, SAIL, Bokaro January/February 2015

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ROLLING

Fig 3. Two control posts are located at each stand, one for that stand and one for the next

Fig 4. Operater HMI displays are located at each stand

posts. Voltage fluctuation was another reason for the failure of the counter cards. The operator adjusted the roll gap based on these reading which led to an uneven roll gap. As a consequence, there were variations in strip gauge and, at times, strip breakages during rolling due to unmatched roll forces. In addition, roll changes were sometimes required as a consequence of damage to the roll by roll pinch. All of these problems were a result of the uneven roll forces applied at opposite sides of the roll stand by uneven screw down settings.

Modified screw down setting The modified position measurement system for screw down was commissioned in the first week of February 2011. The system consists of four components namely (a) Absolute encoder instead of the former incremental encoder (b) A new display unit in each stand with IP 65 protection (c) Distance sensor in each stand and (d) Programmable Logic Controller (PLC) and Human Machine Interface (HMI).

To overcome the problem of failure of the counter card of the incremental encoder, absolute encoders have replaced these on the output shaft of the spur â&#x20AC;&#x201C; worm gear of the screw down motors (Fig 2). The card for the absolute encoder is installed inside the encoder with a high degree of protection to IP65 standard. Moreover, the absolute encoders have been placed in the mill housing at a similar location to the previous encoders to avoid major modification in the system. The absolute encoders are connected to the PLC through a profibus network. This has led to a reduction in the number of cables going to the PLC panel.

There are two control posts for each stand. Each control post has display units for its own stand and the following stand (Fig 3). This helps the operator to control the load and the inter-stand tension. In the final stand #4, where the final reduction of the strip takes place and gauge corrections are completed, a touch panel type display unit has been installed which gives the screw down position, roll force, and inter-stand tension values of all four stands. www.steeltimesint.com

PRASAD 1.indd 2

A Programmable Logic Controller (PLC) panel has been installed in the instrumentation control room near the Tandem Mill # 1 shop floor. The analogue input from load cells for measuring roll force, inter-stand tensiometer for tension measurement and the speed of the mill motors are sent to analogue input cards from an instrumentation panel installed in the instrumentation room. The signal from the absolute encoders is communicated directly to the PLC through the profibus network. The PLC also communicates with the display units through the same profibus network.

The HMI screens have been developed for the touch panel type display unit installed at stand # 4 and also for individual display units at each control post (Fig 4).

An engineering work station has also been installed in the instrumentation control room (Fig 5). The HMI screens help the operator to adjust the roll gap using the screw down position display, roll force

37

value and inter-stand tension.

The screw down position is now correctly displayed at each stand due to the greater accuracy of the absolute encoders as compared to the former incremental encoders. The operators are now able to set the correct load and tension in each stand.

The touch panel type display installed near stand # 4 provides the roll force, inter stand tension, speed and screwdown position of each stand. Since it is a manually operated mill, this centralised display helps the operator in stand #4 guide the operators at stands # 1-3 in optimising the roll force and inter stand tension so as to obtain the desired output thickness of the CR strip. This has helped in reducing production of off-gauge material and reduced the frequency of strip breakage due to uneven roll forces within the stands. The average figure for strip breakage and diversion due to gauge variations has been reduced by 50-60%.

This modified position measurement system for screw down in the Bokaro mill has helped mill operators control the mill more efficiently. The more accurate screw down positioning with the aid of the latest PLC based system has also reduced electrical delays due to failure of encoder cards and so reduced the cost of maintenance.

The HMI has a data logging facility which can help generate data for optimum roll gap setting in each stand for future campaigns when rolling similar material. t Acknowledgment The authors express their sincere gratitude to the task force members from Research & Development Centre for Iron and Steel, Ranchi, and the management of Bokaro Steel Plant, Steel Authority of India Ltd, for help in the implementation of the project.

Reference 1 â&#x20AC;&#x2DC;Rolling Mill actuatorsâ&#x20AC;&#x2122; Lecture 14, Page 5-8, International Rolling Technology Course.

Fig 5. Engineering work station in the instrumentation control room

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PERSPECTIVES: PANALYTICAL

Minimising costs and waste PANalytical claims that it helps its customers to improve the quality of their products. Despite pressure in the steel market, it has witnessed ‘continuous demand’ for its analytical instrumentation systems, says the company’s Dr. Micaela Longo – segment manager for the metals market.

aluminium in vehicle manufacturing, steel will be predominant for the reasons previously discussed.

1. How are things going at PANalytical? Is the steel industry keeping you busy?

Despite pressure in the steel market we have seen continuous demand for analytical instrumentation in the steel and metals industry. Our X-ray fluorescence spectrometers and X-ray diffractometers meet the strict demands of this industry, which requires high-precision analysis in very tough and high-throughput-driven environments.

2. What is your view on the current state of the global steel industry?

After a stationary period and weak global demand, it is likely that global steel consumption will grow – even if at a slow rate – in 2015, particularly in Central America and other emerging countries.

3. In which sector of the steel industry does PANalytical mostly conduct its business?

By providing a variety of analytical equipment, such as X-ray fluorescence and X-ray diffraction spectrometers, near-infrared spectroscopy and CNA, we are able to provide solutions for each individual step in the production of iron and steel. Incoming raw materials that are used in the steel making process can be analysed precisely and all steps of steel production can be monitored. Ultimately, the quality of final and secondary products can be assured by characterising all of the components present.

4. Where in the world are you busiest at present?

We are active in more than 60 countries around the globe, but China is definitely leading the market, followed by Europe, Mexico, Brazil and the USA. 5. Can you discuss any major steel contracts you are currently working on?

Last year we built a completely automated analytical laboratory for Arcelor Mittal in Germany. It contains sample preparation January/February 2015

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for raw materials and slags as well as metal polishing, simultaneous XRF and optical emission spectrometers for elemental analysis and several other instruments for surface and radiation inspection.

6. “Aluminium will always outperform steel on a weight basis; and on the stiffness issue alone it will carry the day,” said Alcoa’s chief technology officer Ray Kilmer speaking about aluminium usage within the global automotive industry. Where do you stand on the argument?

It is true that technology is advancing so fast that those two industry sectors are now competing with each other in different applications, from the automotive industry to construction. But innovation in steel is restless and, nowadays, new types of steel, such as high-entropy alloys, are developed to be as light as aluminium and as strong as titanium alloys.

7. “While there will be increased aluminium penetration, vehicles will continue to be predominantly steel,” said Ducker Worldwide’s Dick Schultz. Is he right or wrong?

I believe that despite the valid attempt of introducing increasing amounts of

8. “Within the next 15 years or so there could be a nearly even split between steel, aluminium and carbon fibre content in the average North American produced light vehicle.” So said Jay Baron, president of the Centre for Automotive Research. Who is closer to the truth – Dick or Jay? Carbon fibre seems to have a bright future in many fields, including automotive applications, with benefits like reduction of weight and emissions.

However, at the moment carbon fibre is too expensive and difficult to recycle, making it an unfavourable replacement for steel or aluminium. We hope to see new developments and a growth of applications.

9. It is always claimed that aluminium is the ‘greener’ metal when compared to steel. What’s your view?

Aluminium production from its raw materials to pure metal requires an incredible amount of energy, higher than what is needed to produce steel.

Aluminium has great potential in terms of sustainability through recycling, as it requires only a tiny portion of that energy to re-melt. However, recycled aluminium is rarely the preferred form and, therefore, aluminium is still produced, usually with a very high expense of ‘non-green’ energy.

10. “…any hint of doubt when it comes to predictions of climate doom is evidence of greed, stupidity, moral turpitude or psychological derangement.” This is a quote from Bret Stephens writing in The Wall Street Journal.

Do you sympathise with his view?

I think we are all aware of our responsibilities as human beings in contributing to climate change. We are emptying natural reservoirs – that would www.steeltimesint.com

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PERSPECTIVES: PANALYTICAL

otherwise have been undisturbed for centuries – for our industrial progress, so it is our responsibility to reduce waste and invest in new technologies to produce clean energy as compensation.

11. In fact, talking of ‘green issues’ and emissions control, how is the steel industry performing?

There is an increasing need for strong environmental regulations dictating the most stringent emission control limits for heavy industries. Governments subsequently translate these regulations into test methods, which force heavy industries, including steel producers, to comply. PANalytical plays a fundamental role in this as we actively participate in standard bodies to deliver test methods capable of detecting very low levels of pollutants.

customers. We are open and transparent and we facilitate and invite them to help us understand their needs.

16. China dominates global crude steel production and is accountable for almost half of total production. How should the industry react to this situation?

The market may experience strong instability if China faces overcapacity. In that case, product competition will be harder and innovation and strict product specifications will prevail.

17. What is PANalytical’s experience of the Chinese steel industry?

We are facing increasing competition between Western and Eastern technologies, and prices have also become

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solutions to these problems, the future will be very challenging.

20. What exhibitions and conferences will PANalytical be attending in 2015?

PANalytical will be attending more than 50 exhibitions and conferences throughout the world.

21. PANalytical is based in the Netherland, but what’s happening steel-wise in the country?

The Netherlands is home to TATA Steel Europe, still expanding with its new production line for corrosion-resistant steel coils. Additionally we are close to a well-established network of many other major steel producers in Germany, UK, Spain and Italy. The European market is very competitive and characterised by

12. In your dealings with steel producers, are you finding that they are looking to companies like PANalytical to offer them solutions in terms of energy efficiency and sustainability? If so, what can you offer them?

In order to aim for low carbon for the future, steel producers will have to constantly optimise their processes and ultimately invest in new steelmaking technology with a lower carbon footprint and focus more on recycling. With our X-ray equipment the phase and elemental composition of raw and intermediate materials can be precisely characterised.

13. How quickly has the steel industry responded to ‘green politics’ in terms of making the production process more environmentally friendly?

I think the industry is reacting very quickly to new changes and they will succeed in the end.

14. Where does PANalytical lead the field in terms of steel production technology?

We can help our customers improve the quality of their products. Fast and accurate elemental and structural characterisation during the whole production process enables optimisation of those processes, with the consequent benefits of higher production, higher revenues and, therefore, lower costs of ownership and faster return on investment.

15. How do you view PANalytical’s development over the short-tomedium term?

We are constantly innovating to satisfy market needs and to always offer unique solutions. Very often we develop new solutions in collaboration with our www.steeltimesint.com

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very competitive. We always have to strike a balance between price and performance.

For the past 25 years, as Philips before and as PANalytical over the last 11 years, we have a strong presence in China.

18. Where do you see most innovation in terms of production technologies – primary, secondary or more downstream?

Innovation is more predominant downstream, with restless development of new materials for higher corrosion resistance, as an example. I see things starting to change also in primary and secondary.

19. How optimistic are you for the global steel industry going forward and what challenges face global producers in the short-tomedium term?

In the short-to-medium term, steel producers will start facing overcapacity and high competition as well as rising raw materials and fuel prices. If we do not find

high-quality products, product innovation, technological development and efficiency.

It is also the region where PANalytical has installed the biggest automation projects to optimise throughput to the max and achieve higher turnovers.

22. Apart from strong coffee, what keeps you awake at night?

When times are sometimes extremely busy I recognise nights are more productive to bring new ideas in and for troubleshooting.

23. If you possessed a superpower, how would you use it to improve the global steel industry?

I would definitely use my superpower to store all the heat generated in the production process in order to replace (or at least reduce) the use of fossil energy resources. In addition, I would improve recycling. The combination of these two aspects would tremendously improve our quality of life and would contribute to a much more effective waste reduction. t January/February 2015

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HISTORY

Shaping the modern world In the years 1861 to 1865, immediately after the American Civil War, the USA began to put its house in order while the great industrial nations of Europe began to eye each other up and prepare for war.

Harry Hodson* AT the start of the American Civil War in 1861 the population of the United States amounted to about 30 million and of this, 20 million made up the northern states and the remainder, including a large number of Afro-Americans, occupied the southern States. Abraham Lincoln had managed to hold the union together, but it cost 900,000 lives. The North’s 2-1 ratio population, and its manufacturing capacity of 100,000 factories were deciding factors in the outcome of the conflict.

When the war ended in 1865 the nation began to heal its deep divisions and embarked upon a programme of technology and industrialisation in a world dominated by Europe. At this time Great Britain, France, and Germany each had a population of about 40 million so anyone of these countries could easily outweigh the United States in manufactured goods, but this would change in a few short years.

The Bethlehem Ironworks The start of the American Civil War coincided with the beginning of the modern steel industry. A few years before this the whole nation, like the rest of the western world, were busy extending their rail networks. Consequently there was a high demand for steel rails.

It was also the year when the The Bethlehem Ironworks established itself in Northampton, Pennsylvania. Its main business was the manufacture of rails, beams, slabs, and bars, but during the war it became the chief supplier

of arms to the union army. During this period it began to manufacture armour plate for the protection of the Northern Fleet. Among other items were ‘floating torpedoes’, cannon and mortar, and steel-hardened armour-piercing shells.

Sometimes referred to as the ‘arsenal of America’ it became The Bethlehem Iron and Steelworks when it invested US$5 million in the nation’s 10th Bessemer steel rail mill in 1873. Also at this time, the United States had overtaken any single European nation in exporting coal, iron, steel, and other manufactured goods, and was now considered to be a world leader of industry.

Increasing demand for steel for construction work when the age of the skyscraper began in the 1880s helped to secure Bethlehem’s future for the next century. Some notable examples of engineering carried out at the works was the forging of 70 tons of steel to make the giant axle of the 250 feet diameter Ferris wheel at the 1893 Chicago Exhibition. In 1914 Bethlehem steelworks constructed the 110 feet high loch gates for the Panama Canal. The works ceased production in 1995, brought on by difficult trading conditions and poor industrial relations.

number of ironworks, the largest being the Tredegar Ironworks at Richmond, Virginia. Established in 1836 by Welsh ironworkers, it was an important part of the Southern war effort. An order for 900 miles of rails in the 1840s by the Richmond Corporation had encouraged them to build locomotives of which 70 had been completed at the start of the war.

Such was the importance of the Tredegar Works when it began to manufacture arms, that the Confederate Government moved its headquarters from Montgomery, Alabama, to Richmond.

Locomotives were to play a vital part in the outcome of the war, and for a little while the Baldwin Locomotive works in Pennsylvania were supplying them to the South, but this was quickly stopped on the orders of the Washington government.

Out-paced by the industrial might of the North, the Richmond government began to trade cotton when it ran out of dollars to finance the war. Cammel Laird Shipbuilders in Liverpool supplied and refitted a few vessels to be used as blockade runners; it was an arrangement that was short-lived when relations between Washington and Westminster began to deteriorate.

The Tredegar Ironworks The Confederate Southern States, while mainly relying on the export of cotton for its economy, had also began to industrialise before the start of the war. Railway construction had started early, resulting in the establishment of a

Shaping the modern world United States industry led the world throughout the 20th century and helped to decide the outcome of the two world wars. Carnegie Steel, Westinghouse, Edison, General Motors, Ford, and many others helped to shape the modern world. t

* harryhodson39@ntlworld.com January/February 2015

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