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There was some debate around whether low-copper shredded scrap could help bridge the shortfall in quality prime ferrous scrap grades and alternatives such as pig iron to meet the quality specifications in some finished steel applications.
Cleveland-Cliffs chairman, president and chief executive officer Lourenco Goncalves noted that copper was “poison” for automotive parts, and that low-copper shred still contains a very high percentage of copper compared with pig iron.
“I believe it’s possible, and I know my competitors are working hard, but when you are talking copper, you are talking 0.002% – that’s the copper content of pig iron. But then you have a low-copper [shred] at 0.10 or 0.15, and you see how many more times you have in terms of copper [content],” he said. “It’s possible, but it’s technologically a challenge, and costly. More importantly, because of the size of the global auto business, and the majority of stamping plants where it goes, then maybe it’s not feasible for automakers.”
However, Steel Dynamics Inc chief financial officer Theresa Wagler reported that the company had developed a product employees call “Shred No 1″ that can be used as a substitute for pig iron in melts.
One scrap dealer on the sidelines of the conference reported growing demand for low-copper shredded scrap. But this source noted that the additional costs to process the material could mean that it falls out of favor quickly if prices for items such as pig iron and busheling normalize, since they still hold a much lower copper content.
Market participants need to speak up if they would like to see an alternative to the London Metal Exchange’s nickel contract, panelists said in response to a question from the audience during a session on risk management. In March, the exchange suspended nickel trading and canceled some trades.
“The market’s going to decide what they do,” said Andrew Lichter, vice president of corporate strategy and development at Mobius.
Said Flack Global Metals director Sean Kessler: “The exchanges have shown that they are willing to step in for market demand to launch a new contract, so if there’s a healthy case and the regulatory support to launch a new contract, whether it be steel or nickel, it’s very likely that another exchange would step in and do that. At the end of the day, it’s on the market participants to decide whether or not they’re going to trade at that venue.”
Liquidity has stayed concentrated on many of the LME’s metals contracts “despite other issues that have raised structural questions that occurred prior to what happened in nickel,” Kessler added.
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Yuriy Ryzhenkov, chief executive officer of Ukrainian miner and steel producer Metinvest, joined the conference by video to give an update on the situation in the war-torn country and its impact on trade.
Ryzhenkov reported that the company’s overall capacity utilization has been reduced by more than 40% due to Russia’s invasion.
Material shortages, as well as rising prices for gas, coal and electricity, have caused upward of $100-per-ton increases in costs, according to Ryzhenkov.
“The biggest problem that we have right now is that the Black Sea ports are not operational because of the blockades by Russia, and as you probably hear in the news, there are lots of talks about how to restart [the ports], at least for humanitarian convoys and agricultural goods,” he said. “If restarted, it will help the steel industry as well, because it will take a load off the railways.”
Metinvest owns the Azovstal steel plant in Mariupol, which was subject to a three-month siege by Russian troops.
Goncalves reiterated warnings that Russian pig iron could find its way to the United States, despite sanctions.
“They will continue, and are continuing, to produce the same amount of pig iron, and it doesn’t matter if the American government is not allowing buying,” he said. “That pig iron will go somewhere else, to places like India, China, Middle Eastern countries and Turkey, and then be rebranded and come to the US. We’ve seen this move time and time again. Will pig iron go the same route? We will not allow that to happen. I want to be abundantly clear – we are watching, and we are not going to allow Russian pig iron to re-emerge with a new passport. That’s not the way it’s going to work.”
To keep up with how the Ukraine-Russia conflict continues to impact the global metals market.
Ternium will be compliant with the US-Mexico-Canada (USMCA) agreement by 2027, chief executive officer Maximo Vedoya said during the conference.
Ternium is “betting on USMCA” and is making “huge” investments to that end, he said.
Under USMCA rules, 75% of the content of vehicles produced in Mexico must be sourced from North America, up from 62.5% under the North American Free Trade Agreement. Ternium’s Mexican facilities have been securing most of their slab via imports, with around 90% of that total coming from Ternium Brasil.
The North American auto industry has been hit hard by a shortage of semiconductor chips and other parts since the coronavirus pandemic began in 2020, but Vedoya was optimistic.
“The medium-to-long-term demand for steel is [only] going to increase under the USMCA rules,” he said.
The Luxembourg-based steelmaker is mulling a new investment in North America to increase its upstream capacity and achieve compliance with the USMCA, in addition to a $1-billion investment in cold-rolling, galvanizing and finishing lines for its Pesquería flat-rolled steel facility in Mexico.
The global steel industry cannot avoid carbon dioxide emissions but needs to develop technology to lower them, Joerg Buttler, senior director of upstream business for Primetals, said during a decarbonization panel.
A source told Fastmarkets on the conference sidelines that carbon capture is the most likely decarbonization path for the steel industry.
Carbon capture and storage (CCS) refers to capturing carbon dioxide generated from industrial activity, transporting it and storing it underground.
“CCS is key to make [decarbonization] a reality,” he said. “Replacing every blast furnace with green hydrogen [direct-reduced iron] is the ultimate zero-emissions solution.”
However, replacing blast furnaces with green hydrogen DRI is still many years away due to three challenges, according to the source: 1) Green hydrogen is still in the testing phase, and its scalability has yet to be confirmed; 2) the amount of electricity needed to produce enough green hydrogen is huge and will take time to produce; and 3) green hydrogen is currently cost prohibitive.
To keep up with the green steel discussion, visit our Green Steel Spotlight page.
Other panelists did not believe carbon capture technology would mature in the long term.
When asked about the prevalence of carbon capture technology over the next 10 years, Tenova chief executive officer Francesco Memoli said: “I have doubts about the fact that [carbon capture technology will] develop quickly enough.”
Antonello Mordeglia, a member of the Danieli managing board and president of Danieli Automation, said that it is “better to invest to avoid carbon than capture it.”
Sean Barry in Tampa, Florida, and Grace Asenov, Rijuta Dey Bera and Robert England in New York contributed to this report.