Optimization software cuts steelmakers’ costs, carbon: Fero Labs

Steel producers in the United States are using optimization software to cut costs for raw materials, reduce quality issues and meet sustainability targets, according to Berk Birand, co-founder and chief executive officer of Fero Labs

Optimization software can help steelmakers tweak the percentage of certain types of feedstock in their melts, including scrap, metallics and ferro-alloys, such as niobium, vanadium and manganese, Birand told Fastmarkets at the 37th annual Steel Success Strategies conference in Miami Beach, Florida, on Tuesday June 7. This flexibility is important considering recent spikes in raw material costs, he said.

“The goal of the software is to optimize hardware,” Birand said. “Our software allows factories to adapt to market conditions. There’s always variation in quality batch to batch. …We will measure what’s happening in the furnace and compute the best possible way to optimize the batch and still meet specifications at a lower cost.”

For example, without optimization software steel producers might add a standard amount of vanadium to each of their scrap melts to guarantee tensile quality, even if that amount of vanadium might not be necessary, he explained.

“Optimal recipes for vanadium become overly expensive,” Birand said. “Sometimes a producer might need to adjust 400-500 different products.”

Depending on the quality of the scrap, it might be more cost-effective to use less vanadium, or switch to niobium instead, he said. Optimization software makes these choices obvious and subsequently lowers the odds that a batch of steel will have quality issues, according to Birand.

Improving efficiencies in this way also lowers carbon emissions, he said.

“There are ways to align reduction in costs with reduction in emissions,” Birand said. Optimization software allows producers to integrate different objectives simultaneously to hit a “sweet spot” of multiple parameters, he said.

About 40% of Fero Labs’ revenue is from steel producers, including Gerdau — one of its largest customers — and Nucor, according to Birand. The rest of its revenue comes from other industries, such as the chemicals, consumer packaged goods and cement sectors, he said. Around 60% of its business is US-based, with the rest from Europe, he said.

According to Birand, Fero Labs is “effectively active” in all of Gerdau’s plants in North America and has saved the company around $3-6 (15-30 cents per hundredweight) on each ton produced.

Prices for pig iron, steel slab and No1 busheling have been extremely volatile this year, spiking to unprecedented levels in March following the start of the war in Ukraine.

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