SPOTLIGHT: Low-cost natural gas fuels US steel growth

Access to affordable natural gas will ensure US steelmakers remain competitive, with some having already capitalised on its benefits, according to a number of industry executives.

Access to affordable natural gas will ensure US steelmakers remain competitive, with some having already capitalised on its benefits, according to a number of industry executives.

“With natural gas in our country, that’s nothing short of what oil did 100 years ago for the manufacturing environment,” Mario Longhi, vp and chief operating officer at US Steel, told attendees on Wednesday May 8 at the AISTech 2013 conference in Pittsburgh, organised by the Association for Iron & Steel Technology.

“We’re producing products that are enabling new technologies to be put in place and to extract and distribute natural gas [across] the nation. [Affordable natural gas is] a transformational event, not just for the steel industry, but for manufacturing in general,” he added.

A number of US steelmakers are taking advantage of low-cost shale gas by building direct-reduced iron (DRI) projects and finding new ways to use the low-cost energy in their processes.

Nucor operates a DRI facility in Trinidad & Tobago and is now constructing a 2.5-million-ton DRI facility in Louisiana, USA, with the opportunity to expand further as it looks to capitalise on the natural gas boom, according to Chad Utermark, vp and general manager of Nucor-Yamato Steel Co and Nucor Castrip Arkansas.

“We’re excited about the opportunity in Louisiana,” he said. “The strategy at Nucor is that we want to have some 6-7 million tons a year of high-quality scrap substitutes, which will be fulfilled through our plant in Trinidad and Louisiana,” he said.

Nucor also entered into a long-term agreement in November with Encana Oil & Gas (USA) for an onshore natural gas drilling programme that it expects will provide a steady stream of affordable natural gas.

US Steel announced that it was also mulling a potential DRI project. Its facility would be a joint venture in Lorain, Ohio, with Republic Steel.

“DRI is a typical example of where manufacturing is benefiting from gas. As recently as 10 years ago, no one would consider investing in this type of enterprise. You’ll remember natural gas being $12. Now, it’s $2-3,” Longhi added.

Building new DRI plants is not the only way to capitalise on natural gas, with a number of steelmakers also opting to inject natural gas directly into their steelmaking processes to cut costs.

ArcelorMittal USA has saved about $67 million in fuel costs since 2010 by offsetting natural gas with more expensive fuels in its blast furnaces, according to Andrew Harshaw, executive vp of operations.

“We’re moving towards 70% self-sufficiency through iron ore. So we use DRI where it makes sense as a scrap substitute,” he said. “We continue to use natural gas as a flexible fuel alternative.”

“The thing about natural gas is that we hope it’s a catalyst in the re-emergence of manufacturing in the USA. I think it’s an exciting time for North America,” he added.

This report was first published by American Metal Market

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