US steel industry needs more unity

29

Nov

US steel industry needs more unity

PRAKSHI RAWAT

Lourenco Goncalves cuts through to the chatter to illustrate how steel companies in the United States can effectively manage sustainability, supply chain constraints, and compete effectively. November 8th, Lourenco Goncalves, president, chairman, and CEO of Cleveland-Cliffs, kicked off the Steel Success Strategies 2021 (SSS 2021) conference.

Goncalves' keynote presentation focused on the company's history, the steel sector's long-term viability, and also the necessity for the steel market in the United States to unite in an ever-changing climate system.

We'll go through some highlights from this industry behemoth at SSS 2021 in this blog. With the acquisition of AK Steel and ArcelorMittal, Goncalves transformed Cleveland-Cliffs from its five-iron ore mining and pulverizing plants into a steel producing giant in a particular time frame. That was what he had to say regarding taking Cleveland-Cliffs from a revenue of $2 billion in 2019 to an anticipated $21 billion in 2021. Government has also simultaneously increase the number of acetylene plants with the steel manufacturing unit.

In comparison to the rest of the world, how ecologically responsible is American steel?

The United States is now at the center of the international green steel movement. We aren't even being pressured in either way. We do have the upper hand. We are indeed being followed by the rest of the world, but we should hold other countries accountable for their CO2 emissions.

Steel provides for only 1% of overall US emissions, and the US production of steel is responsible for only 1% of world steel emissions, whereas China accounts for 15%. It is something that is more made aware of and appreciated. Agriculture provides for 10% of US emissions, therefore nothing much will change until somebody figures out how to halt [gas flowing from] cows.

In the competitive market from European steel-producing states helped by subsidies and Chinese businesses basically run by the government, the US steel industry must band together in the future.

How can steel makers in the United States continue to compete while reducing emissions?

We don't have to be blast furnace steelmakers vs. electric-arc furnace steelmakers, or integrated mills vs. mini-mills. We shouldn't have to compete with just one other as repair shops. We need a united steel industry in the World that leads the world. It all gets down to levelling the level field.

Cliffs now has four seamless integration steel mills, one standalone blast furnace, five electric-arc furnaces, one operational DRI plant, five high-end vehicle finishing facilities, and 22 scrap processing facilities, due to the recent $775 million acquisition of Ferrous Processing & Trading Co (FPT). FPT was recently introduced to Cleveland-Cliffs' record of successful mergers.

Is a total consolidation of the US steel industry the best option?

Our FTP transaction effectively gives the business control across the whole steel life cycle. Cleveland-Cliffs will control 15% of core trash merchant market after the deal, which itself is slated to conclude later this year (1.5 million prime tons).

Cliffs' OF production is enhanced, and the never-ending life cycle between Cliffs and the [Original Equipment Manufacturer] is made easier. It happened at a time when premium scrap supply is dwindling and want is skyrocketing.

Which effect will decarburization challenges have upon steelmaking raw material demand and price within the United States in the future?

The current demand for prime scrap, pig iron, direct-reduced iron, and hot-briquetted iron (HBI) in North America is 21 million gross tonnes in 2021. By 2022, demand is forecast to reach 23.3 MT, followed by 24.4 million tonnes in 2023, 26.3 million tonnes in 2024, and 29.6 million tonnes in 2025.

What is the source of this demand?

Within the next 4 years, demand is anticipated to rise by 8.6 million gross tonnes. The exponential rise of capacity within the coming years, the world will indeed be fighting for prime material, and there'll be winners and losers, he predicted.

Steel Dynamics' Sinton, Texas, facility is slated to start this year, with an approximate of 1.6 million tonnes. Expansion of BlueScope in 2022, with such an estimated demand of 0.6 million tonnes. Expansion of Gallatin in 2022, with only an additional 0.7 million tonnes of demand. In 2022, Brandenburg will also need 0.2 million tonnes.

AM/NS Calvert in 2023, with the requirement of 0.8 million tonnes. Demand for US steel in 2024 is estimated to be 1.6 million tonnes. Nucor has 1.6 million tonnes of requirement in 2024. In 2025, Algoma will still have 1.5 million tonnes of consumption.

How can US steel firms stay solvent while reducing losses?

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What does Cleveland-Cliffs do specifically in order to stay relevant and successful?

Our scrap will be salvaged from our own facilities, and our HBI could be used in our blast furnaces. However, we will also not be supplying the market any pig iron. That has not been the case. In that vein, Conclaves added that the US exports an average of 5 million tonnes of pig iron, and it is not environmentally beneficial.

"Imported pig iron and transportation generate substantially more CO2 than US blast furnace steel," he stated, pushing for monitoring of upstream Scope 3 emissions (transport and redistribution linked to suppliers and customers, pollution from using a product or service delivered). "I'm required to report my Scope 1 emissions [direct sources owned and operated by a firm], then I'm not obliged to disclose my Scope 3 emissions." "This will have to change."

Our ecologically responsible raw material portfolio, which involves half of FPT's output being prime scrap, 27 million gross lots and lots of pellet processing capacity from five mines [85 percent less CO2 intensive than sinter], and 1.9 million tonnes of annual HBI potential using natural gas as that of the reductant, and also the "flexibility for using hydrogen when available."