Relative to the Base Case, the Scenario I fuel and operating cost increases raise open market prices on all products. The largest increases are seen on the premium quality products, notably reformulated gasoline, kero jet and low sulfur diesel fuel, since these are the most energy intensive to produce. The High Cost + Demand Reduction prices must be treated with some caution recognizing they are outputs from a mathematical model under tentative assumptions. Firstly, input marginal crude price was not altered between the cases, therefore these product prices are against a $23.70 world oil price (estimated U.S. refiner acquisition cost). The extremely low prices for residual fuel do however signify considerable difficulty under this scenario in the global industry disposing of or upgrading residual fuel. (Demands were fixed at the lower levels described earlier.) The high sulfur resid economics shown here - and hence the economics for all the other products - are being driven in this model case by the low input price for fuel grade coke. In the model, this grade of coke was allowed unlimited sales at a price ($5/ton) derived from coal price. Residual fuel can be converted to coke Note: The results from this case must be treated with caution, as discussed in the text. They are outputs from a preliminary mathematical modeling exercise. Useful insights can be extracted but the numbers should not be considered as firm projections. Final Draft EnSys Energy & Systems, Inc. and light products. The coke is saleable against coal and the incremental light products back out crude oil but the economics are all based on the coke (coal) price. This finding may well have some realism behind it and should be further investigated. In the limited time available, detailed impacts on crude and product flows, refinery operations, electricity consumption etc. were not extracted from the WORLD model cases. In addition, a projected run to illustrate the potential effects of increasing bunker fuel costs was not undertaken. From past experience, however, this would have had the effect of boosting regional refinery investments and GHG emissions while curtailing interregional crude and product movements and bunker fuel GHG emissions. These and other quantitative effects and tradeoffs can be readily extracted from further WORLD model cases. Ideally however such cases should use latest EIA projections. The current cases are valuable in their indications but should be regarded as preliminary. 46-495-38 THE STEEL INDUSTRY: PERSPECTIVE The steelmaking process begins with the conversion of iron ore to molten iron in the blast furnace; the molten iron and streel scrap are refined in the basic oxygen furnace to form steel, which is subsequently solidified and converted into basic products such as plates, sheets, bars, rods, pipe, and tubes. Alternatively, steel may be made in an electric arc furnace by melting scrap iron and steel. The value of blast furnace and basic steel products shipments in 1994 was $69.7 billion, or 2.1 percent of the manufacturing total of $3.3 trillion. From 1992 to 1995, this industry, which constitutes 1.5 percent of consumption expenditures and I percent of gross domestic product, experienced an average growth rate of 5.2 percent, compared to the all-industry average of 4.2 percent. The industry sector for blast furnaces and steel mills is fairly concentrated, with the eight largest companies accounting for 58 percent of the value of shipments. Compared to the manufacturing average of 12 thousand British thermal units (btus) of energy used per dollar of value added, the steel industry is among the most energy-intensive of the major industries, using 108.1 thousand btus per dollar of blast furnace and steel mill output. While coal and coke are still the predominant fuels, the utilization of natural gas and electricity is increasing as electric arc furnace-based production replaces basic oxygen furnace-based production. |