The energy figures given in Table (4) were computed considering the requirements for each process and the yield from liquid steel to final product. For example, for coal consumption in the BF/BOF to produce flat products The direct energy costs for the assumed conditions range from $30 to $55 per tonne depending on the process and product. This represents about 10 to 15% of the total operating costs. There are significant indirect energy costs associated with the materials used to produce steel. Also, transportation has a significant energy component and the steel industry has high transportation costs. For example, steelmaking requires large amounts of oxygen for which over 50% of the production cost is energy. The production of refractories and refining fluxes require energy. Furthermore, over two tonnes of materials must be transported to the plant to produce one tonne of steel. It is extremely difficult to estimate the indirect energy cost for producing steel. A conservative estimate would be $10 to $15 per tonne; the higher figure is for integrated production. The major indirect energy form is electricity followed by gas and light oil. The estimates given in Tables (1-4) are for reasonable modern state of the art facilities. Current industry averages may be somewhat higher. However, the older inefficient facilities will be closed in the next few years. Therefore, these are not considered in this report. In 1993, the International Iron and Steel Institute" estimated the average carbon use by the steel industry. They estimated an average of 550 kg of carbon per tonne of steel for a weighted average of integrated and EAF production which is in agreement with the present estimation. 46-495-39 Energy Consumption and Yields Energy consumption by the steel industry decreased significantly in the past 20 years primarily due to installation of continuous casting and other process improvements. The major benefit of continuous casting was an increase in yield. When there is a yield loss, much of the energy input to that point is lost. For example, a 10% yield loss roughly increases energy by 10%. However, a large portion of the yield loss is recovered as scrap. As mentioned earlier, much of the energy in integrated production is required to reduce the ore so not all of the energy is actually lost when scrap is recovered. When examining energy consumption, in a given process, the impact of a yield lost should be associated with the process with the yield loss, not the processes to produce the product to that point. For example, improving rolling processes leading to a decrease in yield loss will significantly improve the overall efficiency of steelmaking. Present Key Industry Indicators In this section the industry indicators for the purposes of this report are given including employment, production and imports/exports. Employment: The employment of the steel industry depends on the definition of the industry. The US International Trade Commission(2), using census data for SIC 331 codes, estimates the total employment for 1994 at about 178,000 production workers and a total of 233,000 employees. The average total compensation for production workers was $33.17 per hour which is 50% higher than for the average of all manufacturing. There is a significant indirect employment associated with steelmaking. It has been estimated that for each direct job there are 2.3 indirect jobs in suppliers of goods and services. The number of indirect jobs has been growing because companies are out-sourcing many goods and services previously done by the steel companies themselves. This trend is expected to continue. Furthermore, the indirect employment for the BF/BOF is greater than for EAF production per tonne since more processes are involved. The exact difference in indirect employment between process routes is not known. Production Shipments and Consumption: Three indicators are often used for the steel industry. Production refers to liquid steel production, shipments is steel actually sold by US producers, and steel consumption. Consumption is US shipments plus imports minus exports. The ratio of shipments to production has improved due to better quality control and yields. Furthermore, shipments are considered to be a more accurate measure of the steelmaking industry and will be used in this report. Steel shipments decreased in the 1980's but rebounded in the 1990's. Steel shipments, imports, exports and consumptions are given in Table (5). Imports and Exports: Imports and exports are given in Table (5). Imports decreased in the late 1980's and early 1990's but increased to a record high in 1994. This was, in part, due to the inability of the US industry to produce all of its needs. Of the 27.5 million tonnes approximately 25% was unfinished slabs which were further processed by US companies. In 1995, exports increased dramatically to about 7 million tonnes indicating that the US industries improved their competitive position. Financial Performance: The integrated segment of the US steel industry suffered significant losses in the 1980's while the EAF (minimills) had reasonable profits. The integrated segment has improved in the past few years with a ratio of income to sales of 1.8 and 9.3% in 1993 and 1994 respectively. Minimills have typically had a 3 to 8% return on sales. Current and Future Competitors of the US Steel Industry: Foreign competition with the domestic steel industry has been a major factor for over twenty years. For many years the competition primarily came from Europe (EU), Canada and Japan. In general, the industry in these areas is similar to the US industry. The major method of producing steel is the integrated process (BF/BOF) with EAF-scrap based production being the remainder, typically 20 to 35%. However, in the future, the number of competitors is expected to grow. In particular, Korea, Brazil and Mexico are expected to become major competitors. These countries have lower labor costs and relatively modern facilities. Future Energy Consumption and Alternative Technologies In this section of the report, I will examine energy consumption and costs in the future for several different scenarios. If no changes in technology occur other than anticipated energy savings by incremental process improvements and assuming no increase in energy cost relative to the base case. Then the two cases for increased energy costs are examined. Finally, new technologies which will significantly affect the amount and type of energy consumed are discussed. There are many combinations of processes and products. Only flat rolled production by the BF/BOF and EAF will be considered in detail. This represents, by far, the largest product line and the changes in energy cost will be similar for other products; any differences are briefly discussed. Case A: Case A is the base case. Incremental improvements in energy consumption are expected. These will be primarily due to decreased yield losses, near net shape casting, direct charging and continuous rolling. The energy consumption and cost for this case are given in Table (6). Direct energy costs for flat rolled products would be $40 and $34 for integrated and scrap based production respectively by 2010; which represents about 15% of the total cost. Energy costs would represent 30% of total production. There will be some decrease in energy consumption cost but it will not significantly change the overall cost of production. It could be possible that there are significant reductions in other costs. In particular, by more automation and efficient use of labor, labor costs should be reduced. Table 6 Cost of Energy (1994 Dollars) for HR and CR Flat Products Costs and units are for electricity are in kwh and for gas and coal are in tonne Case B: (Scenario 1) The costs for this case increase dramatically primarily due to the increase in the coal cost, as shown in Table (7). The increase in electrical energy has less impact for flat rolled steel but does increase the cost for EAF production somewhat. For coated products, the increase in electricity has a significant impact. Gas has less of an effect because less is used, the price increase is less and the energy credit would be expected to reflect the gas price increase. For this case, the increase in cost for the integrated (BF/BOF) producer would be nearly $75 per tonne by 2005 while that for EAF production would increase by $25. For long products, the increase will be slightly less and that for galvanized, slightly more. Case C: (Scenario 2) In this case, the energy costs are given in Table (8). The increase for BF/BOF and the EAF are about $50 and $17 respectively. Again, the increase for long products is less and galvanized, more. |