Professional Documents
Culture Documents
Dr Neil J. Bristow
Presentation at OECD Steelmaking Raw Materials Workshop Paris, France 5th December 2011
H & W Worldwide Consulting
neil.j.bristow@hwworldwideconsult.com +61240286268
1.
2.
3.
4.
5.
6.
05-Dec-2011
A year in two parts strong steel output/demand in H1 then weakness in H2 as economy slows Major dislocations to raw materials supply due to weather events in Australia and Brazil, strikes Canada Markets tight in early 2011, now softer, what happens if 2012 is stronger than predicted? Continued moves to change raw materials pricing push to indices across iron ore and coal Emergence of new basins for coal and new iron ore impact more pronounced in 2012-3
1,900 1,800 1,700 Million tonnes 1,600 1,500 1,400 1,300 1,200
Steel and pig iron production growth Crude Steel Pig Iron 2500
2000
Million tonnes
1500
1000
05-Dec-2011
Chinas growth will raise BF/BOF share by ~0.8% in 2012-3, as the majority of the global pig iron increase derives from Chinese growth in BF productivity and expansions relying mainly on imported raw materials.
Pig Iron production by Region 1800 1600 1400
Million tonnes
China Asia ex China, India NAFTA CIS India Europe South America Middle East
Rise of China
62 60
In addition to China steel growth to 2014 will be driven by other countries, with a majority favouring the BF route relying on imported seaborne coking coal and domestic iron ore. Low grade iron ore reserves Vast iron ore reserves Extensive met coal Large met coal reserves Scrap/some DRI No Scrap Favour BF/BOF + EAF Russia Favour BF/BOF
China India
SE Asia
Vast low cost high grade iron ore reserves No met coal No scrap/some merchant pig iron Favour BF/BOF
Brazil
Vast high grade iron ore reserves Very limited met coal No scrap/some sponge iron Favour BF/BOF Limited iron ore reserves Some met coal No scrap/minor DRI Favour BF/BOF + EAF
H & W Worldwide Consulting
05-Dec-2011
The BF has been the King and has seen of many challengers. It will remain the main producer of iron for steelmaking into the future, no change in near term.
Larger working volumes Low gangue feed Bosh / Hearth cooling Computer control / heat & mass balance models Instrumentation advances
H & W Worldwide Consulting
Coke 650290kg
Pulverised coal injection 0-220kg Natural Gas 0-60kg Fuel Oil 0-100kg
Coke
Lump Ore
Raw Materials costs ~60-75% of liquid steel costs Transportation costs ~ 6-15% of liquid steel costs
H & W Worldwide Consulting
05-Dec-2011
Coke
Sintered Ore
Gas flow (coke) Liquid flow
Carbon monoxide
Molten iron
H & W Worldwide Consulting
Coke
Carbon monoxide
Coke + Oxygen
Carbon dioxide
Molten slag
Molten iron
H & W Worldwide Consulting
05-Dec-2011
No change in near term for ferrous burden materials as BF remains core production unit. Increased productivity, lower fuel and slag rates remain key targets for ironmakers.
Reducibility
Softening/melting behaviour
EAF drivers will also remain unchanged, with adjustments to feedstocks as EAF steelmakers seek to move up the value chain into higher quality flat products, SBs etc - rising need for DRI, premium scrap
HBI 0 40%
DR ore 0 80%
05-Dec-2011
Increasing EAF use is not all bad for the BF, as merchant pig iron makes an excellent part feed for modern EAFs as does liquid hot metal, BF linked to EAFs in the future?
Melting rate
Carbon content
Size
DRI HBI Heavy melting scrap Shredded scrap high density Pig Iron Liquid Iron
poor
excellent N/A
poor
excellent excellent
excellent
excellent liquid
H & W Worldwide Consulting
Major raw materials have risen very sharply in price and are now close to record % shares of the cost of steel based on HRC. This is driving steelmakers to seek to use cheaper and more difficult to use steelmaking raw materials.
Cost of iron ore and coking coal as percent of global HRC steel price
80% 70% % of steel price 60% 50% 40% 30% 20% 10% 0%
1970
1975
1980
1985
Iron ore
1990
1995
2000
2005
2010
Coking coal
H & W Worldwide Consulting
05-Dec-2011
Increase fuel rates and lower productivity Can cause breakdown of coke, refractory attack Lead to recycling in BF and environmental problems Make BF slag unusable
Freight
Increase costs and carbon footprint Losses and degradation during transport Stockpiles, dusts, environmental issues
Increasing demand seeing moves to new materials from new locations Testing and evaluation of new raw materials Price of raw materials leading steelmakers to experiment with new materials
100% 1
Modern blast furnace 2010 Modern blast furnace 2020 1a Smelting reduction Advanced technologies
80%
2 Partial reduction with biomass or H2 3 Using carbon lean sources 4 Sequestration
60%
Learning curve
40%
Target
20%
Improve efficiency Replace fossil carbon
5
Renewable carbon and capture
0% 0 1 2 3 4 5 6 7
Development
H & W Worldwide Consulting
05-Dec-2011
1.
2.
3.
4.
5.
6.
Natural iron ores (or direct shipping ores (DSO) or run-of-mine ores) ores as extracted from mines and not subjected to any processes of beneficiation other than sizing.
Lump ore ore consisting of coarse particles, typically with a minimum size between 6 and 50mm. Sintering Fine ore ore consisting entirely of small particles. Upper size limit usually between 6.3 10mm. Sized ore ore prepared to meet specific size limits e.g. 6.3 x 30mm.
Processed ore ore physically or chemically (rare) treated to make them more suitable for use.
Concentrates processed ores in which the iron content has been increased, size typically 1mm to 0.125mm Pellet Feeds processed fine ores which have been ground and beneficiated, size typically <0.125mm
Agglomerates processed ores formed into coherent pieces which are substantially larger than the original particles, normally found as sinter or pellets
H & W Worldwide Consulting
05-Dec-2011
Major ferrous raw materials flows are customer and region specific, increased variation is likely in the near future as new materials enter the market. The iron ore flow to Blast Furnace The iron ore flow to the DR Shaft
Concentrate Fines
Sinter plant
Sinter
50 85%max
Grinding
~95% DR
Concentrate
BF
Pellet plant
Pellet
Pellet Feed
Pellet plant
Pellet
0 90%max
Pellet Feed
~5%
Lump
0 25%max
Lump
1.
Coarsening by granulation
2.
Charging on machine
Ore Mix
7.
Cooling
Sinter
and solidification
These sub-processes influence overall sintering performance. The response of certain ores can be quite different, e.g. goethite, magnetite
3.
Humidified Granules
Calcination
6.
Total melt generated
Solid-melt reactions
5.
Solid-solid reactions
Shrinkage/ cracking
4.
Drying
Drying and calcination
H & W Worldwide Consulting
10
05-Dec-2011
The rise of China saw seaborne iron ore grow very rapidly . Ex China seaborne iron ore has not reached pre GFC levels and is unlikely to do so in 2012-3.
1200 1000 800
(million tonnes)
70 60 50 40 30 20
(China % share of total trade)
70
92
113
148
208
275
326
384 444
628
626
678
World ex China 0 2000 2001 2002 2003 2004 2005 2006 2007
China 2008
Chinese iron ore imports are predominantly fines, estimated at ~90% of total figure with pellets ~5% of the total; the majority being hematite. Magnetite is excepted to increase in the future.
Lump
Yes very limited limited Yes no no no no
Pellet
very limited Yes very limited no Yes minority Yes majority yes no
Hematite Magnetite
Yes majority Yes majority Yes majority yes yes yes yes yes very limited currently will rise Very limited no no very limited very limited very limited no
H & W Worldwide Consulting
Canada
Russia Iran
11
05-Dec-2011
Chinese imports will continue to grow as domestic supplies increase in cost and decline in grade , and as significant additional supply comes on stream from major producers leading to reduction in domestic supply.
800 700 600 500 400 300 200 100 0 2010
2010
Million tonnes
China
2020
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Accurate information on domestic ore is difficult to get due to under reporting, double counting but domestic production is still rising to meet the need for iron units.
1200 1100 1000 900 800 700 600 500 400 300 200 80%
70%
60%
60%
Million Tonnes
626
50%
40%
30%
20%
55
136
52
145
55
153
70
136
92
138
111
157
412
432
10%
100 0
133
0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e
Domestic Iron Ore (62.0% Fe Equiv) Imported Iron Ore Domestic Ore Share Imported Ore Share
12
05-Dec-2011
Local magnetite is increasingly moving to pellet production where its properties are best suited. From use in sintering, as many new pellet plants are built in China. Beneficiation Balling 90% passing 45m High temperature reactions
Magnetite Hematite
- magnetic properties
- generally more costly
- exothermic heating in
pelletising
Hematite goethite X less desirable because (Australian) goethite lowers yield and hinders performance.
Magnetite concentrate is ideal for pelletising with excellent chemistry, high Fe, low Al and low P, requiring minimal grinding and exothermic oxidation to hematite during firing (very limited in sintering), both of which lower energy costs.
H & W Worldwide Consulting
There are vast reserves of iron ore in the world and many major producing areas have very significant potential for further resource development by exploration.
Canada High project development and operating costs, due to arctic conditions, rail, barge and port constraints near term, new areas lack of infrastructure Sweden Large magnetite reserves, high cost UG mining Russia Large magnetite reserves, mid cost largely domestic
USA Large magnetite reserves, low grade, West Africa Large reserves high grade, costs mid?? no infrastructure
South Africa Large reserves high grade, high costs long rail haul Northern Area Carajas large reserves infrastructure - increasing costs
India Large reserves inc low grade, costs low poor infrastructure
Major seaborne supply basin Major prospective supply basin Major domestic supply basin
Pilbara Large ore bodies, quality declining, no low-hanging fruit, costs rising
South Australia Lack of infrastructure, costs mid/high potential reserves Mid West Lack of infrastructure, costs mid/high logistics uncertain
Significant new supply unlikely before 2012-3, existing infrastructure close to maximum capacity
Source: Macquarie Research, H&W Worldwide Consulting
H & W Worldwide Consulting
13
05-Dec-2011
Seaborne market likely to see significant growth to 2015, with ~65% projected to come from the Big 3. Capacity growth has been far slower than announced typically ~50% in delays and reduced output.
800 700 600
Consolidated Thompson Other Assmang
Seaborne market remains undersupplied until major new expansions in Australia and Brazil come on stream post 2013-4. Longer term planned expansions are ahead of demand growth.
1800 1700 1600 1500
Million tonnes
1400 1300 1200 1100 1000 900 800 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
14
05-Dec-2011
Physical Properties
Physical Properties
lump
Increasing ultra-fines
Ore Types
Ore Types
magnetite
Chemistry
Increased BF slag volumes and rising P levels Move from lump to sinter/pellets Sinter yields challenged, increased RDI lower RI Higher silica loads problems with slag granulation
Physical Properties
Increased pressure on sinter plant productivity Moves to manage increased ultrafine ores
HPS sinter, secondary or selective agglomeration, micro pellets
Rising magnetite move to pellets as poor sintering Deterioration in sintering size more concentrates poor granulation
15
05-Dec-2011
Market dominated by China today and into the future Current tight market to remain, strong markets to ~2014 Major new capacity coming on stream will balance market timing important Major changes in the future ore supply
Many deposits to see grade decline More magnetite and finer ores India exports decline? Chinese domestic production peaks and then declines
1.
2.
3.
4.
5.
6.
16
05-Dec-2011
Seaborne market definitions are some what regionally specific, especially when it comes to further dividing up coals into rank and volatile components.
Simple definition Coking coal and injection coal (PCI) Coking coals (coals that enter the coke oven)
Hard Coking Coal (HCC) Semi-hard coking coal Semi- soft coking coal Fillers
PCI Coals
Ultra low volatile coals Low and mid volatile coals High volatile coals and thermal coal
Coke
Blast
Cohesi ve Zone
Raceway
PCI
17
05-Dec-2011
Seaborne metallurgical coal market remains dominated by the HCC portion. PCI demand was curtailed due to the GFC but is predicted to grow strongly in the future. The GFC saw China become a major coking coal buyer, particularly of HCC coals.
Seaborne metallurgical demand 2000-2010
300 250 Million tonnes Million tonnes 200 150 100 50 0 250 240 230 220 210 200 190 180 170 160 150
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2024
HCC
SSCC
PCI
H & W Worldwide Consulting
HCC remains the largest portion of the increase, as expected with new ovens in India and growing HCC imports into China. Larger BFs & higher PCI also favour HCC demand.
600
300
500
250
200
PCI
300
million tonnes
150
SSCC
200
SSCC
100
PCI
100
HCC
50
HCC
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2025
0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
2010
18
05-Dec-2011
No major changes in market structure major producers have retained position. USA retained ability to be swing producer, Australian market share steady growth ~54% to 64%.
2010
Russia 3%
200
Others 13%
million tonnes
150
Australia 64%
100
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Australia is the dominant supplier of met coal to the market. The major 3 producers account for around 89% of the total supply, with US at record exports due to demand and Australian floods
Russia Indonesia 2% 3%
Canada 11%
Other 5%
USA 23%
Australia 56%
Note: Severe floods in Australia has reduced exports severe in Q1 and Q2
19
05-Dec-2011
2012 will see new coals from Mozambique, Mongolia and Indonesia enter the market, these are different to traditional coking coals.
Tavan Tolgoi, Mongolia High political risk, no infrastructure in place, captive to Chinese market Kuzbass Large reserves, but very long route to coast and export markets Appalachia Increasing costs, regulations, declining reserves Elga Challenging infrastructure, much delayed project
Western Canada High project development and operating costs, particularly in northern British Colombia, rail and port constraints near term.
Shanxi, China Dangerous, high-cost mining conditions, costs escalating on regulatory burden and RMB appreciation Tete/Moatize Good mining conditions, challenging infrastructure Bowen Basin Increasing costs, lower quality, no low-hanging fruit
Major seaborne supply basin Major prospective supply basin Major domestic supply basin
Very little new supply likely before late 2012, infrastructure close to capacity and recovery from 2011 flood event has been slower than predicted.
Source: Macquarie Research, H&W Worldwide Consulting
H & W Worldwide Consulting
US producers have increased exports in 2011 to make up for Australian losses due to the weather and are expected to remain in the market as Australia and Canada grow.
Australian exports
SSCC HCC
20
05-Dec-2011
Chinese met coal imports have declined in 2011 but continue to grow, from Mongolia . Australian exports declined due to weather and pricing effects Chinese swing price buyers 50 40 million tonnes 30 20 10 0 Total -10
Source : GTIS, H&W Worldwide Consulting
H & W Worldwide Consulting
Australia
Mongolia
Russia
USA
Canada
Indonesia
Seaborne market likely to see increase in 2012, subject to weather effects, with demand weak will China reenter the market?
500 450 400 350
Million tonnes Vietnam Venezuela USA South Africa Russia Poland Other New Zealand Mozambique Mongolia Indonesia Colombia China Canada Australia
21
05-Dec-2011
Trends for rising ash levels in new mines and some new basins (Mozambique) General drift down in fluidity in number of regions New coals have different properties and characteristics than current seaborne coals Vitrinite levels higher in new basins new blends Reduced volumes of ULV PCI coals and rising P levels Widening quality range across HCC/SHCC/SCC
Trends for rising ash will see rising BF slag volumes Cokemakers will seek new blends with new coals Will high vitrinite levels see greater carrying capacity Will trends to ULV coals for PCI change to higher VM coals? Search for high carbon, low ash fillers increased use of pet coke? Now to NG as an injectant or co-injectant for ash and environmental benefits?
H & W Worldwide Consulting
22
05-Dec-2011
China has supplied coke short regions such as Europe and US prior to the GFC. But with high duties and moves to reduce energy intensive exports it is highly unlikely that will return to high levels of exports. 18 16 14 million tonnes 12 10 8 6 4 2 0
Source: GTIS
Coke exports illustrate the extremely weak position in 2009, recovery in 2010 has been mixed and might slowing, but what happens when ROW fully recovers if China limits exports?
14 12 10 million tonnes 8 6 4 2 0 0
23
05-Dec-2011
Europe, US etc
India has a large merchant coke sector but remains coke short China has large (40%) tariffs on coke exports to reduce energy intensive exports Other exporters are Poland, Russia and Ukraine, Australia could join as it shuts one BF Who will replace China when markets return to pre GFC levels of production if China doe not return to high levels of exports? Will new cokemaking technologies (HRCO) see more ovens built or will another country replace China, e.g. India?
H & W Worldwide Consulting
1.
2.
3.
4.
5.
6.
24
05-Dec-2011
US sees a growth export of scrap, mainly to selected Europe and Asia. CIS has declined as more is now used domestically.
120
Scrap exports
Scrap imports
100
Million tonnes
Million tonnes
China Asia ex China, India NAFTA CIS Africa India Europe South America Middle East Oceania
80
80 60 40
60
40
20
20 0
Source: WSA
Rising steel production will see scrap demand increase in both BOF and EAF vessels. DRI will also play an important part in steelmaking with coal based DRI/HBI likely to join gas based processes.
25
05-Dec-2011
With growing demand for metallics will there is a shortage of scrap and increased investment in alternatives such as DRI and even pig iron, especially in scrap short countries?
Scrap the dominant traded metallic Most consumed where generated e.g. DRI, Rising impurity levels and move to higher quality steel boosting virgin iron Environmental concern remains re scrap radioactive sources Future increased use internally in CIS, possibly US Scrap pool in China ~2020 for growing scrap based EAF Rise in coal based DRI
H & W Worldwide Consulting
1.
2.
3.
4.
5.
6.
26
05-Dec-2011
~90% of Mn is used in the steel industry mainly as ferroalloys Mn has no substitute thus increased steel demand = more Mn demand Mn use in steel had declined to ~2000 but has slightly increased due to the advent of China
Mn is also used in stainless steel with high levels in 200 series ~8%
Most M alloys are HCFeMn and SiMn mainly used in flat and long products respectively Majority of Mn ore is in South Africa, with high grade deposits in Australia and Gabon China has large low grade deposits and needs to import higher grade ore to make alloys for its strong steel production Mn has some environmental concerns and has challenged the industry
H & W Worldwide Consulting
Major reserves of Mn ore are in South Africa, although grades are declining. High grade ores have a more limited life in Australia and Gabon. Problems with infrastructure, power in South Africa and Government policies have raised questions as to the future of Mn ore growth.
Mn ore grade
Mn ore production
H & W Worldwide Consulting
27
05-Dec-2011
~90% of Mn is used in the steel industry mainly as ferroalloys Mn has no substitute thus increased steel demand = more Mn demand Mn use in steel had declined to ~2000 but has slightly increased due to the advent of China
Mn is also used in stainless steel with high levels in 200 series ~8%
Most M alloys are HCFeMn and SiMn mainly used in flat and long products respectively Majority of Mn ore is in South Africa, with high grade deposits in Australia and Gabon, current problems in South Africa are a concern China has large low grade deposits and needs to import higher grade ore to make alloys for its strong steel production Mn has some environmental concerns and has challenged the industry
H & W Worldwide Consulting
1.
2.
3.
4.
5.
6.
28
05-Dec-2011
BF will remain the major production route current RM parameters will remain highly important Markets were tight in H1 in due to demand and weather events, now softer , possible recovery in 2012-3 back to tighter markets? Drift down to lower grade in many existing mines in Iron ore, Coking coal and Manganese ore New steelmaking raw materials will enter the market, finer higher grade ores and high ash and vitrinite coals Government policies are changing:
Australia leading the way with MRRT and carbon taxes, China seeking to curb energy intensive exports. US making mine permitting more difficult Governments wanting to share in resources boom, Mongolia coal, copper Environmental pressures seeking curbs to mining and land allocation Land allocations becoming more difficult across many countries, in Asia, Africa and Developed world
neil.j.bristow@hwworldwideconsult.com +61240286268
29