No looming scrap shortage amid EAF boom: SDI

US steelmaker Steel Dynamics (SDI) does not expect a shortage of ferrous scrap or a meaningful rise in operating costs amid the boom in scrap-intensive electric arc furnace (EAF) capacity additions over the next few years.

The shift to more scrap-intensive EAF production has raised concerns over the potential for raw material supply constraints, primarily of prime scrap to feed new flat-rolled capacity.

The new EAF capacity coming on line over the next few years will result in roughly 4mn gross tons/yr of additional prime scrap demand, SDI chief executive Mark Millett said. But he said generation of prime and scrap substitutes from additional projects coming on line should outpace the increased scrap demand from new capacity.

"I do not believe you are going to see any significant issues from a profitability or cost perspective for the electric arc furnace community," Millet said.

SDI has already taken proactive measures to secure prime scrap supply to feed its new 3mn st/yr flat-rolled mill in Sinton, Texas, which is expected to ramp up to 80pc operating capacity in 2022, by acquiring Mexican recycler Zimmer. SDI's scrap subsidiary OmniSource also acquired three Texas scrap yards from CMC Recycling in Corpus Christi and Victoria near the mill.

The Sinton mill sits about 20 miles from the port of Corpus Christi, where Voestalpine operates a 2mn metric tonne (t)/yr HBI plant.

Steelmaking capacity in the US has been undergoing a transformation with new large greenfield mills and expansions mostly concentrated on increasing EAF melt shop to produce high-quality flat-rolled steels. Much of the new capacity is located throughout the southern US.

From late 2020 through 2022, southern steelmakers will add 6.2mn st/yr of additional flat-rolled capacity, while the Midwest/Great Lakes region is set to add 3.65mn st/yr of flat-rolled/plate capacity over that same span.

The US is dependent on imports for much of its scrap substitutes like pig iron, direct-reduced iron (DRI) and hot-briquetted iron (HBI), though there have been recent capacity additions.

Cleveland-Cliffs began production at its 2mn t/yr HBI plant in Toledo, Ohio, in December and expects to begin shipments in the late first quarter of 2021. The integrated steelmaker also said it may use some of its recently acquired blast furnaces from ArcelorMittal to produce merchant pig iron.

Canadian steelmaker Stelco also commissioned its 1mn t/yr Lake Erie Works pig iron caster in Ontario in late January, allowing it to begin supplying nearby EAF mills as opportunities arise.

Rio Tinto and Stahl-Holding-Saar (SHS) have also teamed up to explore a potential low-carbon HBI plant in Canada, with a feasibility study scheduled for late 2021.

By Brad MacAulay