Stelco to build new pig iron plant in Canada

Canadian steelmaker Stelco plans to construct a new pig iron facility that will begin shipments by the third quarter of 2020.

The plant will be built alongside its integrated steel mill at Lake Erie Works near Hamilton, Ontario, and have an estimated 1mn t/yr capacity, Stelco said on 13 November. The Canadian steelmaker expects to begin shipments to customers following the relining of its Lake Erie blast furnacein the second quarter.

Stelco said it signed a letter of intent to sell a "meaningful" portion of the new pig iron plant's first two years of production.

Market sources expect at least some of the pig iron to serve Stelco's existing Lake Erie Works operation, which has rated melting capacity of 2.12mn t/yr. Still, the new plant could represent an additional 7-8pc of supply for the North American merchant market, KeyBanc estimates. Canada is largely self-sufficient in pig iron, importing just 21,358t over the first three quarters of 2019, so most of the added production likely will supply US markets.

Unlike their electric arc furnace (EAF) counterparts, integrated steel mills produce pig iron by melting iron ore with a reductant in a blast furnace. Integrated mills can cast excess pig iron into ingots and sell it as merchant pig iron to other steelmakers.

Although there are no merchant pig iron producers in the US, Cleveland-Cliffs plans to kick off production of its 2mn t/yr hot briquetted iron (HBI) plant in Toledo, Ohio, by mid-2020 to meet growing demand for scrap substitutes from US EAF-based steelmakers.

Voestalpine began operations at its 2mn t/yr HBI plant in Corpus Christi, Texas, in late 2016.

HBI and direct reduced iron both are viable alternatives to basic pig iron (BPI) for mills and will lessen future US reliance on offshore imports of pig iron.

Argus assessed BPI prices at $315-325/t cfr New Orleans on 14 November, up from $315-320/t a week earlier. Southern Brazil prices rose to $292-295/t from $290/t in their second assessment, while northern Brazil prices rose to $302-305/t from $300/t a week earlier.

Stelco's steel shipments rose by 12pc to 654,000 short tons (st) in the third quarter. Greater cold-rolled and coated shipments outweighed a 5pc drop in hot-rolled volumes. Profit in the third-quarter fell to zero, compared with profit of C$125mn ($94mn) a year earlier, as revenue declined by 23pc to C$475mn.

By Zach Schumacher