oecd steel subsidies · scrap exports/imports oecd steel committee 270011 -50,000 -40,000 -30,000...
TRANSCRIPT
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Alan Grimmond
McLellan and Partners Ltd
ENERGY SUBSIDIES IN THE STEEL INDUSTRY
OECD STEEL COMMITTEE – 13 May 2011
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DEFINITION OF A SUBSIDY
“any measure that keeps prices for consumers below market levels,
or for producers above market levels or that reduces costs for
consumers and producers.”
OECD Steel Committee 270011
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STUDY OBJECTIVES
OECD Steel Committee 270011
• Identify differences in energy related steel production costs
• Examine if these can be attributed to different energy pricing systems and government
subsidies
• Outline steelmaking technologies capacities and types of energy purchased
• Identify target companies (primary and secondary steel producing companies) in key
steel-producing countries
• Investigate the energy related production costs of steelworks per ton of raw steel of
different sizes of companies and different production methods
The Study has been based on publicly available information including data from
previous work undertaken by the International Energy Agency.
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APPROACH
• Review of Technologies; Blast Furnace Process, EAF, DRI, Corex
• Energy Saving Technologies
• Influence of International Policies
• Model Development and Calculation of Baseline Costs
• Model Application and Country Analysis
• Conclusions
OECD Steel Committee 270011
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REVIEW OF TECHNOLOGIES
OECD Steel Committee 270011
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STEELMAKING PROCESSES
OECD Steel Committee 270011
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
China EU Japan India Russia USA Korea Ukraine Brazil Turkey South Africa
Perc
en
t
BOF EAF OHF
Source: World Steel Statistics 2010
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BLAST FURNACE IRONMAKING PROCESS
OECD Steel Committee 270011
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BLAST FURNACE PRODUCTIVITY
OECD Steel Committee 270011
Fce Working Daily Annual Annual Prod. BF
Plant Location Dia. Volume Production Production Days Productivity
m m3 t Mt days/y t/m3/d
Hoogovens Netherlands 11 2,328 5,549 1.97 355 2.38
Hoogovens Netherlands 13.8 3,790 9,550 3.30 355 2.52
VAI Linz, Austria 10.5 2,454 5,521 1.96 355 2.25
Rautaruukki Finland 8.0 1,059 3,270 1.13 346 3.09
Rautaruukki Finland 8.0 1,059 3,183 1.13 355 3.01
Fundia Sweden 6.8 574 1,521 0.54 355 2.65
Sideco Dunkirk Belgium 9.5 1,620 3,680 1.50 408 2.27
Sideco Dunkirk Belgium 10.2 1,994 4,080 1.65 355 2.05
Krupp Germany 10.3 2,081 7,042 2.50 355 3.38
Krupp Germany 10.3 2,226 6,479 2.30 355 2.91
Krupp Hoesch Germany 9.7 1,582 4,028 1.43 355 2.55
Thyssen Germany 13.6 3,844 9,296 3.30 355 2.42
Thyssen Germany 14.9 4,769 9,296 3.30 355 1.95
Thyssen Brazil 12.0 2,650 7,042 2.50 355 2.66
Corus Scunthorpe UK 9.0 1,537 3,549 1.26 355 2.31
Corus Scunthorpe UK 8.3 1,255 3,268 1.16 355 2.60
Corus Llanwern UK 9.0 2,290 5,915 2.10 355 2.58
Nippon Japan 13,000 4.62 355
Nippon Japan 5,245 11,487 4.08 355 2.19
Japan 3,223 7,640 2.71 355 2.37
NLMK BF 6 Russia 12.0 3,200 8,000 2.80 355 2.50
NLMK BF 7 Russia 3,650 9,450 3.40 355
JSW BF 1 India 1,250 2,535 0.90 355 2.03
JSW BF 2 India 1,680 3,662 1.30 355 2.18
JSW BF 3 (VAI) India 3,445 7,800 2.70 355 2.26
Source: Various
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ELECTRIC ARC STEELMAKING
OECD Steel Committee 270011
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TECHNOLOGICAL IMPROVEMENTS IN EAF STEELMAKING
OECD Steel Committee 270011
Source: Source SMS Siemag
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BASIC FLOW DIAGRAM COREX PLANT
OECD Steel Committee 270011
Source: JSW Steel
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DIRECT REDUCTION PROCESS FLOWSHEET (TYPICAL)
OECD Steel Committee 270011
Source: Midrex
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ENERGY CONSUMPTION BY PROCESS (GJ PER TONNE)
OECD Steel Committee 270011
Source: Siemens VAI/McLellan
DRI
Best Average Worst Best Worst Best Worst
Coke making 3.5 4.3 7.7
Sintering/Pelletising 1.5 1.7 3.3 0.6
Iron making 14.8 17.4 22.2 15.6 17.5 11.7
Steel making 0.2 0.3 0.7 2.4 4.8 0.2 0.7 2.5
Casting 0.1 0.2 0.3 0.1 0.2 0.1 0.2 0.1
Total 20.1 23.9 34.2 2.5 5.0 15.9 18.4 14.9
Blast Furnace EAF Corex
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STEELMAKING TECHNOLOGIES
One of the recent features is how different technologies are used in
combination:
• Corex and Direct Reduction at ArcelorMittal Saldanha, JSW
• Blast Furnace combined with EAF at MMK
• Essar used to be 100% Direct Reduction now Blast Furnace and Corex
OECD Steel Committee 270011
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ENERGY SAVING MEASURES
OECD Steel Committee 270011
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COKE DRY QUENCHING
OECD Steel Committee 270011
Source: UNFCCC Baotaou PDD 2006
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SINTER HEAT RECOVERY PROCESS FLOW
OECD Steel Committee 270011
Source: - JFE Technical Report No 13
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PULVERISED COAL INJECTION
Pulverised Coal injection
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BLAST FURNACE TOP GAS RECOVERY TURBINE (TRT)
OECD Steel Committee 270011
Source: Siemens VAI/TBK
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BOF GAS RECOVERY
OECD Steel Committee 270011
Source: UNFCCC TKCSA
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EAF OFF GAS WASTE HEAT RECOVERY SYSTEM
OECD Steel Committee 270011
Source: SMS Siemag
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POTENTIAL ENERGY SAVINGS
OECD Steel Committee 270011
GJ/thm
0.80
0.55
PCI 0.77
0.40
0.70
Total 3.22
Coke Dry Quenching
Sinter heat recovery
Top Gas Recovery Turbine
Steel making (BOF)
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CLIMATE CHANGE
• UNFCCC
• Kyoto
• Asia Pacific Partnership
• Individual Countries
• WSA collecting energy consumption data from
members
OECD Steel Committee 270011
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MODEL DEVELOPMENT – BLAST FURNACE COST OF PRODUCTION
OECD Steel Committee 270011
unit price consumption unit cost
($/t) (kg/t pig iron) $/t pig iron
Iron ore 175 1587 277.73
Iron Ore Transport 20 1587 31.74
coking & non-cokingcoal 240 500 120.00
coking coal transport 20 500 9.75
Steel Scrap
Steel Scrap transport
sum of raw materials 439.22
electricity 0.106 $/kWh 45 4.77
LNG, COG (average) 308 $/1000m3 0 0.00
Oxygen
total energy 4.77
By Product Credits -21.60
Net Thermal Energy -33.39
other costs -54.99
total cost of hot iron 388.99
3,000,000 t/y cap. BLAST Furnace
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MODEL DEVELOPMENT – BLAST FURNACE COST OF PRODUCTION
OECD Steel Committee 270011
Steelmaking and Casting
unit price consumption unit cost
($/t) (kg/t billet.) ($/t.billet)
scrap 350 162 56.70
Hot metal 389 904 351.65
electricity (total) 0.106 $/kWh 55 kWh/t 5.83
natural gas (kWh/t) 308 $/1000m3 3.0 m3/t 0.92
oxygen 85 $/1000m3 83 7.06
total purchased energy 6.75
alloying elements 1,650 14.0 23.10
Fe-Si
Fe-SiMn
Ca-Si
electrode 8,900 0.40 3.56
refractories 650 4.00 2.60
lime 45 60.00 2.70
other consumables 6.00
sum of consumables(excluding scrap and energy): 37.96
maintenance 4.20
material transfer (maint.,fuel rental etc.) Employees $/mmonth 3.00
labor costs 4,500 6,400 115.20
management costs 4.90
sum of services: 127.30
total billet cost 580.36
3,000,000 t/y cap. BLAST Furnace
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MODEL DEVELOPMENT – EAF COST OF PRODUCTION
OECD Steel Committee 270011
MELTSHOP (100% own scrap)
108,333 tons billet/month
unit price consumption unit cost
($/t) (kg/t billet.) ($/t.billet)
scrap 400 1073 429.20
scrap delivery 10 1073 10.73
electricity (total) 0.106 $/kWh 468 kWh/t 49.61
natural gas (kWh/t) 308 $/1000m3 3.9 m3/t 1.20
total energy 51
alloying elements 1,650 14.0 23.10
Fe-Si
Fe-SiMn
Ca-Si
Oxygen 0.09 38.00 3.23
electrode 8.900 1.00 8.90
refractories (May 08) 650 5.0 3.25
lime 40 43.0 1.72
carbon
other consumables 8.60
sum of consumables(excluding scrap and energy): 45.57
maintenance 6.00
material transfer (maint.,fuel etc.) 3.00
labor costs 6400 $/mmonth 26.58
management costs 7.00
sum of services: 42.58
total billet cost 571.39
450 pers.
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BLAST FURNACE COST DRIVERS
OECD Steel Committee 270011
79%4%
2% 1%5%
-9%
Gross Raw Material Costs Alloys Gross Energy Costs
Other Additions Labour and Maintenance By product and energy credits
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EAF COST DRIVERS
OECD Steel Committee 270011
78%4%
9%5% 4%
Raw Materials Alloys Energy Costs Other Additions Labour and Maintenance
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RAW MATERIALS
OECD Steel Committee 270011
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IRON ORE PRICE
OECD Steel Committee 270011
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50
100
150
200
250
300
US$
per
tonn
e
Iron Ore, 67.55% iron content, fine, contract price to Europe, FOB Ponta da Madeira
Iron Ore Pellet cfr main China port $ per dry metric tonne (63.5% fe)
China Iron Ore Fines cfr main China port $ per dry metric tonne (63.5% fe)
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COAL PRICE
OECD Steel Committee 270011
0
50
100
150
200
250
300
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$
/ton
ne
Hard Coking Coal fob Australia $/ton US Export Coking Coal $/ton
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SCRAP EXPORTS/IMPORTS
OECD Steel Committee 270011
-50,000 -40,000 -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000
China
EU
Japan
India
Russia
USA
Korea
Ukraine
Brazil
Turkey
South Africa
Exports Imports
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SCRAP PRICE
OECD Steel Committee 270011
0
100
200
300
400
500
600
700
Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10
US$
/ton
ne
Rotterdam Scrap Price Turkey Scrap Price
Source: Metal Bulletin/McLellan
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ENERGY
OECD Steel Committee 270011
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INTERNATIONAL GAS PRICES
–
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
US$
per
MM
Btu
LNG Japan Natural gas Germany Import Price Natural gas UK Heren NBP Index† Natural gas US Henry Hub‡
Source: BP
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INTERNATIONAL ENERGY PRICES
OECD Steel Committee 270011
Electricity Natural Gas
US$ /kwh US$/1000m3
China 0.101 321.46
EU 0.106 308.06
Japan 0.116 321.46
India 0.100 140.64
Russia 0.046 77.69
USA 0.070 139.30
Korea 0.060 321.46
Ukraine 0.077 222.34
Brazil 0.155 321.46
Turkey 0.120 385.75
South Africa 0.048 90.00
Source: IEA 2010 / Evraz
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THYYSEN KRUPP CSA
OECD Steel Committee 270011
Source: Thyssen Krupp CSA
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OTHER INPUT PRICES
• Ferro alloys – International prices with discount where there are
resources available
• Refractories - International prices with discount where there are
resources available
• Electrodes - International prices with discount where there are
resources available
• Manpower – Consideration given to wage rates and productivity
• Depreciation and Finance – So far not considered in this analysis
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RESULTS
OECD Steel Committee 270011
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COST OF CAST STEEL – EAF V BOF
OECD Steel Committee 270011
Source: McLellan Cost Calculations
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
Base Case China EU Japan India Russia USA South Korea Ukraine Brazil Turkey South Africa
US$
/ton
ne
Total EAF Total BOF
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COST OF CAST STEEL – BF PROCESS
OECD Steel Committee 270011
0.00
100.00
200.00
300.00
400.00
500.00
600.00
Base Case China EU Japan India Russia USA South Korea Ukraine Brazil Turkey South Africa
US$
per
tonn
e
Gross Raw Material Costs Alloys Gross Energy Costs Other Additions Labour and Maintenance
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COST OF CAST STEEL – EAF PROCESS
OECD Steel Committee 270011
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
500.00
Base Case China EU Japan India Russia USA South Korea Ukraine Brazil Turkey South Africa
US$
per
tonn
e
Raw Materials Alloys Energy Costs Other Additions Labour and Maintenance
22
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COUNTRY ANALYSIS - SUMMARY
OECD Steel Committee 270011
Own Iron Ore Own Scrap Imported Iron Ore
Own Coking Coal Imported Coal
Natural Gas Imported Scrap
China China
Russia USA EU
Brazil Japan Japan
Ukraine South Korea
South Africa
India Turkey
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CONCLUSIONS
• Our research indicates that while the total energy consumed in making steel is some 20
GJ per tonne, about 60% of this is a result of coal related inputs either in the form of
metallurgical coal or PCI fuel injection.
• If we exclude the energy consumed from coal then the remaining contribution from
electrical energy and natural gas is relatively small in comparison with the total cost of
steel production (between 4 and 6 percent of the blast furnace process route and 9
percent of the EAF process).
• Our research also indicates that while in some countries the existence of subsidised
energy costs is well documented this tends to be aimed at the general population rather
than on industrial tariffs.
OECD Steel Committee 270011