Cost of metal

China is sucking up metal like a giant Shop Vac. Also oil, coal and other resources. Things will get interesting in the next few decades. DL

Not too long ago I took a tour of an automotive stamping plant. I asked about how the cost of steel is affecting their business. They said it isn't because they don't buy the steel, they only hit the OEMs' steel...

Regards,

Robin

that's a forward thinking company there

also some people are saying that china will not be able to sustain their currency the way they have and when they finally let go of it they will have a several hundred percent increase in inflation, read it in one of the trade mags

might be interesting to see them compete in the world market with out a locked currency

There is no end in sight for metal price increases. Nobody knows for sure the answer to this question.

One thing for sure, if your customer is not willing to allow you to pass on the fair cost of metal increases this means if the company cannot absorb it within the profit the company is, eventually the company will go out of business.

This means conservation of the metal is very important, design the parts very efficiently to get the maximum yield, get the scrap rate down to the minimum, if not zero, watch the suppliers closely so that when prices do fall (there are fluctuations always but the overall trend is up) you are getting the lowest possible price. Ask your suppliers if there are alternate steels or other raw materials that will save you money.

Their is a net export of U.S. scrap steel to China and iron ore is not made in America anymore. It comes from other countries, and China's appetite for pig iron is so high that the U.S. and other countries have to pay more to import the pig iron we need because of the competition.

We are in the beginning of a global economy. Nobody knows the long term effect because we do not know whether the world will keep pumping capital into China to build their economy. Once people slow down buying of their exported products, and if they begin to use a lot of their manufacturing capacity for internal goods, then the rest of the world will have to pay a lot more for the manufactured products unless somebody invests in manufacturing in their own country.

Eventually if demand raises, we would tap into the iron ore deposits in North America. This will require either huge investments in new blast furnaces which meet all the modern clean air act requirements and the iron ore will have to be able to be turned into pig iron that is less costly than what the U.S. could import, i.e. the production cost will have to be lower. We have the natural resources it's just not now cost effective to do it ourselves.

Mark

Mark

Mark Fields wrote: ...

...

While it's true that prices are way up, mostly due to Chinese demand, your claim that "iron ore is not made in America anymore" is nonsense.

recent US iron ore production of about 50 million tons per year. Also see

That sentence should have read "There is a net export of U.S. scrap steel to China and pig iron is not made in America anymore." In the following sentence of my post, which you copied, should clarify this.

It is true US iron ore is being mined, and then exported, to other countries.

However if you can tell me the name of a pig iron producer in America I would like to know it.

Mark

shows recent US iron ore production of about 50 million tons per year. Also

-jiw

One word- SURCHARGES! I run a small gray & ductile iron foundry and without surcharges we would be in dire straights right now. They are a fact of life in most primary and secondary metal processing operations. However, I know how the automotive industry acts about any deviations from standard cost. Your company needs to take a very hard look at your contract with your customer and get a plan together that takes into account the rising metal prices that you have very little control over. You don't say where you are on the food chain as a supplier ( Tier 1, Tier 2...), but I would have to imagine that the big suppliers, i.e. Bendix, Delco and the like have some method of indexing rising raw material costs to the part price.

Get your figures together on your standard cost and choose your metrics wisely on the increasing costs of materials. It is very unlikely that we will see any major reductions in raw material costs in the future. For example, my scrap steel price went up $90/ton in July!!! I've never seen that kind of movement in the market- my people in Chicago & Detroit say that it wasn't demand driven (meaning China), it was supply side. Right now, from what I hear, China isn't buying as aggressively as it was in Feb-April, but they are expected to go back on a buying spree later in the year. The metals market is a very cut-throat place to be right now, things are very volatile!

Good Luck!!

Mark, I believe you are basically correct in the fact that there are no domestic pig iron producers at the present time. I do find a reference in Steel News that Nucor may be trying to start up some type of pig production. I don't have a subscription, so I can't access the article

Thanks that would be good to know and if there is a domestic producer of pig iron out there it means I have not uncovered it. I think it's been 10, perhaps 20 years, since there was domestic pig iron. I think the last producers were Pickans-Mathers and Hanna Furnace, and possibly one or two of the (then) major steel producers.

What is harder and more expensive to find is nodular or low Phos pig iron, to make ductile iron; it would be interesting to see if someone produces this. We have not used basic pig iron for about two years now by reformulating our charge makeups, implementing a tight returns classification system, and trying to conserve by increasing yield and reducing what gets lost from use like metal being drug out with sand, or mismarked, etc.

Sometimes it has been amazing how hard it is to find even rail crop or other dense charge material. I do think that the scrap dealers feel it is still a seller's market. This was not a new thing since 2004 began, and the tariff was lifted late in 2003 though it may seem that was the cause. It is supply and demand at work.

Mark

"> Thanks that would be good to know and if there is a domestic producer of pig

Mark,

Yes, the supply of nodular pig is VERY tight and very expensive. I'm buying an RF-1 Sorel from South Africa at the bargain price (or so my supplier tells me!) of $359/ton. I suppose that isn't too bad, I hear there is a lot of nodular sold into the $400's.

There are several factors at work for the high costs, many of the Brazilian furnaces have there entire production dedicated to Chinese buyers, so that material never enters the market. There is also a major shortage of ocean freight vessels.

We are also working very hard at returns recovery and proper segregation. As you have done, smart charge reformulation is a key factor in hot metal cost management.

Regards, Mike

Infeasible to take say, mild steel scrap, alloy it as necessary and add the nodularizing components, say at a mini-mill?

Tim (BTW hi Mike)

-- "I've got more trophies than Wayne Gretsky and the Pope combined!" - Homer Simpson Website @

Hi Tim!

Using steel scrap and melting it in an EAF at a mini-mill to produce pig iron would be very cost prohibitive, although it certainly can be done. To make pig iron on a cost-effective basis, ya gotta have a blast furnace & coking ovens. To the best of my knowledge, there hasn't been any new blast furnaces or coking ovens built in the USA since the '70's. I think we have been too de-industrialized to produce pig iron competively with the Brazilians, Russians/Ukrainians or even the South Africans.

Regards, Mike

So what makes a mini-mill cost-effective? Steel is worth more than iron? Ok. So what are you paying for? Or is the class of ductile iron you use something different? Personally, I don't see what's so hard about CI.. if you can melt steel, you can add some charcoal and ferrosilicon, and maybe a hint of magnesium (or whatever's used) to spheroidize it. I'm pretty sure people have melted scrap steel in cupolas and had it come out a quality gray iron.

Tim

-- "I've got more trophies than Wayne Gretsky and the Pope combined!" - Homer Simpson Website @

My metallurgy text says that the manufacture of cast iron is very common in North America and around the world. Are you confusing pig iron and cast iron? Not the same stuff...

Regards,

Robin

Several things. Most mini mills are direct rolling mills. The "traditional" mills produced their own pig iron from the iron ore and coke, and either charged their steel melting furnaces with hot metal straight from the blast furnace or pigged the excess iron because their blast furnaces needed to run continuously, sometimes 24/7 for perhaps 3 years. When they had a common grade like 1020 or 1045, etc. it was relatively inexpensive to take the iron melt from the blast furnace, refine it in an open hearth, or with BOF or whatever, and pour the entire huge melt into 20+ ton ingots or refined steel. The ingots would be put in a soaking pit, then when the temp was equalized the entire ingot was rolled to a common shape. There was enough demand for the large batches of steel that one heat, once rolled to final mill shapes, could be sold quickly. When they needed to produce alloyed grades they used a similar technology and produced smaller heats but still had to produce single ingots for the rolling mil sections of the mill.

By the 1970's there was enough recyling of steel going around at fairly low prices that some new companies started up with lower capitalization. Their idea was to make a mini-mill. They eliminated the blast furnace (economic source of pig iron from iron ore) and started taking advantage of recycled materials (cars, railroad rail, or whatever). They also eliminated a step: Melt the steel, but don't cast into ingots. Instead tap the melt into a chamber to form a continuous cast ingot that slowly extrudes directly into the same or similar shape as a 20 ton cast steel ingot, except the length was as long as they wanted (almost). The liquid steel after being released from the steel melt and hardened went straight into the rolling section of the mill. They could now take the steel from liquid to finished product in a much shorter time. Also the batches were smaller. With this cost efficient method they were most competitive on alloyed steels first because they could make smaller batches than the traditional mills and they did not have to inventory as much. Eventually more and more people built these mini mills because they were more efficient (man hours per ton of steel produced) required less money (capitalization) to build.

There was one problem. Nobody wanted to build blast furnaces to make the pig iron from the iron ore because other countries were able to make pig iron for less, even counting the cost of transporting the pig iron back to the U.S. The thing is, though, the pig iron will always contain hogher carbon and silicon that you want in a steel. So, if you buy pigs and refine them into steel you have to remove the carbon and silicon. If you buy scrap steel, the carbon and silicon is already close to where you want it so you don't have to purchase oxygen to reduce the carbon. So most of the pig iron being bought was done so by the big tradtional mills and the mini mills kept buying the recycled steel (this is more or less the scenario). Gradually though as the price of pig iron rises, and world currencies rise and fall then if you are buying pig iron at a low rate from one country you can be surprised by a turn of events where currency rates change.

There's a few other things going on too, for one iron foundries don't have a way to remove carbon from their melt, like blowing oxygen into it, they have to build the melt from pig iron and steels, and carbon raisers to aim for a carbon. They build up to a carbon whereas the steel producers blow down to a carbon (a little simplified but generally this is the case).

Depends on a lot more things. Generally:

Iron ore is at the bottom of value list. Don't have a clue on the price but perhaps $50 / ton? Transportation is pretty easy and cheap, huge freighters, long rail cars, etc.

Pig iron is next tier up (lots of variation here because there are lots of grades of pig iron). Can range from $250 to $450 per ton and you have to consider the transportation cost, etc. Usually shipped by ocean lines and rail cars. If you only buy a little bit, then maybe it's shipped by dump truck.

Plain carbon steels next, perhaps. Simple shape, common grade, purchased in large quantities then maybe $400 to $600 per ton? Depends on the productivity of mill, etc.

Mildly alloyed steel, unusual shapes like tubing, or formed shapes, or cold rolled, etc. maybe $500 to $800 per ton?

High alloy or tool steel - could probably be a very wide range range of prices, I don't have a good idea here but maybe $600 to $1500 or more per ton. Often bought in small quantities.

Gray cast iron - depending on the complexity of the casting, and quality requirments of the buyer, a gray iron casting could sell for $750 to $2400 per ton. The metal portion cost could be $425 to $650 of the price (in the furnace) then you have to add the inoculants and alloy costs. The rest is the capital equipment like core machinery, mold machinery, melting furnaces, heat treat ovens, sand handling equipment, casting cleaning equipment, blasting machinery, painting machinery, testing equipment and the labor to do all it plus a small profit.

Ductile iron is similar to gray iron but generally the cost per pound is more because foundries often use higher quality pig iron, higher quaity levels of scrap, more expensive magnesium treatment alloys, and there is usually an additional processing step (adding the magnesium) that requires another piece of equipment. Add to this that ductile iron requires more technical know-how (it was only discovered, or invented, by Millis about 60 years ago) and the gating and risering is more complex, to reduce cast defects, and ductile iron castings cost more than gray iron. I know of some companies, particularly in Europe, who have specifically prohibited suppliers from making ductile iron in a cupola. I'm not saying it cannot be done (I have done it) but it low on the list of preferred melting equipment. Coreless induction furnaces are generally considered the best for controlling ductile iron metal.

Okay, I went overboard on the answer above I think that answers SOME of what you are paying for with an iron casting. There are also classes of ductile or gray iron and these are divided generally into tensile strength classes. Again, generally speaking, if you would image that either gray or ductile iron can be produced in say five tensile levels, the lowest cost grade is generally either the second lowest or lowest tensile level. That's because the 3rd, 4th and 5th levels require either a heat treat, alloying, or a controlled shakeout temperature to acheive the tensile strength. I haven;t mentioned specific grades because there are so many of them.

Well this all depends on what the function of the part and the design criticality. I would not get into my car and drive it down the street if I knew the foundry followed the procedure you described. But, if I had a backyard foundry and was making some ornamental iron, or perhaps making my own iron pieces for a Gingery lathe, or perhaps a replacement part for an old car, etc. I think (in general) you procedure would work. The the steel could be dropped into the cupola along with additional coke to replace the combustion, along with limestone, silicon and manganese briquets, etc. and good quality gray iron could be tapped that might require only a minor amount of alloy like copper and a ferrosilicon inoculant and a great quality iron would result. But the coke also contains sulfur, from the coal, and that base iron would not react well with the magnesium alloy because the excess sulfur would want to combine with the magnesium and that would cause quite a mess. At minimum you would have to make a desulfurizing step of the iron out of the cupola before adding the magnesium plus any alloys and the inoculant. When you tap a cupola you have to be sure everything's ready to go because you don't have any time to mess with the iron, it cannot be put back into the cupola.

Great post thanks Ken Cutt

Mark wrote:

Aren't pig and cast both high carbon, high silicon? Pig of course being primary metal...

Tim

-- "I've got more trophies than Wayne Gretsky and the Pope combined!" - Homer Simpson Website @

And it's not cost-effective to refine to steel overseas?

Understood...

Ok, makes sense...

Not sufficient to simply weigh out the proper amount of junk, toss a shovel or briquette or whatever and stir?

From what little I've read, you simply add a minute amount (up to .05%, a pound per ton) of magnesium and maybe some calcium and it'll solidify with spherical rather than platelike carbon. Oversimplified of course, depending on precise levels of everything as well as cooling rate and such.

So slag is more sticky, or is that just a side effect of the customer demanding higher quality? Are gray iron castings more tolerant of slag or does the average customer simply not care as much?

I've toured Mike's foundry and yep, he uses two Ajax induction furnaces. :) He also melts a very specific scrap, as I recall.

Heh heh. Very informative though, thanks.

Yes, I've noticed this too.

There are also irons that have up to 40% nickel in them.. those must be expensive!

Eheh, yeah, but that's why the manufacturer does things a bit better than that!

Okay. So add some more control to it, weigh things out carefully, do on-the-spot chemical testing (if possible), mechanical properties, etc. As long as the instruments are certified, it should come out certifiably good as anything, no?

- Just what kind of a mess? Can't say I've ever heard of magnesium sulfide, in relation to iron or otherwise, for that matter.

True (hmm, putting iron back in the cupola... that's almost humerous, but it's again got me thinkin'! :P ). If you do large melts, say in the one ton range, it'll stay hot on its own for quite some time though. On said tour of Mike's foundry (oh yeah, where's Errol to jump in with his pictures?), they'd melt a load, pour into the ladle, stir and skim a bit with a nice chunky steel bar, then slide the thing over to the molds and crank it into them (mounted on an overhead crane system of course, with a geared wheel to tip the ladle). It took a number of minutes to finish as I recall, and it stayed liquid 'til the end.

Tim

-- "I've got more trophies than Wayne Gretsky and the Pope combined!" - Homer Simpson Website @

Last time I looked, pig iron and cast iron are the same stuff. In what sense are they not the same stuff?

Pigs are ingots, cast as the output of big primary furnaces or cupolas. They're plain, gray iron. Sometimes cast-iron products are poured from cupolas directly, with no pigs being made in between. In fact, that's the more efficient method.

In most cases, pigs actually are treated as the intermediate product in making something else. In the old days, they were the feedstock for a puddling furnace, which is where they made wrought iron. Today, ingots (if I understand correctly, most iron ingots aren't in pig form today, but are rectangular ingots) may be used for the feedstock for making ductile iron, which is an alloy of cast iron and other metal(s).

In fact, I don't know if any real "pigs" are being made today. Maybe, maybe not. But the old pigs were just cast iron, cast in a strange-looking ingot form.

Ed Huntress