THIS PAPER WAS FIRST PRESENTED

AT THE

60th ELECTRIC FURNACE CONFERENCE

HELD IN

SAN ANTONIO

NOVEMBER 10-13, 2002

AND IS REPRODUCED HERE BY KIND PERMISSION OF THE

IRON AND STEEL SOCIETY

 Is Pig Iron Vital to Electric Furnace Users?

Christopher M. Moore
International Pig Iron Secretariat
Angerhof 11
40878 Ratingen
Germany
Tel: 00-49-2102-5289803
Fax: 00-49-2102-5289804
e-mail: IPIS@Roheisen.de
http://www.pig-iron.com/

Jonathan Aylen
Senior Lecturer in Techno-Economic Analysis
Centre for Manufacture
UMIST
Manchester M60 1QD
England
Tel: 00-44-161-200 5704
Fax: 00-44-161-200 5701
e-mail: j.aylen@umist.ac.uk

Key Words: pig iron, electric arc furnace, cost advantages

INTRODUCTION

The dream of all merchant pig iron producers was - and remains - that the quality of scrap becomes so poor,
due to galvanising and the micro-elements in steel, that pig iron will become the leading raw material for
steel production in EAFs. When I first joined a merchant pig iron producer more than 20 years ago I too
believed the dream. Since then I have learnt that the resilience of the scrap market and the creativity of the
EAF producers are such as to ensure this will never happen. Notwithstanding this, pig iron has become
increasingly important to the EAF producers over the last decade. Pig iron has shown that it can fulfil an
important, some might argue a critical, role in the raw material mix bringing both technical and economic
advantages.

WHAT IS MEANT BY MERCHANT PIG IRON?

The vast bulk of the world’s pig iron (570 million tpa) is basic iron made in blast furnaces in integrated steel
mills for their own consumption. The second major source of pig iron is synthetic iron made in electric
furnaces (EAF’s) estimated at 300 million tpa. Merchant pig iron production comes a distant third; the
production is estimated at, perhaps, 15 million tpa or only 2.6 % of total basic iron production. Merchant pig
iron is defined as pig iron produced for use in a plant other than the producer’s own. Because of this the vast
bulk of the merchant pig iron is traded in solid form as pigs.

There are examples of liquid supply of merchant pig iron to customers but these are few and far between.
The energy advantages of retaining the sensible heat of the molten iron are obvious, but the logistics of
transporting hot metal across rail networks in torpedo ladles or by road generally make it impossible.

The merchant pig iron market divides into two quite distinct markets; the steel industry and the foundries.
The foundry market is much smaller, requires many more grades but pays much better prices. The steel
industry looks to merchant pig iron for clean iron units, or additional supplies, or to raise production rates.
Obviously, integrated steel mills do not need merchant iron for quality reasons and are only occasional
buyers when extra iron units are required. Even then there is a major problem as to how they bring solid pig
iron into their circuit. The EAF producers do not have this problem, require clean iron units and are
therefore the largest consumers. Here the use of merchant pig iron is principally a question of price.

The merchant pig iron producers have changed over the last years. Thirty to forty years ago the merchant pig
iron producers were almost exclusively integrated steel mills with one or more blast furnaces dedicated to
merchant pig iron production feeding pig casters. Then the Brazilians came along with cheap merchant pig
iron using charcoal in place of coke and simple small plants. Initially these furnaces used virgin rain forest
as a source of charcoal, but now eucalyptus is cultivated to provide the raw material for the charcoal. Pig
iron prices fell to the production costs of the Brazilians plus freight to the major markets.

About the same time, the ever increasing size of the production units in the integrated mills made it harder to
meet the smaller scale requirements of the merchant pig iron market and difficulties with operating pig
casting machines led most integrated mills to leave the business. In Europe, Usinor-Sacilor (Lorfonte),
Thyssen and British Steel (Cleveland Iron) are examples of some of those who left the business during the
early 1990's.

Around the same time QIT Fer et Titane of Canada entered the market with their spherodial graphite (SG)
iron, which was really a by-product of titanium slag production. In the early days QIT did an excellent job
of persuading the market that their product was special and as a result it carried a premium price and had
little impact on the rest of the merchant pig iron market. Even now QIT pig iron commands a higher price
per tonne in the USA than iron from other sources (table V). The success of QIT lured other merchant pig
iron producers to manufacture a SG of a poorer, but still satisfactory quality in blast furnaces. This extra
production began to erode the price differential between the SG and normal haematite markets. More
recently, growth in the titanium slag market has led to many more projects with an accompanying increase
in the production of QIT quality SG iron. In the meantime the quality of the SG made in blast furnace is very
close to that made as a titanium slag by-product. The final blow to the exclusive position of SG iron has
been the discovery by foundry operators that they could get almost the same grade of pig iron at much lower
prices by buying basic steelmaking pig iron.

Today SG has lost its special position and although demand is still increasing it has become a commodity
item in the merchant pig iron market. A problem with the merchant pig iron production from titanium slag
producers is that it bears no relation to the steel or pig iron markets, but is instead driven by the vagaries of
the titanium slag market which can behave quite differently.

A more recent major influence on the merchant pig iron market are restrictions on "beaching" or "plating"
pig iron for environmental reasons. At the same time a desire to keep blast furnaces operating at full
capacity regardless of steel plant output has developed. This has led some integrated mills to install pig
casting machines and cast the excess pig iron production. The problem with this production is that it is anti-
cyclical. The steel industry has more merchant pig iron available when the steel and pig iron demand is
weak and this tends to depress prices at a time when they are already under pressure from a weakening
demand.
The last major change to the merchant pig iron market was the fall of the USSR. After this, the Russian and
Ukrainian mills entered the merchant pig iron market seriously for the first time. In the case of Russia, there
are both dedicated merchant pig iron producers and integrated steel mills supplying the merchant pig iron
market, both on a permanent and opportunistic basis. In the Ukraine there are only integrated steel mills
supplying merchant pig iron on an opportunistic basis.

There are thus 8 types of merchant pig iron producers; the charcoal based merchant plants in Brazil; the
merchant pig iron producers in Russia; the integrated mills in Russia and the Ukraine; the titanium slag
producers; the integrated mills in the USA with pigging machines; the merchant pig iron producers
elsewhere; and the integrated mills in Japan. The Chinese, the eighth, are the wild card: At the moment they
are only supplying small quantities to the world market, but they have been major suppliers in the past and
remain capable of taking up such a role again in the future. Indian merchant iron producers are occasionally
in the market but can not be considered major players. The wide variety of sources helps explain the
varying chemistry of pig iron available on the world market (table VI). Value in use in an electric arc
furnace varies across these different sources. Essentially, the market is determined today by the Russian and
the Brazilian suppliers.

THE PIG IRON GRADES

There are three principal categories of pig iron serving three distinct purposes. The first is basic or
steelmaking pig iron, the subject of this paper, which as its name implies is pig iron for the production of
steel. The other two types are used in foundries; the first haematite is used in the production of grey iron
castings and the second nodular or SG pig iron for the production of spherodial graphite castings. The major
difference between pig iron destined for steelmaking and those grades produced for the foundries lies in the
silicon content. Steelmaking pig iron has a silicon content between 0.5-1.0% whereas pig iron for the
foundries has a silicon content from 2.5-4.0%. Typical analyses for the three categories of pig iron are
shown in table I below.

Table I Typical Analyses of Major Categories of Pig Iron

Basic/Steelmaking Haematite Nodular/SG
Si 0.4-0.8% 2.5-3.5% 0.5-1.5%
C ~4.0% 3.5-4.0% 4.0-4.2%
Mn 0.4% 0.4-0.8% <0.1%
P ~0.05% ~0.1% ~0.05%
S 0.02% 0.04% 0.01-0.03%
Source: IPIS Data

TECHNICAL ADVANTAGES OF PIG IRON

The foremost reason for using pig iron in an EAF charge is to provide clean iron units to counteract
increasingly dirty scrap. Clean pig iron helps dilute residual elements such as copper and tin which arise as
tramp elements in scrap. Pig iron can also play a key role in helping minimise nitrogen levels in arc furnace
melts.

American arc furnace practice increasingly relies on large quantities of loose, fragmentised or shredded
scrap. "Frag." is now the most widely traded grade of scrap in the USA accounting for 10 million tonnes of
scrap used in the USA in the year 2001, approximately one sixth of total scrap use (table II). The advantage
of shredded scrap is that it can be charged to an electric arc furnace in the first basket and rapidly melts in a
hot heel of molten material deliberately retained from the previous heat. Oxy-fuel melting is also highly
effective on loose charge material. So frag. is an ideal feedstock for fast arc furnace operation, helped by
large quantities of oxygen with consequent gains in melt shop productivity and energy savings brought by
frequent melting.

Table II Scrap Use by Grade, USA 2001

All uses, including foundries and re-circulating scrap within works
Grade Consumption (million tonnes)
Shredded or fragmentised 10.0
No. 1 Heavy melting scrap 9.2
No.1 and electric furnace bales 6.8
No.2 HMS and all other bundles 6.8
No 1 busheling 5.3
(Iron scrap, cast iron borings, moulds 1.0 incomplete data )
Cut structural and plate 4.6
Turnings and borings 2.2
Slag scrap 2.2
Low phos. plate and punchings 0.3
Other grades (cans, rails, mixed scrap) 6.3
Stainless and alloy 1.8
Source: derived from US Geological Survey, Mineral Industry Surveys, Iron and
Steel Scrap in December 2001, Reston, Virginia: US Department of the Interior,
February 2002, table 2

However, frag. typically contains a high proportion of copper from the electric wiring increasingly common
in modern cars. Most cars now include motors for electric windows, sun roofs and air conditioners as well as
the familiar alternator and starter motor. These smaller motors tend to evade manual scrap sorting which is
the only effective way of removing copper components.

Copper is particularly harmful to the surface quality of the strip produced by the new thin-slab caster mini-
mills. In practice, copper levels must be below 0.1% to reduce sub-scale formation in equalising tunnels and
to prevent surface cracking during subsequent strip rolling. Copper is less of a problem for long products but
it is unwelcome in high grade engineering steels used for, say, bright bar drawing produced via the bloom
casting route. Consequently there is a need to dilute the final amount of scrap-derived copper in the final
melt. For this purpose pig iron is ideal. The growth of thin-slab casting mini-mills goes far to explain the rise
in US pig iron imports during the 1990's (table IV).

There are other advantages from using clean pig iron of known analysis. The melting point of pig iron is
lower than that of steel so there are savings to be made in electrical energy. Pig iron brings other elements
that are advantageous and not present in scrap such as carbon, silicon and manganese. Both carbon and
silicon provide energy. Modern arc furnaces use large quantities of oxygen to assist melting and in these
circumstances carbon and silicon are highly exothermic and impart heat to the bath. The energy content of
the silicon is particularly high and depends on the silicon level in the pig. Evidently, energy requirements
depend on the precise chemistry of the pig iron used. But cold pig iron has the potential to be "energy
neutral" as the exothermic reaction of the carbon and silicon content offset the electrical energy required for
heating and melting the pig iron charge.
The energy contribution made by pig iron means that the productivity will increase as the amount of pig iron
increases; at least up to a point. The lower melting rate of pig iron is a limiting factor on the amount that can
be added to the charge. If the furnace doesn’t have oxygen then the maximum amount of pig iron that can be
charged is 15 to 20% before tap to tap times increase due to the melting properties of the pig iron. An arc
furnace with oxygen injection can melt a charge of up to 35% pig iron without difficulty. Typical practice is
to include dense pig iron in with the light scrap of the first charge basket to give a longer melting time for
the iron.

The limits on the use of pig iron are the need to remove the silicon and phosphorous in the slag. Even the
carbon can cause difficulties as it needs oxygen and this could lead to extra tap to tap times. Excessive
oxygen injection rates can cause problems with splashing. However, pig iron used for electric furnace
feedstock needs to be low in phosphorous as electric arcs are not good at de-phosphorising metal (see
Millman(2000), p.24). This explains why less than 1 per cent of the pig iron imported into the USA in 2001
contained more than 0.5 per cent phosphorous.

A major advantage of pig iron is enhanced nitrogen removal. A recent IISI (2000, p.45) report on electric arc
furnace operation concluded "of all the residual elements, nitrogen is the most difficult to control in the EAF
and is a major limitation on the production of high quality steels from the arc furnace route". This is crucial
point for the new generation of arc-based thin slab casting mini-mills as high levels of nitrogen induce strain
ageing and lower the ductility of cold rolled and annealed strip. High levels of nitrogen pick-up in arc
furnaces preclude these mills from the deep drawing market. The two key sources of nitrogen are the liquid
steel surface of the bath and the arcs themselves which dissociate nitrogen from the air into the bath.

Pig iron helps remove nitrogen from electric arc furnace steel melts in two ways. Firstly, high carbon and
silicon levels help develop an ideal foamy slag to protect the surface of the melt. Secondly, high levels of
evolution of carbon monoxide deep within the melt help "sweep" nitrogen out of the liquid metal. The
dissolved nitrogen is absorbed at the interface with the CO bubbles and escapes upwards into the exhaust
gases. Pig iron is an ideal source of carbon, especially if carbon monoxide evolution can be promoted with
the help of oxygen right to the end of the refining period. All the furnaces in the recent IISI survey
producing steels with nitrogen levels of 60 parts per million or less used significant quantities of cold pig
iron, molten pig iron or directly reduced/hot briquetted iron in the charge. This is a further reason why the
rise of thin slab casting mini-mills in the USA has been associated with a growth in pig iron imports into the
USA.

The high bulk density of pig iron reduces charging time and its uniform rounded shape is easier on hearth
refractories. The bulk density of pig iron is 3.7 t/m3 compared with 0.8-1.0 t/m3 for scrap, or a saving of one
bucket in three. Since a 40t furnace looses some 500 kWh per bucket charged the use of pig iron saves some
12 kWh/t. Some papers suggest that the cold pig iron should be charged first to provide the best conditions
for melting and create a bath with a high carbon content as early as possible. This allows maximum time for
decarburisation of the melt and optimises the energy obtained through burning the CO. Late charging of the
pig iron can result in extended tap to tap times due to high carbon contents, but helps maintain low nitrogen
levels in the final melt.

A perceived disadvantage that pig iron only has 95% Fe is in reality not a problem at all as most scrap
grades have similar levels of iron when one takes rust, paint, dirt etc into account. Certainly the yield is
higher than for directly reduced iron with its high gangue content.

MAJOR PRODUCERS OF MERCHANT PIG IRON

The major producers of merchant pig iron are located in Russia and Brazil. The vast bulk of the production
in Russia comes from three producers; Tulachermet with a production of 2.3 million tpa where virtually all
the iron output is sold as pig, Sokol with a production of 0.5 million tpa and Kosya Gora Iron Works with a
production of 0.3 million tpa. There are other producers who occasionally appear on the market, but they are
not dedicated merchant pig iron producers in the true sense and have too small a merchant pig iron
production to have any impact. These producers use conventional, coke fed blast furnaces.

Table III Russian Merchant Pig Iron Production and Exports in 2001
Producer Share of Exports Production (Tonnes) Exports(Tonnes)
Tulachermet 54% 2 328 000 1 880 000
Kunetsk MK 12% 427 000
Novolipetsk MK 11.5% 411 000
Sokol 10% 560 000 352 000
Kosaya Gora 7% 380 000 257 000
Chusovskoy 5.5% 149 000
Source: IPIS Data

In Brazil there are more than a hundred small producers divided between those in the north making almost
exclusively basic pig iron for the USA, and those in the centre and south which make all grades of pig iron.
Merchant pig iron is predominantly made in mini-blast furnaces using charcoal. There are large blast furnace
based pig iron producers in Brazil but they are all integrated steel mills making pig iron for their own
consumption.

Then come a number of much smaller European producers based in Italy, the Czech Republic, Germany and
Poland. These mainly supply the foundry industry, with only small tonnages going to the steel industry. The
Italian producer is the exception since it belongs to a local steel group and is in a country short of scrap; it
provides basic pig iron for its principal.

The Canadians and South Africans have specialised in SG pig iron for the foundry industry. Whilst the steel
industry could use their pig iron the prices paid for these grades in the foundry industry are much better.

The Chinese producers exist, but are not exporting at present and IPIS does not have any detailed
information on them. The other producers in the world are integrated steel plants that sometimes offer
merchant pig iron for sale but can not be considered major merchant pig iron producers because they are not
consistently present. It is for this reason that the Ukrainian producers are not listed although they have been
a big force in the market.

SUPPLY OF MERCHANT PIG IRON

As stated above there are two countries which dominate the merchant pig iron markets with specialised
merchant pig iron producers; they are Brazil and Russia. There are other countries like Japan, China and the
Ukraine which enter the market as occasional suppliers but are not dedicated merchant pig iron producers
and are driven by other motives. The other merchant pig iron producers in Canada, South Africa and Europe
are supplying the foundry market and therefore not of relevance for this paper.

An IPIS study (1993) indicated total merchant pig iron exports of 13.25 million in 1990 which then fell
sharply back to 8.23 million tonnes in 1991. Then, as now, the major players were USSR (Russia &
Ukraine) with exports in 1990 of 6 million tonnes and 3 million tonnes in 1991. Brazil was not quite so
badly affected by the downturn, exports fell from 3.5 million tonnes in 1990 to 2.5 million tonnes in 1991.
A decade later, little has changed. In 2000, world pig iron exports were almost identical at 13.1 million
tonnes to those ten years earlier, according to IISI (2002, p.17) figures. Though there are clearly
shortcomings in this trade data, since world imports in the same year were 14.3 million tonnes - a
discrepancy between two theoretically identical figures of 1.2 million tonnes ! In that year, Russian exports
were put at 3.6 million tonnes - little different to the figure for 1991. Brazil remained at 3.8 million tonnes,
of which 3.1 million tonnes went to the USA (table V). Rather it was China that entered the market in 2000
to provide 3.3 million tonnes of exports (double the previous year's exports.)

The production of merchant pig iron in Brazil was 6.5 million tonnes in 2001 of which 2.0 million tonnes
was produced in the North. Basic production at 5.02 million tonnes of merchant iron made up the vast bulk
of the production; only 1.49 million tonnes was foundry grade pig iron. In 2001 4.27 million tonnes were
exported; all of the production from the north and 2.25 million tonnes from the Southern/Central regions. Of
this total 3.4 million tonnes was basic iron and only 0.88 foundry grade pig iron. Roughly 40% of the
foundry grade exported was SG. Exports in 2002 are expected to reach 4.5 million tonnes out of a total
production estimated at 6.8 million tonnes.

Total Russian production was 45 million tonnes in 2001; this was approximately the same as in 2000. In
2001 the merchant pig iron production for export was 3.5 million tonnes or 20% more than the 2.9 million
tonnes in 2000. The breakdown of the exports between producers is shown in table III. Exports from Russia
in 2002 are forecast to reach 4.5 million tonnes, of this total 4 million tonnes will be basic pig iron. The
largest producer Tulachermet plans to export 2.3 million tonnes in 2002, Kosya Gora 0.24 million tonnes
and Sokol 0.5 million tonnes. There are other producers but they, like those in other countries, are only
occasionally in the market.

China will be a net importer of pig iron in 2002; despite this some pig iron will be exported. These exports
will be the result of tolling operations set up in the past. Most probably the bulk of these “exports” will find
their way into the better priced domestic market.

The Ukraine is predicted to export 1.2 million tonnes in 2002, down some 5-10% on 2001. The reason is that
the production of merchant pig iron in the Ukraine comes from integrated steel mills and is solely profit
driven. When margins on steel are better than those on pig iron, steel production and exports increase at the
expense of direct pig iron sales. The Ukraine exports mainly to Italy and Turkey.

The Japanese are the wild card in the short term. They exported some 300,000 tonnes of pig iron to China,
Korea, Taiwan and Thailand during the first quarter of 2002 yet the reasoning is not clear as the prices did
not appear to conform to the market. The Japanese have large quantities of pig iron available and may enter
the market as they did in 1998 - exporting 2.3 million tonnes.

DEMAND FOR MERCHANT PIG IRON

Very little cold pig iron (2.7 million tonnes) was used in EAFs prior to 1995. The Delphi report on Electric
Arc Furnaces from the IISI (2000, table 33 and p.263) in the early months of 2000 showed that consumption
of cold pig iron in EAFs had tripled in the previous six years and predicted it would increase further from
6.4 million tpa to 8 million. It is very difficult to distinguish between beached or plated pig iron being reused
in the integrated mills and merchant pig iron purchases. It is however clear that a significant trade in
merchant pig iron has built up in recent years. Delphi estimated it to be 12 million tonnes in 1995. A study
done for IPIS in 1993 estimated world trade in pig iron as having peaked in 1989 at 25 million tonnes before
sinking to less than 20 million tonnes in 1990. It was estimated that the actual figure was between 17 and 18
million tonnes. The reason for the reduction was the collapse of the trade in pig iron within Eastern Europe
in the early nineties. At this time three quarters of the demand was from foundries with only 6 million tonnes
being consumed by EAFs. Both the members of IPIS and the Delphi study suggest these figures are on the
high side. At this time Japan with a 1991 consumption of 4.4 million tonnes was the largest market for pig
iron, it was Brazil’s largest market.

The demand for pig iron in 2002 will be quite strong and according to estimates from IPIS will reach 12
million tonnes. North America and China will be the principal consumers of pig iron in 2002. Well down on
the figures from the earlier study but as was said at the time the figures were thought to be overstated. It
should be remembered that pig iron statistics are notoriously unreliable.

Table IV US imports of Pig Iron

( '000 tonnes)
1986 400
1991 430
1996 2,660
1997 3,150
1998 5,150
1999 4,990
2000 4,970
2001 4,370
derived from US Geological Survey,
Mineral Industry Surveys, Iron and
Steel Scrap,annual

There has been a natural splitting of the markets between Brazil and Russia on grounds of transport costs.
Brazilian merchant iron is predestined for the North American market due to its geographic location. The
increased demand in North America has absorbed all the extra production in Brazil and the development in
the north of Brazil is a clear response to this demand.

Russia is present in the North American market and although their sales have been limited by quota the
general feeling is that they would not sell more in North America were the quota to be lifted. The natural
markets for the Russians are Europe and Asia. Their extra production is being absorbed by the switch of
China from being an exporter to an importer. China is expected to import 1.8 to 2.0 million tonnes in 2002.
The demand from the whole of Asia for pig iron in 2002 is estimated at 5.5 million tonnes.

Taiwan continues to be a major yet not dominant market for pig iron. It imported 450,000 tonnes in 2001
and 220,000 tonnes in the first quarter of 2002. It is on course for higher imports in 2002 than in 2001, but
they will not continue at the first quarter rate as this figure includes some carry-over from December 2001.

MAJOR MOVEMENTS OF MERCHANT PIG IRON

The major movements of pig iron derive from the above discussion. Brazil shipped 3.37 million tonnes to
the USA in 2001 and 670,000 tonnes in the first quarter of 2002. The remaining 600,000 tonnes exported by
Brazil was sold to Asia with small amounts going to Europe. Russia exported 3,5 million tonnes in 2001, 2
million tonnes to Europe, some 1 million tonnes to Asia of which the bulk went to China and 505 000 tonnes
to the USA. In the same year the Ukraine shipped 600 000 tonnes to Europe and 164 000 tonnes to the USA.
The other big movements of pig iron were SG pig iron from Canada and South Africa.
 Table V US Pig Iron Imports by Source, 2000
Country of Origin Volume of Imports Price
Metric tonnes US $ per tonne
Brazil 3,080,000 $121.43
Ukraine 1,070,000 $120.56
Russia 423,000 $106.86
South Africa 145,000 $124.83
Canada 109,000 $167.89
Turkey 44,000 $125.45
China 41,100 $115.33
Venezuela 23,000 $103.04
Others 34,900 $108.02
Total US Imports 4,970,000 $120.93
Source: derived from US Geological Survey, Mineral Industry Surveys, Iron and Steel Scrap, 2000 Annual
Review, Reston, Virginia: US Department of the Interior, October 2001, table 20

PRICING OF MERCHANT PIG IRON

The long term price of pig iron is determined by the price of scrap (Aylen and Albertson, 1998). This has
been shown to be true not only in the USA but in the world market and even in the Europe for the pricing of
pig iron for foundries. This is logical as pig iron and scrap are close substitutes, both in the market for basic
pig iron and among foundries where pig iron is an alternative to cast iron scrap. The difference between the
two Fe sources is their value in use and this is reflected in the price difference, but that said the price of pig
iron tracks that for scrap which is a much bigger market (Wulff, 1998, exhibit 7), though with less volatility
(Scrap Magnet, 1995).

Prices for other grades of pig iron also track that of scrap in the long term as many producers can switch
production between basic, haematite and SG pig iron grades. This ensures that the price differentials do not
move too far away from the real cost of making the different products.

ECONOMIC ADVANTAGES OF PIG IRON

Various attempts have been made to establish the value in use difference between scrap and pig iron. A
calculation done by IPIS some years ago came up with a figure of $ 12.35 per metric tonne for the minimum
additional value of pig iron over scrap. If liquid pig iron can be used then the figure rises to somewhere
between $25 and $34 per tonne because of the saving in melting costs. As discussed above, this is a rarity
with merchant pig iron.

Table VI Typical Composition of Cold Pig Iron Charged to Electric Arc Furnace
Median Range
% Carbon 4.2 3.2 - 4.8
% Silicon 0.6 0.02 - 2.1
% Phosphorous 0.06 0.01 - 0.8
% Sulphur 0.03 0.01 - 0.5
Source: derived from Committee on Technology, Working Group on EAF Technology, EAF Technology, State
of the Art and Future Trends, Brussels: IISI, Committee on Technology, 2000, table 22 based on pig iron use in
29 furnaces in an IISI Survey of EAF Technology
 Note: the "median" value gives the halfway point in the sample - where half of the sample is less than or
equal to this value, and half is equal to or more than this value. The median is less influenced by extreme values
than the mean, or average value.

The figure was calculated on the basis of the value for the carbon, silicon and manganese.

Table VII Value of Elements in Pig Iron

Difference between amount in Unit Cost Value
Scrap & Pig Iron $/kg $
Carbon 42 kg 0.15 6.30
Silicon 5 kg 0.72 3.61
Manganese 3.7 kg 0.44 1.63
TOTAL 11.54

These extra elements do require additional of oxygen and lime; it is however difficult to estimate what these
costs are as the EAFs differ greatly and both oxygen and lime are often present in excess anyway. Therefore
cost ranges have been estimated:

Table VIII Costs associated with Elements in Pig Iron

Minimum Maximum Unit Cost Minimum Maximum
$/tonne $/tonne
Oxygen 33 m3 100 m3 0.05 $/ m3 1.65 5.00
Lime 15 kg 22,7 kg 80 $/tonne 1.20 1.82
TOTAL 2.85 6.82

Thus the net benefit through using pig iron is in the range $4.72 to $8.69 per tonne. This valuation does not
allow for the benefits attributable to the higher purity of iron compared to scrap, or to its impact on melting
time. Since the impact of pig iron use on the thermo-chemical reactions within the furnaces cannot be
determined directly, another approach was chosen to quantify the electricity savings and the shorter tap to
tap times.

The melting point of pig iron is lower than that for steel and this leads to savings in electrical energy.
Foaming slags have become standard practice in electric arc furnace operation because of the huge increase
in the conversion of electrical energy to thermal energy when they are used. The formation of foaming slags
is positively influenced by the use of pig iron because of its additional chemical energy in the form of
carbon and silicon. A Japanese study estimated that the average saving in electrical energy when charging
pig iron is 1.2 kWh per 1% of pig iron used, or 120 kWh per tonne of pig iron. This gives overall savings of
8.64 $/tonne, made up of 7.20 $/tonne for electricity and 1.44 $/tonne for electrodes. However it must be
noted that since EAFs have lower decarburisation rates than BOFs, this estimate is only true when pig iron
makes up less than 25% of the charge.

Lower electricity consumption also means shorter tap to tap times and increased productivity. Assuming a
power-on time of 50 minutes and power requirements for a scrap charge of 430 kWh/t in a modern UHP
furnace. If 25% of the scrap charge is replaced with pig iron, this will save 14 minutes or $7.84. If the power
on time is 80 minutes and the power requirement 580 kWh then the saving is 16.5 minutes or $9.24. Hence
charging one tonne of pig iron instead of scrap saves ($7.84 or $9.24)+8.64= $16.48 or $17.88. Once the
costs for oxygen and lime are factored in the savings drop to between $9.66 to $15.03 per tonne depending
on the equipment and its efficiency. This gives the average saving of $12.35 per metric tonne quoted at the
beginning of this section. This value advantage closely tallies with the average difference between the scrap
and pig iron prices as quoted in the TEX reports.

A Brazilian study done in 1993 came up with a value difference of $16.22 per metric tonne of pig iron used.
Very similar to the one estimated by IPIS.

THE FUTURE OF PIG IRON IN EAFs

The future of pig iron as a charge material for EAFs is secure. One can go further and say that the future for
pig iron as a raw material for EAFs is sure to be a growing market. There are two principal reasons for
saying this: quality and productivity.

The dream of merchant pig iron producers that the quality of scrap will deteriorate is certain to come true, at
least to some extent. There will simply be too much uncertainty in the quality of the scrap in the future when
the micro-alloyed and heavily galvanised scrap begins to return after usage. One could argue that this will
not be such an issue as the EAF producers will become more adept at coping with these qualities. This is
true yet irrelevant, as the EAF mills are steadily moving up the quality ladder and making steels that have
ever more stringent quality restrictions. This requires ever better quality scrap, at a time when the material
that is being offered will tend to be of a lower quality. Thus even if one were to dismiss the probable long
term deterioration in the quality of scrap there will be an increasing need to dilute the contaminants present
in today’s scrap to make the higher grade steels. Furthermore as in all industries the competitive pressures
on the EAF producers will increase as the industry matures; they will be pushed to increase the production in
their existing furnaces. Pig iron is a simple, readily available and cost effective option.

Finally - but much more difficult to predict - are periods when there will be a shortage of iron units. They
will come, and merchant pig iron will benefit but these propitious intervals can not form the long term basis
for the future of the industry. This lies in the undisputed advantages of pig iron as outlined in this paper.

SUMMARY

The paper asks the question: is pig iron vital to electric furnaces? The honest answer has to be no. Yet, the
reality is that EAFs would struggle were there no merchant pig iron and there are clear technical and
economic advantages that mean it would a foolish EAF operator that didn’t consider using pig iron. I believe
that the usage of pig iron in EAFs will increase in the future for the reasons given above.
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