American Metal Market

Philip Burgert

Demand for steelmaking metallics could result in projects that will add as much as 20 million tons of alternative iron capacity in the next two years and shift the region's dominating raw materials trade.

Speakers at the Steel Success Strategies XXII conference in New York said costs of $85 or $90 a ton for production of hot-briquetted iron (HBI) in Russia could make that country the largest supplier of alternative iron within the next few years.

One speaker suggested that global warming might allow for a shift in shipping to polar routes from the Panama and Suez canals. "I will make a forecast that in my lifetime ships will be going over the North Pole to the Far East," said Robin Masters, Stamford, Conn.,-based vice president of dry cargo chartering for Simpson Spence & Young Ltd.

John Kopfle, director of corporate development for Midrex Technologies Inc., Charlotte, N.C., said that Russian costs for alternative iron production are on the low end, and costs range to more than $200 on the world market for iron produced in other regions where natural gas prices are high.

Kopfle said Midrex calculations show that 14 million tons of HBI and direct-reduced iron projects are now in the works. Combined with others under discussion and likely to be approved, they could total 20 million tons of new alternative iron over the next two years.

Maxim Basov, general director of JSC Gazmetall, a unit of Moscow-based Metalloinvest Management Co. LLC., said that while his company is already active in HBI, it also is debating further investments in blast furnace and direct-reduced iron product to go along with at least one new steel plant being planned.

Basov said the company also is considering options for production of pig iron. "Russia is a good place for cheaper iron ore and natural gas," he said. "In several years we will become the largest supplier of HBI."