SMA president discusses EAFs, scrap supply, decarbonization

The president of the Steel Manufacturers Association (SMA), Phillip K. Bell, made a presentation on several subjects related to steel and raw materials at the biannual meeting of the International Iron Metallics Association in Houston on Tuesday.

He emphasized the advantages of EAF steel production in relation to carbon emissions as opposed to integrated steel production. Going back 10 years, Bell showed that while EAF production grew over this period of time, emissions from this process remained static. However, when examining Blast Furnace/BOF steel production, there was a significant decline. The level of emissions remained the same, despite the decline.

Regarding steel tariffs, Bell said, “They were here to stay.”

The tariffs on steel, especially Section 232, were established under the Trump Administration but were continued under the Biden team. President Biden even increased the tariffs on Chinese steel and a host of other related products. Bell lauded the fact this issue had bipartisan support and also praised Vice President Harris for casting the tie-breaking vote to enact the Infrastructure and Jobs Act, which will be a boon to the steel industry. The legislation received no Republican votes. Harris also supported the Inflation Reduction Act (IRA) which supports the transition to renewable energy and the creation of jobs to enable this. Former President Trump did not support either piece of legislation and wants to completely do away with the IRA.

On the future scrap supply, Bell predicted our obsolescent scrap reservoir should increase by 30 million tons per year. This will provide enough material for the expected expansion of capacity. But, regarding low residual industrial scrap, there may be a shortage and the U.S. will have to import. This may be difficult since many countries around the world are switching over to EAFs to decarbonize. This will restrict the export of these grades.

The electrical grid was also a subject of discussion. Bell reminded the group about the prospect of a considerable increase in electricity use by the growing EAF steelmaking sector, along with the growth in other sectors. He thought an upgrade of the grid would be a prudent investment. Bell also said the members of the SMA do use all available forms of energy, whether renewable or fossil, to meet their needs.

Bell went on to say that EAF producers are making quality steel of all types, including drawing quality flat roll products for the automotive and appliance sectors. The industry is progressing in scrap optimization to blunt the shortage of prime scrap, as well as to limit their dependence on OBM’s, such as pig iron and HBI/DRI (and their relatively high price of procurement).

Regarding “green” steel, it is a worthy concept, but Bell has his doubts as to whether users will agree to pay a premium for it.