The monetary value of these returns can be controversial. Some accounting departments consider them to be free, as they are generated in the process of making saleable castings. However, the same raw materials, alloys, energy, processing costs and cleaning costs that are expended during the produc- tion of returns are spent to produce those saleable castings. At a minimum, these returns should be valued at the current market selling price of iron/ steel scrap. The second charge material option
is steel scrap. This can be prompt industrial scrap, obsolete scrap, or turnings and borings. Chemistry varia- tions are larger for this charge material than for revert, as it is typically a blend of a number of alloys and/or chem- istry ranges. In the case of obsolete scrap (steel scrap generated from the demolition of a structure or finished goods at the end of their lifetime), the
chemistry range used during initial production may vary greatly from the chemistry ranges employed later in the production cycle. This may be due to the melting method utilized for the majority of steel or chemistry changes that have been made for increased product life. For a number of years, pig iron use
by iron metalcasters decreased. The supply of low residual steel scrap and its low price made it possible for many iron casting facilities to eliminate pig iron from the charge. As a result, virtu- ally all of the domestic merchant pig iron producers have exited the market. Now, the material’s use is resurging, but virtually all merchant pig iron sold in the U.S. today is imported. Little pig iron is utilized in the me-
tallic charge for steel castings due to the high carbon level (4% by weight). The only other metallic charge mate- rial regularly added to steel casting
melts are alloying elements (e.g. fer- rochromium, ferromanganese, nickel, molybdenum alloys).
Partnership Philosophy One method of better understanding
your charge material options and avoid- ing surprises is to utilize a partnership philosophy with steel scrap suppliers. A visit to the supplier’s yard may uncover both desirable and undesirable types of scrap. But with minimal processing, some undesirable scrap can be ren- dered acceptable. For example. lead counterweights can be removed from steel automobile wheels. The steel scrap dealer also can
benefit from a visit to the metalcasting facility, where he or she can discover why physical dimensions are a critical issue by observing the throat opening or charge opening. Metalcasters should create a speci- fication to define acceptable and un-
Examining the Steel Scrap Market T
he entire U.S. market for processed steel contains approximately 100 million tons in typical years. This market consists of steel produced in the U.S. and im-
ported steel. The steel is then utilized for the production of thousands of products from automobile parts to washing machine bodies. The leftover steel from manufacturing becomes the bulk of the steel scrap market. In addition, some steel structures are demolished, and the resulting steel becomes a part of the stream, as well. This includes retired implements, tractors, trailers, automobiles, etc. This total scrap steel market contains approximately 65 million tons. A measurable percentage of this steel
scrap is exported. Worldwide demand for steel scrap has driven the percent- age of exported steel scrap from 10% in the early 2000s to 18% in 2008 and 30% in 2009. Of the approximately 800 steel scrap customers, 20% or fewer consume 80% or more of the steel scrap generated. The price is therefore controlled by the laws of supply and demand. Some experts theorize that steel scrap is one of a few remaining perfect examples of supply and demand economics. It is virtually impossible for traders or investors to manipulate the market and is therefore considered non-fungible. Global shifts in steel production have accentuated the volatility of the steel scrap market. China now represents
MODERN CASTING / February 2011
nearly 50% of the world’s total steel production. The U.S. has dropped to about 5% of the world’s steel production, roughly equal to that of India. The demand for all iron units (i.e. iron ore, steel scrap,
DRI, HBI and merchant pig iron) has driven global pricing to historically high levels. The price of low residual steel scrap as bundles or busheling languished at or below $140/ton for nearly 20 years. As can be seen in Fig. A, that price has not been seen since 2003-2004 and may not be seen again.
MC
Fig. A. The price of low residual steel scrap escalated at the end of 2003 and has not returned to the $140/ton level since. Pig iron pricing also has been on the rise.
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