Editor’s Note: Tis article is the third in a series on raw materials in the metalcasting industry. Te first article, “Sand Shortage: Myth or Reality?,” appeared in July, and the second, “Melt Additives Supply Tightening,” appeared in August.
R
obert Peaslee, president of Manitowoc Grey Iron Foundry, Manito-
woc, Wis., is indiscriminate when it comes to discriminating against raw materials. Tese days, he can hardly find one he likes. Foundry sand: he couldn’t increase
his order quantities if he tried. Ferrosilicon: he says he’s been laughed at for asking his supplier for a long-term contract. As for the rest: he’s seen a total raw
materials cost increase of more than $550,000 a year since 2008. Part of Peaslee’s disdain comes
from his penchant for speculation. When times are good, he is in the habit of buying up materials by the truckload with the expectation that a later price increase could turn the purchase into a profit center. Now, he’s lucky if he can get suf- ficient materials to keep his business running. And there’s one material that’s
more important to Peaslee’s operation than any other: iron. A ferrous facility producing ductile and gray iron parts for a variety of industries, Manitowoc Grey Iron can’t deliver castings if it doesn’t have casting alloys. Tese days, the market for iron units (a term that refers to ferrous material in all of its forms) is in seri- ous turmoil. “Tat whole industry has been
turned upside down in terms of pricing and availability,” Peaslee said. “Te suppliers aren’t taking on any new customers. If you’re not getting enough, there aren’t too many people you can turn to.”
Defining the Market According to Eugene Mura-
tore, senior foundry metallurgist for Rio Tinto Iron & Titanium North America, Chicago, ferrous
casters have three primary options for securing the melting materi- als they need—revert (in-house scrap returns), steel scrap and pig iron. Due to the wide availability of inexpensive, quality steel scrap, the amount of pig iron used by the market segment decreased for many years, Muratore said. As a result, the majority of the domestic pig iron producers exited the market. Now, the market for low residual scrap is drying up, and pig iron is available only from overseas suppliers. For metalcasting facilities, the
movement of pig iron production offshore has only compounded the fact that the indus- try is a small player and subject to the whims of other manufacturers’ pur- chasing patterns. “Big steel is the
dog, and we’re the tail,” Muratore said. As for the recent
turmoil in the scrap market, Tom Cobett, a consultant who previously worked for several decades with an alloy supply company, said manufac- turing itself is changing. “Te biggest thing we’re seeing in
the marketplace is that manufacturing scrap—punching, busheling, stamping scrap—isn’t as widely available as it used to be,” he said. “And I’m not sure we’re ever going to see it come back to where it used to be.” Steel scrap can be prompt indus-
trial scrap like the materials Cobett mentioned or obsolete scrap, material generated from the demolition of a structure or finished goods at the end of their product life. Muratore said the entire U.S. mar-
ket for processed steel, including steel produced in the U.S. and imported steel, will be approximately 100 mil- lion tons in 2011. Worldwide production of pro- cessed steel is expected to be 1.4 billion tons. Tis material is used to produce steel parts. Te leftover steel from this manufacturing process becomes a part of the steel scrap
pushed people to sell their exhausted products in a timely fashion. Finally, a familiar refrain comes
up for purchasers concerned about raw materials availability: emerging markets are gobbling up the previously plentiful supply. “Te demand in Asia is so huge,”
Muratore said. “It’s at six to eight times the historical demand.” Te total domestic scrap steel mar- ket is about 65 million tons, Muratore said. Some of this is exported—10% in the early 2000s, 18% in 2008, 30% in 2009 and record highs expected in the years to come.
Most of the global supply of steel
is produced in foreign countries. Today, China makes 50% of the supply. The U.S. makes 6%. And the demand for iron units has driven global pricing to historically high
market. Demolished steel structures become the obsolete scrap portion of the stream. According to Cobett, several
market conditions have made both sources of steel scrap less bountiful. One, fewer things are made of metal than they used to be. Conversions to plastics and other materials have shrunk the quantity of prompt indus- trial scrap made in manufacturing plants. (For example, Cobett points to the reduction of metal components by weight in automobiles.) Two, the high scrap prices of the last several years
“Big steel is the dog, and
we’re the tail,” —Eugene Muratore, Rio Tinto
ONLINE RESOURCE
For links to each of the articles in this series, visit
www.moderncasting.com.
September 2011 MODERN CASTING | 21
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