A PRESENTATION FROM. ( Kingdom of Saudi Arabia) AL ITTEFAQ STEEL PRODUCTS CO.

Transcription

1 A PRESENTATION FROM AL ITTEFAQ STEEL PRODUCTS CO. ( Kingdom of Saudi Arabia)

2 Topics for Presentation (a) Reducibility, sticking and Fe content - how do pellets from different sources compare? What are the advantages of diversifying feed stock? (b) What is the most effective procurement strategy to ensure a balanced mix? (c) Do pellet premiums and spot prices accurately reflect the iron ore prices? Will we see a shift away from long term contracts?

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4 ISPC NETWORK AT 2 ND INDUSTRIAL CITY, DAMMAM

5 ISPC STEEL PLANTS IN SAUDI ARABIA DRIC NASCO ASCO ISPF 1 ISPF 2 FSPF

6 High Tensile Deformed Reinforcement Bars ;-- ASTM A-615 grade-60/40, BS-4449, Grade-460B and 500B Diameter Range : 8 to 40 mm Wire Rods ;-- According to C1008 and C1006 grades Diameter Range : 5.5mm to14mm (plain) Cold Processed Rods & Rebars ;-- ISPC PRODUCTS Cut and bend & Weld Mesh Cold rolled Spring Wire product Galvanizing; BSEN 10244, ASTEM A 392, ASTEM F-668, ASTM A-641 Fusion Bonded Epoxy coating : ASTM A775 / A775M, ASTM, ACI-316,BS Low Relaxation PC Strands; ASTM A-416, BS-5896

7 Direct Reduced Iron Company (DRIC) Two MIDREX DRI modules built to produce 1.5 million tons of low residual metallic iron for the production of high quality steel in NASCO & ARAB Steel of ISPC.

8 ISPC STEEL PRODUCTS (T) DRI PRODUCTION (T)

9 Do pellet premiums and spot prices accurately reflect the iron ore prices? Will we see a shift away from long term contracts?

10 LOW IRON ORE PRICE ; ANY EFFECT ON STEEL PRODUCTION??

11 VALE's IRON ORE AND PELLETS PRICE REFERENCE USD cents / Fe unit YEAR Standard Sinter Feed (SSF) Carajás Sinter Feed (SFCJ) Carajás Lump (CJL) MBR Lump (BFLO) Tubarão Blast Furnace Pellets (BFP) Tubarão Direct Reduction Pellets (DRP) São Luís Blast Furnace Pellets (BFP) São Luís Direct Reduction Pellets (DRP) Standard Sinter Feed (SSF) Carajás Sinter Feed (SFCJ) New Tubarão A Lump Ore (NTA) Blast Furnace Pellets (BFP)

12 IRON ORE (62.5% Fe ) PRICE VS PELLET (63% Fe) PRICE

13 Poor Quality China India Low process Cost High Capacity High Capacity Brazil & Australia

14 Depreciati on Interest burden Production Capacity Capex Operation Cost

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16 Ore Price Pellet Price WHERE IS THE END?? ASK DRAGON!

17 Brown Field projects Green Field Projects Surplus Capacity 174 m t

18 SCAPEGOAT! PELLET PREMIUM?? This to be added to IODEX of the day to get Sale Price. Total Premium on Pellet. After multiplying change in TFe to average of 62% Ore sale Price. IODEX Based Premium Conversion Based Premium COST CUTTING Average of Spot sale for 62% Fe Iron Increment al TFe change based on 62%. Declared by Manufacturer on Quarter basis. CAPEX REDUCTION

19 What is the most effective procurement strategy to ensure a balanced mix?

20 Oxide quality Parameters Material Source/Month DR grade Oxide quality BF grade TFe S SiO Al2O Cao MgO P Expected Product Quality after Feedmix.: Product 1 Product 2 Product 3 Product 4 Product 5 Feed mix % % % % % DR Grade % 90.00% 80.00% 70.00% 60.00% BF Grade 0.00% 10.00% 20.00% 30.00% 40.00% Product Metsn Carbon Total Fe in Product : MFe in Product : FeO in Product : Carbon S SiO Al2O CaO MgO P Others SiO2+Al2O Gangue

21 Product (DRI) Increase in Acid gangue % CS Cost Increase@$ 5/1% DRI cost Total Cost increase ($/t) DR Pellet cost($/t) BF pellet Cost ($/t) Feed Mix Cost ($/t) Net benefit in CS($/t) Prod. 01 Basic Basic Basic Basic Basic Prod Prod Prod Prod Purchase Price of 67.8 % Tfe( DR) Pellet - $ 121/T ( Dec. '14 )(Premium $42/T) Purchase Price of 63.5 % Tfe( BF) Pellet - $ 94/T ( Dec. '14 )( Premium $25/T ) Strategy To Ensure A Balanced Feed Mix For DRI?? Workout the Cost of CRUDE STEEL which is Going To be Made Using DRI with Proposed Feed Mix.

22 Reducibility, sticking and Fe content - how do pellets from different sources compare? What are the advantages of diversifying feed stock?

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24 Factors affecting Stickiness Factors affecting Reducibility. Degradation of Iron grain due to Carbon formation and CO2 evolution. Structural Changes in iron grains During the first stage of reduction hexagonal hematite lattice transforms into cubic magnetite lattice and results in Reducibility. Whiskar or Fibrous growth of Iron Grains and Generation of cracks during reduction of Fe2O3 to Fe3O4. Physical properties of pellets e.g. higher porosity and lower Crushing strength. Reduction temp. range above 950 deg. C, causing recrystallization and sintering of Iron grains to stick Chemical nature of ore and Chemical reaction b/w Fe2O3 and CO/H2 at Fe2O3 - Fe interface

25 Stickiness, Reducibility and T Fe of some Iron Ore Pellets High T Fe High Reducibility Low Cluster Index

26 QUESTION OF THE YEAR! How to reduce Acid Gangue in DRI within MIDREX MODULE??

27 IS IT POSSIBLE?! MAY BE!!

28 COURTSY ACKNOWLEDGEMENT TO ;--- * METAL BULLETIN CHARTS * C S RESEARCH * MARKET REALIST * CBA ESTIMATES * INFO. MINE * Y CHARTS * MACRO BUSINESS * UBS

29 THANKS