Middle East Steel Supplement 2012

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Middle East Steel 2012

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Ask international plantmakers which regional markets have kept them busiest overthe past few years and alongside the BRIC countries many of them will point tothe Middle East. Ask them now where the most promising new markets are and anumber will also mention Africa.

While some projects to increase steelmaking capacity in the Middle East andNorth Africa have proceeded more slowly than originally envisaged large andtemporarily immobile inventories of billet and rebar plunging in value in thewake of the nancial crisis several years ago forced reconsideration of their pace ofprogress signicant advances have been made. Projects at Emirates Steel in UAE,Sulb in Bahrain and Jindal Shadeed in Oman are examples of regional expansion.

The fundamental advantages of producing steel in the region are unchanged. Anabundance of reasonably priced power for such an energy-intensive industry is

one of them. A plentiful supply of natural gas as a reducing agent for making directreduced iron (DRI) is another.Given the well-known statistic that about half of all steel production globally

is used in construction, the potential for Mena consumption to grow is alsoparticularly attractive for steel investment in the region. The internationallyrecognised high-rise towers of Dubai have become emblematic of world classconstruction, but there are plenty of other commercial, residential and industrialbuildings as well as infrastructure projects needing steel, for which the regionsown mills are adding capacity. Specialised steel products like heavy sections orseamless tubes are amongst them. Plans for new at product mills are under way.Investment in steelmaking capacity upstream is reducing regional demand forimported billet.

The oil & gas industry, whose revenues drive much of the capital investment in the

Gulf region, is a signicant steel consumer itself of course.Infrastructure development offers a particularly promising steel market. The Gulf

Co-operation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia andUAE, for example, have plans for or are actively engaged in airport expansionand/or reconstruction. They also have plans for rapid-transit, light-gauge railways,several of which are already under way. In addition, a $106 billion, 2,200 km inter-state Gulf Rail project is scheduled for 2017. Kuwait alone plans 60 stations.

This Metal Bulletin Focussupplement provides: a review of market developmentsthis year, with comment on the immediate outlook in 2013; a summary of thedetailed long-term analysis of the regions steel industry recently made by MetalBulletin Research; a country-by-country look at steelmaking projects recentlycompleted, under construction or planned; and a review of the latest DRI capacity of

the Mena region as producer of more than a third of global DRI output and home tothe latest technologies for hot charging to an EAF.No-one really needs to be reminded of the Mena areas recent problems among

them conict in Syria, an uneasy ceasere between Israel and The Gaza Strip,internal tensions in Libya and Egypt as new governments evolve after the ArabSpring, and the effects of sanctions in Iran as the West continues to keep a watchfuleye on development of the countrys nuclear capabilities but no comment on theregion would be complete without mentioning them either. Clearance work, scraphandling and rebuilding are essential steps for communities looking to rebuild livesshattered by conict.

Taken as a diverse whole, the Mena region encompasses higher than average risksand rewards. It is for each investor in the region whether internal or external toweigh up the opportunities against the threats.

Risks and rewards

Published by the Metals, Minerals and Mining division of MetalBulletin Ltd.Metal Bulletin Ltd, Nestor House, Playhouse Yard, London EC4V5EX. UK registration number: 00142215.Editorial headquarters: 5-7 Ireland Yard, London EC4V 5EX.Tel: +44 20 7827 9977.Fax: +44 20 7928 6892 and +44 20 7827 6495.E-mail: [email protected]: http://www.metalbulletin.comMetal Bulletin Focus:Editor, Richard Barrett;Associate Editor, Steve Karpel.Tel: +44 (0)20 7827 9977Magazine design:Paul RackstrawPublisher:Spencer WicksManaging Director:Raju DaswaniCustomer Services Department:

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CONTENTS

The long viewMetal Bulletin Research analyseslong-term trends in steel production

and consumption in the Middle East

and North Africa 4

Markets stabilise,competition growsSteel demand in the Middle East has

stabilised this year, but competition

between domestic steelmakers andimporters to satisfy it is fierce 9

Integration, expansionand diversifcation aboundSteel companies across the region are

increasing capacities and widening product

ranges in response to local markets and

anticipated demand 14

Direct reduction is theprimary choiceDirect reduced iron is widely produced and

used as a feedstock for steelmaking in theregion, and capacity continues to climb 21

December 2012 | Middle East Steel | 3


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4| Middle East Steel | December 2012


Overview

Metal Bulletin Research has been providinga very detailed study of regional markets inthe Middle East and North Africa for the lasttwelve years and in its latest report*examines supply, demand andconsumption of steel products and alsogives a forecast for the next ve years.

In MBRs view, the most stunning progresswill be made in steelmaking itself. Itexpects crude steel output to double in theMiddle East to 50 million tonnes by 2018 andto almost 18 million tonnes in North Africa(see graphs).

The capacity expansion needed for thisgrowth in production is from bothgreeneld and browneld sites. Moreover,mills that have started up in 2012, such as atMaghreb Steel in Morocco, ESI in UAE, as wellas a re-start of Lisco in Libya, will contributeto higher production levels in the shortterm. In addition, MBR expects higheroutput in Iran as well as the development of

a small steelmaking industry in Iraq by theend of the forecast period.

Most of the investment will be in longproducts and this reects the consumptionpattern in the region, of which 75% is longproducts. Nevertheless, one key trend is thebackward integration into crude steel that

to some extent will displace the regions keydecit, which is currently served byimported billet.

Sulb in Bahrain, for example, is building a1 million tpy EAF plant that will supply itsown new 600,000 tpy section mill as well assupply 400,000 tpy of billet to its acquired

The long viewDespite the immediate conicts and political

unrest in parts of the Middle East and North Africa,there is a different story to tell about the regionssteel industry, which is burgeoning. Metal BulletinResearch analyses the long-term outlook

Metal Bulletin Research expects crude steel outputin the Middle East to reach 50 million tpy by 2018


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sections plant in Saudi Arabia the formerUnited Gulf Steel. It will then leverage its 1.6million tpy of DRI capacity to add another 1million tpy EAF and will make up to 500,000tpy of rebar by 2014/15.

Jindal is building a 2 million tpy EAF for

completion in 2013 that will be fed from itsexisting DRI plant in Oman. It then has plansto move further downstream with an initialinvestment in a medium section mill,although this has yet to be conrmed.

In Qatar, Qasco is replacing its current EAFwith one of an expanded capacity that willallow it to fully supply its own billetrequirements in UAE and Qatar.

Meanwhile a number of smaller producersare planning to produce billet for sale. Sulbof Saudi Arabia, for example, is planning a300,000 tpy induction facility due on streamin 2014.

This of course has implications for current

billet providers primarily in the CIS. Onestrategy has been to co-invest in re-rollers inthe region, such as Metalloinvest withHamriyah. However, the narrow spreadbetween billet and rebar in the UAE meansthat this has only operated intermittently.

Other pure re-rollers such as RAK Steel havenow exited the market. Its equipment wasre-located to Oman, where it will roll rebar atSharq Sohar and be integrated with thatcompanys new 300,000 tpy EAF. Anotherre-roller, Star Steel, has found it tough tocompete in the rebar market, but has hadsome success re-rolling light and medium

sections for the local market.Finally, Iranian billet imports halved in 2012due to problems in securing foreign currency,but it also reects backward investment byprivate sector re-rollers into steel capacity.

Only in Saudi Arabia, where controlledprices for rebar have allowed a protablespread between billet and rebar, havere-rollers been successful. Other marketssuch as Morocco have also been good forre-rollers where the differential in importtariffs between billet and nished steel hasallowed them to ourish. However a tariffreduction (for EU suppliers at least) inMorocco means that re-rollers here willstruggle in the future.

Raw material demandThe presence of cheap natural gas has madeDRI the natural choice for large integratedplants. Indeed, MBR views the cost structureof these regional DRI-EAF mills as a keyadvantage compared with coal-dependentblast furnaces. However, natural gas withinthe region remains primarily the property ofthe state via the national oil companies ortheir distribution arms.

The option of supplying gas to the privatesector to generate DRI and steel (and prot)

has to be compared with other opportunitiessuch as power generation or LNG. As such,there have been few examples of the statebeing willing to supply long-term gascontracts at low prices to non-state groups.Moreover, even when it has (as in Egypt),

political changes and licensing arrangementshave sometimes made the process opaque.MBR therefore treats claims of DRI expansionby private groups that have yet to secure gasallocations with some scepticism in itsforecasts.

However, expansions by state-afliatedcompanies such as Sabic, ESI, Qasco and Sulbwill still generate signicant additionaldemand for iron ore pellet, while MBRexpects the expansions in Egypt to comeon-stream over 2013 or shortly after.

The expansions by Gulf Industrial InvestmentCompany (GIIC) in Bahrain and the start-up ofVale in Oman mean that there is now 20million tpy of pellet capacity in the region enough to satisfy much of the merchantdemand in the region. As a whole, the region

was a major net importer until recently,although the last few years have seen asignicant increase in exports of iron ore fromIran to China. As iron ore prices fall, MBRbelieves that those exports will also decline,but the pellet requirement in the region willshow signicant growth and this could justifyfurther investment in capacity with projects atpresent under examination by both Vale andGIIC.

Yet scrap will also see an increase indemand. Smaller private sector mills without

EXAMPLES OF NEW (AND PROPOSED) CAPACITY IN MENA (000 TONNES)Country Company Type Crude Rebar Rod Sections HRC CRC HDG NotesBahrain Sulb DRI-EAF 1,100 600 2012/13 Sulb EAF 1,000 500 2014Oman Sharq Sohar EAF 500 2013 plus transfer of RAK

from UAE to Oman Jindal DRI-EAF 2,000 2013/14Qatar Qasco DRI-EAF 600 Browneld expansion Al Watania EAF 400 200 100 100 2012Saudi Hadeed DRI-EAF 1,000 500 2013

Arabia Al-Rajhi EAF 150 700 300 2012 Al-Rajhi DRI-EAF 3,000 400 1,600 600 400 2017/18

Al-Yamamah EAF 800 2014 - may be delayed Atoun Steel EAF 900 500 2014/15 South Steel EAF 1,000 1,000 2012/13 Sulb EAF 300 2014 Al-Quryan EAF 300 2015UAE ESI EAF 1,600 1,600 2017 - not yet approvedAlgeria Tosyali EAF 1,000 1,000 2013 Qatar Steel DRI-EAF 5,000 5,000 Feasibility under way

2017/18Egypt Beshay DRI-EAF 1,500 1,000 2012-13 Suez DRI-EAF 1,250 2012-13 Ezz DRI-EAF 1,300 1,000 250 2013-14 Elmarkaby EAF 350 2013-15EAF - Electric Arc Furnace, DRI - Direct Reduced Iron Source: MBR

MIDDLE EASTERN*CRUDE

STEEL OUTPUT

0

60

10

20Milliontonnes

30

40

50

2006

2007

2008

2009

2010

2011

2012(e

)

2013(f

)

2014(f

)

2015(f

)

2016(f

)

2017(f

)

2018(f

)

NORTH AFRICAN*CRUDE

STEEL OUTPUT

0

20

2006

2007

2008

2009

2010

2011

2012(e

)

2013(f

)

2014(f

)

2015(f

)

2016(f

)

2017(f

)

2018(f

)

2

4

6

8

10

12

14

16

18

Milliontonnes

*Algeria, Morocco, Tunisia, Libya, Egypt, Sudan

Source: MBR

*Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi

Arabia, Syria, UAE & Yemen Source: MBR


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Overview


gas supply agreements, such as South Steelin Saudi Arabia or United Steel in Kuwait,have built scrap-based EAFs. Some of thishas been secured locally, althoughincreasingly imports will play a factor. AlYamamah, Atoun Steel and Sulb in Saudi

Arabia and Tosyali in Algeria are all buildingscrap-fed EAFs.Moreover, even DRI-EAFs will increase their

proportion of scrap utilised. Rather thanrelying on 90-95% DRI and just utilisinginternally-generated scrap, MBR believesthat these mills may drop their DRI rates to75% or so and supplement with scrap. Forexample, ESI is examining its at productexpansion of 1.6 million tpy without addinga new DRI module and it appears that Sulb ofBahrain may do the same as it adds a 1million tpy EAF in 2014.

Both trends will result in rising scrapimports, but will be complemented by

improved scrap collection chains that willresult in increased domestic scrap collection.Nevertheless, this will lead to morecompetition to secure scrap imports and tosecure raw materials domestically. Over thelast few years, there has been an increase inscrap export bans, with Algeria, Saudi Arabiaand Morocco implementing them. There willbe more to come, in MBRs opinion.

Merchant DRI/HBI therefore becomes anoption for steelmakers. Flat product mills inMorocco and Turkey are buyers of merchantDRI, as are regional long product EAFs such asSouth Steel. However, MBR sees some

constriction in supply here and consequentlymills may need to secure material fromoutside the region. Jindal will largely exitthis market in 2013, as it brings its steel millon line. MBR estimates that it will sell around1.5-1.7 million tonnes in 2012, although MBRalso believes that it will continue to sell amore limited amount.

Qasco is also likely to reduce its sales from2013, as will ESI once it brings on its atproduct mill around 2017. While Sulb will beselling some DRI from the second half of 2013,it too is likely to exit sales after bringing onits second EAF in 2014. As a result, externalsuppliers such as Lebedinsky and Lisco willsee increased opportunities.

Demand growthOf course investment in steelmaking capacityin the region only makes sense if demandgrowth is strong enough to justify localsourcing and if it is cost-effective. In terms ofdemand, that is certainly the case. Even in2011 and 2012, when consumption in certainmarkets fell dramatically due to civildisturbance and political uncertainty Egypt, Libya, Tunisia, Syria long productconsumption in the region rose by 4.5% andan estimated 5.0%, respectively.

One of the strongest regions for growth hasbeen in the Gulf Co-operation Council (GCC)market. High oil and gas prices have provideda budgetary boost to governments. In turn,they appear to have undertaken a politicalcommitment to invest in infrastructure and to

diversify into manufacturing in what remainquite centrally-driven economies. This ishugely steel-intensive and will underpinmedium-term steel demand growth for atleast the next 2-3 years, with Saudi Arabia thekey example. This is not only important forrebar and structural sections, but also forproducts such as wire rod. As an example, theOmani governments private investmentgroup Takamul is building a 60,000 tpygalvanized wire plant in 2013 in conjunctionwith Singapores Global Steel Industries.

North African long product demand hasbeen hit in the last couple of years by politicaluncertainty in Tunisia and Egypt and the civil

war in Libya. While it may be too early for adenitive call, it is MBRs view that longproduct demand will return to these marketsby 2013/14 and could accelerate later in theforecast period. A key imperative in theseeconomies is to provide housing for youngpopulations, while infrastructure investmentswill be a relatively simple way to generateemployment growth. Both will be enormouslysteel-intensive.

An example of the astonishing growth ratespossible is the performance of Iraq. Imports ofrebar are expected to touch 2 million tonnesin 2012 for example to the huge benet of

Turkish and Ukrainian suppliers. Structuralsections imports are also growing fast. Whileagain this is subject to political uncertainty,MBR believes that strong growth rates willremain in place for the near term.

Iran, however, is of some concern. At over 20million tpy of nished steel consumption atits peak, MBR estimates that demand will fallby more than 10% in 2012 and imports haveborne the brunt of this as tightening sanctionshave limited foreign exchange availability. Weexpect that imports will fall again. Meanwhilethe development of the indigenous DRIindustry remains well behind schedule andstruggles to source equipment.

Despite this, MBR is forecasting an averageannual demand growth of 7.2% for regionallong product consumption out to 2018.Consumption will surpass 80 million tonnescompared to an estimated 58 million tonnesin 2012.

Approximately 25% of nished steeldemand is for at products. The keyconsumers are tubular manufacturers and theconstruction product industry, whichbetween them account for over 80% ofregional demand. There are a number ofsmaller markets including shipbuilding,transformers, barrels and containers,

packaging, automotive as well as some lightindustrial manufacturing, while Turkey andIran produce a wider range of manufacturedproducts.

Flat products will see demand growth, butin MBRs opinion this will be slower than for

long products. MBR is forecasting averageannual demand growth of 5.8% out to 2018.Iran will be a key drag on growth as it currentlyconsumes a third of the regional total.

There are growth opportunitiesnevertheless. Tubular facilities such as KuwaitPipe Industries new LSAW mill are dueon-stream, while there are a number of spirallinepipe projects in Iraq. Constructionproducts such as purlins, sandwich panelsand HVAC equipment are increasingly madelocally and are likely to show signicantgrowth.

Yet regional projects in the Middle East aresome way away with none conrmed. The

furthest progressed is the ESI 1.5 million tpyhot rolled coil project that is scheduled for2016-17. Al-Rajhi of Saudi Arabia has another1.5 million tpy project, but this will not beready before 2018. Moreover, Turkish EAF millsare operating below capacity thanks tocompressed spreads between scrap andnished products.

Import implicationsThe regional net decit in long products hasslipped in the last couple of years to around4-5 million tpy, although this includes the netexporter Turkey shipping to Iraq and the GCC

region. With much of the investment goinginto long products, MBR believes that thisdecit will be relatively stable lookingforward. Rising capacity will also mean thatthe inows will shift more to North Africa andIraq and away from Iran and the GCC area.

On the other hand, the integration back intocrude steel production along with the pooreconomics for re-rollers means that the netdecit for billet will drop sharply. Over2007-09, this net decit was almost 10 milliontpy. By the end of the forecast period,however, MBR expects that this will more thanhalve. Iran is likely to exit the slab importmarket completely as well.

In at products, however, the lack of localsupply growth combined with rising demandwill result in a widening decit. Already asignicant 10 million tpy, MBR expects it to riseto almost 14-15 million tpy by 2018. European,Asian and CIS mills will target this market.

*Metal Bulletin Researchs report The Five-YearStrategic Outlook for the Middle East & NorthAfrican Steel Industrycovers the followingcountries: Algeria, Bahrain, Egypt, Iran, Iraq,

Israel, Kuwait, Lebanon, Libya, Morocco,

Oman, Qatar, Saudi Arabia, Sudan, Syria,

Turkey, Tunisia, United Arab Emirates, Yemen.


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Coil-Tainer Limited


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Market outlook


The Middle East steel industry has had a difculttime this year and there are no signs that therewill be an improvement in demand orconsumption levels in 2013 due to the bleakoutlook for the global economy.

The region has recovered reasonably well fromthe political turmoil caused by the Arab Spring in2011 and most markets are back to stability,which supports healthy steel demand andconsumption levels.

The biggest sales markets for Turkish, Russianand Ukrainian rebar exporters continue to bethe usual players in the Gulf Co-operationCouncil (GCC), with Saudi Arabia and the UnitedArab Emirates particularly important due to theirsteady demand from the construction sector.

The Saudi government is investing its hugerevenues from oil and gas exports to invest insteel-intensive projects. It has several multi-billion dollar investment plans in the pipeline toimprove infrastructure and housing for itsgrowing young population.

There is always good demand from SaudiArabia, but compared to ve years ago whenthere were about eight traders selling into Saudi,

maybe now there are about 150. So the rebarmarket is very good in Saudi, but the prots [forthe traders] are not good, said one trader in theGCC region.

Construction coolsConstruction activity by private real estatecompanies is continuing in the UAE, although ithas fallen immensely since the global nancialcrisis in 2008 when the market was inundatedwith developers keen to cash in on the buildingboom in Dubai. Those days are gone.

Despite the overall slump in the buildingmarket in the UAE since the nancial crisis,government orchestrated projects for housingcitizens in Abu Dhabi have become the biggestconsumers of rebar in the UAE. The majority ofAbu Dhabis rebar requirements are sourcedfrom its state-owned domestic mill EmiratesSteel.

Rebar demand and consumption levels haveplummeted signicantly in the Middle East overthe last four years. Several major constructionprojects not backed by governments werecancelled or put on hold due to nancial

constraints and have yet to materialise.Traders and stockists in the GCC region still have

vivid memories of when their rebar inventoriesplummeted in value from record highs of $1,450/tonne in July 2008 to less than $450/tonne inDecember that year.

Numerous international rebar trading,distribution and re-rolling companies wereforced to write off large inventories worth manymillions of US dollars. Some smaller companieswent out of business or focused on otherproducts like sections.

The events in 2008 have changed thepsychology of the rebar market in the MiddleEast from speculating about prices, generatinghigh stocks and intensive selling into the currentsituation of purchasing small tonnagessporadically, on a hand-to-mouth basis, toavoid being caught out by an uncertain market.

Demand steadiesLong product demand from end-users hasremained scant throughout 2012 and buyingactivity has been cautious. Some traders havebeen struggling to stay in business and haveswitched to trading other commodities sincetheir customers in the Middle East have reducedtheir rebar purchasing volumes. They are buyingsmall tonnages of a few thousand tonnes toserve their immediate needs instead of tens ofthousands of tonnes four years ago.

Rebar stockists have been keeping low-to-medium inventories levels and they are moreinterested in trying to liquidate their existingstocks to generate cash ow, rather than

building stock levels, when demand is scant andmarket outlook is uncertain. There is currentlyan oversupply of rebar in the UAE according tomarket participants in the region.

Distributors have plentiful stocks to serve theneeds of a local market characterised by thesporadic purchasing of small volumes toreplenish stocks of certain rebar sizes andgrades. There has not been immediate demandfor imports from Turkey, China or CIS countries formost of the fourth quarter.

China offersThe Middle East was ooded with cheap hotrolled coil and rebar import offers from Chinesemills in August, September and October. Chinawas desperate to reduce its stocks due tosignicant over-supply and weak demand in itsdomestic market which in turn led to cut-pricedeals and quick delivery to Gulf clients.

Rebar from Turkey is still the rst choice forbuyers in the Gulf region due to its quality, butthe lower-priced offers from China attractedpurchases from consumers who were keen tocash in on lower prices despite low demand.

During this period there was as much as100,000 tonnes of ready-made inventory sittingamong the major Chinese mills that they werestruggling to sell.

Markets stabilise,

competition growsSteel demand in the Middle East has stabilised ata healthy level this year, but competitionbetween domestic steelmakers and semis andsteel importers to satisfy it is erce. The outlookfor 2013 is for more of the same, reports Stacy Irish

By some estimates, Mena regional demand for heavy sections like these produced at EmiratesSteel in UAE - will reach 8.5 million tpy in 2020

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ANIELI


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Market outlook


At the end of September hot rolled coil importtransaction prices from China to the GCC regionplummeted by $50 per tonne to $550-560 pertonne cfr main Gulf port , compared with theprevious price of $600-630 cfr.

Discouraging importsGCC import prices for billet, rebar and hot rolledcoil have steadily declined since April this year(see graph). Competition between Turkish andCIS exporters and domestic producers, such asHadeed and the Al-Tuwairqi group in SaudiArabia, Qatar Steel and Emirates Steel, in AbuDhabi, is erce.

Governments in the GCC region haveencouraged their citizens to purchase steel madein the Middle East to prevent large volumes ofimported material, which puts pressure on itsdomestic prices.

Hilal Al-Tuwairqi, chairman of Saudi Arabiansteel producer Al-Tuwairqi Holdings and former

president of the Arab Iron & Steel Union, is urginggovernments in the GCC region to impose a 20%import tax on rebar imports to put an end towhat he refers to as dumping practices.

Also, Saeed Al Romaithi, ceo from EmiratesSteel, is working closely with the Abu Dhabigovernment to impose customs duties on steelimports to the UAE. He wants an additional 5%customs duty on rebar imports to supportdomestic steel producers in the UAE.

The UAE government has an existing 5%customs duty on imported rebar, which wasreinstated in February 2009. But it is not enoughto fend off the large import volumes from Turkey

and the CIS, which have been cashing in on thestable demand for construction steel in theregion.

Emirates Steel adjusts its domestic rebar priceson a month basis to compete with cheaper rebarimports from Turkish suppliers. The state-ownedcompany is offering rebar to domestic consumersat 2,245 UAE dirhams ($611) per tonne ex works forDecember production and shipment.

Also, UAE re-roller Conares is offering rebar at2,225 UAE dirhams ($606) per tonne ex works forDecember rolling.

This compares with the latest Turkish rebarimport price of $595-605 per tonne cfr main GulfPort for December shipment. Sales have beenfew and far between due to sufcient stockslevels in the UAE.

Companies such as Emirates Steel haveinvested in increasing steel production capacityand a diversication of products to serve theneeds of its domestic market and to remaincompetitive against low-cost importedmaterial.

Expansion plannedAt the end of September Emirates Steelcompleted the second stage of its $1.9 billionexpansion plan, which pushed its total steelproduction to 3.5 million tpy.

The company aims to increase productionfurther to about 5.5 million tpy over the next

three years. It now has the capacity to produce 1million tpy of jumbo and heavy sections from itsfacility in Musaffah, Abu Dhabi. Production is soldmainly to countries in the Middle East and NorthAfrica (Mena) region.

Demand for heavy sections in Mena countries isnow about 5.5 million tpy and is expected toincrease to 8.5 million tpy in 2020, according tothe companys estimates. The heavy sections millwas supplied by Italian plantmaker Danieli andwill be integrated with an existing 1.4 million tpymeltshop and 1.6 million tpy direct reduced iron(DRI) plant (see projects article).

Level outlookSteel demand in the Mena region is expected toincrease by 5.7% in 2012 up after a 2% fall in 2011due political instability and is expected to growby 8.4% in 2013, supported by government-funded construction projects nanced by oil andgas revenues, according to a joint paper by Frost &Sullivan and the World Steel Association.

The report argues that regional production ofnished products is expected to reach about 85million tonnes by 2013, with crude steelproduction projected at more than 50 milliontonnes up from 27.4 million tonnes in 2010.

Despite the promising growth gures fromvarious industry reports and associations, traders,stockists and distributors in the GCC region have agloomy outlook for 2013.

Next year will be as dull as 2012, Im optimisticfor 2014. I dont think well see an upswing indemand in 2013. The overall economic situation

in all markets is not good. There is oversupply inJapan and China. The European market is

showing no signs of improvements and itsunlikely to get better anytime soon, said a traderin Dubai.

The US and Canadian market is ticking along. Icant see that there will be a big jump in demandor prices in 2013. The only thing that mighthappen that will help the market is that there willbe more distributors, traders [speculators] thatwill go out of business. It will calm down themarket and give it breathing space. There are toomany people shing for business and they needto be removed to regulate the market, heconcluded.

A second trader in Dubai agreed that the market

will remain unchanged in 2013.The rst quarter of 2013 will stay as quiet as

2012. The second quarter of 2013 will show someimprovement. China has been dumping HRC tothe Middle East and Turkey has been selling largevolumes of rebar to the Middle East. We arehaving a tough time, said a source from a pipeproducer in the GCC area.

Several market sources in the GCC region say thatthey are expecting the market to remainunchanged in 2013.

I dont think that 2013 will be any different to2012. It will be a tough year for billet and rebarproducers and traders. The market will staystagnant. I dont think we will see any big pricerises or falls and there will be no volatility, whichis not good for traders, said a prominent UAEbased long products trader.

There will not be a great deal of demand.Europe is not doing well and demand is weakthere. The USA has its problems and consumptionlevels are unlikely to change any time soon. Chinais not showing any signs of cutting productionwhich will add to the oversupply problem. I dontthink there will be a great deal of excitement in2013, he concluded.

The author is senior correspondent for

Metal Bulletins sister publication Steel First

I dont think that 2013 will be anydifferent to 2012. It will be a toughyear for billet and rebar producersand traders

GULF CO-OPERATION COUNCIL AREA IMPORT PRICES*

6/12/11

6/2/

12

6/4/12

6/6/12

6/8/12

6/10/12

27/11/12

500

600

700

550

650

750

800

Billet

Rebar

Hot rolled coil

$/tonne

Source: Metal Bulletin*cfr main Gulf port


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ESI 1 and 2, UAE

Two DRI-based minimillsfeaturing EAF hot charge

for the production of 3.2 Mtpyof heavy sections, rebars andwirerod. 45,000 tons of steelstructural buildings, 300,000m3 of concrete works.Full LSTK project includingall auxiliary plants, systemsand plant infrastructures.

Jesco, Saudi Arabia

400,000-tpy seamless pipecomplex featuring FQMFine Quality Mill for the

production of 16 steelpipes and finishing lines.

Full LSTK projectincluding all auxiliaryplants, systems and plantinfrastructures.

Ezz Flat, Egypt

1-Mtpy minimill complexfor hot band featuring thin

slab casting-rolling process.New DRI plant andexpansion for long product

production.TK project including allauxiliary plants, systemsand plant infrastructures.

Sabic (Hadeed), Saudi Arabia

1-Mtpy minimill for barand wirerod production.

New meltshop and rollingmill expansion (secondrolling mill).

Full LSTK project includingall auxiliary plants, systemsand plant infrastructures.

Four main references out of total 134, worldwide

Turnkey plants

and Systems Engineering

Turnkey construction,

Erection and Systems Engineering

Danieli Headquarters

33042 Buttrio (Udine) Italy

Tel (39) 0432.1958111


13/24

www.danieli.com

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14/24



Project review

AlgeriaArcelorMittal Annaba, Algerias sole steelproducer, is undergoing a $500 million

investment to increase its steelmaking capacityfrom 1 million to 1.4 million tpy by 2014. This willinvolve blast furnace relining, revamping thesinter plant and installing a new coke battery.The expansion will focus on long products,although the company makes a wide range ofproducts including hot-rolled and cold-rolledsheet and coil, hot-dip galvanized coil, tinplate,and OCTG/tube and pipe. Commissioning isexpected from 2013.

With the government investing in several largeinfrastructure and housing projects, local steeldemand is being boosted, attracting theattention of other steelmakers.

Qatar Steel is studying the possibility ofestablishing a 2.5 million tpy rebar mill inAlgeria. A new government-owned jointventure between Qatar Steel and Qatar Mining

called Qatar Steel International has beenformed, which will have a 39% stake in theplant, with the Algerian government holding

the remaining 61%.It is envisaged that the plant will initially

produce 2.5 million tpy of rebar and then laterdouble capacity with the addition of 2.5 milliontpy of at-rolled products, a Qasco spokesmantoldMetal Bulletinin July.

BahrainSince construction is one of the biggest areas ofactivity in the Middle East, it is not surprising tond further investments in the types of steelrequired in this sector. Although there are manyregional bar and light section producers, heavysections and beams have been absent from the

product mix until recently. This gap is now beinglled by Emirates Steel in the UAE, which startedup its 1 million tpy heavy sections mill in January,and now the United Steel Company (Sulb) in

Bahrain is commissioning its 850,000 tpy beamsand sections mini-mill.

Sulb is owned 51% by the Gulf United Steel

Holding Company (Foulath) and 49% byJapanese heavy sections producer YamatoKogyo. Foulath is also the sole owner of the twoGulf Industrial Investment Co iron ore pelletizingplants which are adjacent to the Sulb steel millat the Hidd Industrial Area. These pelletizingplants, of total capacity 11 million tpy, will supplya 1.5 million tpy Midrex DRI plant, which will inturn provide feedstock for Sulbs 850,000 tpyEAF.

The Sulb mini-mill comprises a 120-tonneultra-high-power EAF and ladle furnace. Thebloom/beam blank caster was originallydesigned for three strands, but was upgraded to

four strands some six months after ordering. Theheavy section mill has an initial capacity of600,000 tpy and will eventually be capable of 1million tpy, says Foulath. The mill is said to behighly exible in terms of product mix and sizes,and the line is designed for programme changesin just 20 minutes. SMS Concast supplied themeltshop and SMS Meer the rolling mill.

Integrated from iron ore pellets to nishedproducts, Sulb will be the lowest-cost producerof its type in the world, the company claims,and when fully operational will replace about14% of the medium and heavy beams beingimported into the Middle East.

EgyptEgypt is the home of Ezz Steel, the largestindependent steel producer in the Mena regionwith a total capacity of 5.8 million tpy ofnished steel, including 3.5 million tpy of longand 2.3 million tpy of at-rolled products.

The companys planned next stage ofinvestment is a 1.9 million tpy Energiron III DRImodule at its Ezz Flat Steel (EFS) plant, AinSokhna, near Suez, to provide feedstock for boththe EFS mini-mill (which is also to be expandedin capacity) and another group mini-mill at EzzSteel Rebars. Phase 2 involves erecting anotherDRI module at the same site to supply the

Regional expansion and

diversification aboundSteel companies across the Middle East and North Africa are increasingcapacities and widening product ranges in response to local markets andanticipated demand. Steve Karpel reviews projects that have come on streamthis year and what is moving through the pipeline for the near future

Suez Steels DRI-based steelmaking complex will feature a 1.95 million tpy Energiron modulefeeding a 1.3 million tpy meltshop for long products

SUEZSTEEL


15/24


expanded EFS meltshop. The two new DRImodules will reduce these steel plantsdependency on imported scrap.

The overthrow of the Mubarak regime in Egypt,however, resulted in legal obstructions to theseinvestments arising from allegations that the

DRI construction licences were acquired fromthe then-government illegally. Egypts Court ofFirst Instance annulled both licences inSeptember 2011, since when construction hasstopped, with the rst DRI plant 80% complete.The court also annulled the DRI licences that hadbeen awarded at the same time (2008) to threeother Egyptian steelmakers, including BeshaySteel and Suez Steel.

Ezz Steel announced last month that the courthad awarded a new licence on 14 November,replacing the annulled one, to companysubsidiary Ezz Rolling Mills for the constructionof the DRI plant plus additional meltshopfacilities at Ain Sokhna. The licence terms require

a total payment of EGP 330 million over the nextsix and a half years.

The licensing dispute has not affected thenormal operations of Ezz Steel, which reported a10% increase in net sales in the rst half of 2012to EGP 10.31 billion ($1.72 billion), althoughEbitda fell by 11% to EGP 1.1 billion.

A new licence was also awarded to Suez Steelin mid-year. The steelmaker, a part of the SolbMisr group, is building a 1.95 million py HYL/Energiron DRI plant linked to a 1.3 million tpybillet and beam blank meltshop.

The new integrated steel mill is almostnished, and is expected to start up early in

2013, bringing the companys steelmakingcapacity up to 2 million tpy. Products will supplythe Egyptian market, with any surplus billetexported to the local region, says a spokesman.

Other investments in Egypt are proceeding.Rebar roller Elmarakby Steel has ordered a350,000 tpy meltshop from SMS Siemag toproduce 130 sq mm billet. This will supply its240,000 tpy rolling mill in 6thof October City, withexcess billet to be sold on the market pendingthe construction of a second rolling mill. Themeltshop is expected to start up by December2013, fed by imported scrap.

IraqThe steady rebuilding of Iraqs infrastructure hasmeant a continuing focus on the basic industriessuch as steel, cement and power, as well as itsdominant economic base oil and gas. One ofthe major steel projects is by Iraqs Mass GlobalInvestment, which has been active in thecement and power sectors with several plantscompleted or in progress. Turning its attentionto steel, it is building a 1 million tpy mini-mill inthe north of the country (Kurdistan), which willfocus initially on rebar.

The mill, supplied by Danieli with powersupply by ABB, comprises a 120-tonne FastArcEAF, a 120-tonne ladle furnace, a 5-strand

FastCast caster for 130 mm and 150 mm sqbillet, a 120 tph walking hearth furnace and a650,000 tpy rolling mill for 10-32 mm diameterdeformed bars. The mill is scheduled to start upin the second half of 2013, says Mass Global. Thecompany is also constructing another rollingmill for small and medium sections, which isexpected to start in early 2014.

The EAF will be scrap-fed, but the company isstudying the possibility of building a DRI plant,together with an iron ore pelletizing facility. Italso says that it plans to double the mini-millsteel capacity eventually.

Indian pipemaker Jindal Saw has instigated a$200 million project to build a new pipe mill inIraq, sited in a new industrial city outside Basra.It will produce 300,000-350,000 tpy oflongitudinal submerged arc-welded pipe,16-65in (406-1,651 mm) in diameter with wallthickness up to 1in. It is planned to start up atthe end of 2013, while an anti-corrosion coatingline will commission earlier in the year.

Fully-owned by Jindal Saw, the company willsell into Iraqs oil and gas transmission sector.

An expansion phase is also planned six monthsafter start-up with the introduction of hotinduction bending, and the company says itintends to add spiral welded pipe as well at alater stage.

OmanOne of the biggest planned investments in theregion is the Jindal Shadeed integrated steel millin Oman, which will eventually comprise a 7million tpy iron ore pelletizing plant, a MidrexDRI/HBI plant, a 2 million tpy meltshop and along products rolling mill.

Indias Jindal Steel & Power (JSPL) acquired theShadeed DRI project for $464 million in 2010, andthe 1.5 million tpy Midrex DRI/HBI modulestarted up at the end of that year. Prior to themeltshop commissioning next year, Shadeedhas been exporting the HBI produced just over1 million tonnes were sold last year.

JSPL is now engaged in expanding the projectat Sohar Industrial Port into a completesteelmaking complex, and a 2.0 million tpymeltshop is scheduled to commission in the

Assembling the 120 tonne EAF at United Steel Co, Bahrain (Sulb)SMSSIEMAG

The Sulb mini-mill includes an efcient dedusting plantSMSSIEMAG


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Project review


nal quarter of 2013. The Danieli-built meltshopwill be fed directly by hot DRI, and comprise a150-tonne EAF, a 150-tonne ladle furnace, a200-tonne twin-tank vacuum degasser, and a 2million tpy 6-strand billet/bloom caster. Theassociated infrastructure also includes an air

separation plant, a 4,800 cu metre/daydesalination plant and extensive port facilities.The semis produced will be initially targeted

mainly at the Saudi market, as well as domesticre-rollers supplying Omans infrastructureprojects. In time, however, it is planned thatmuch of the billet produced will be taken up bya 1 million tpy rolling mill for rebar and merchantbar, plus a seamless pipe mill, which areexpected to start around 2015. These represent a$400 million investment, while the meltshop isput at $475 million.

Jindal foresees the DRI plant expanding from1.5 million to 5 million tpy over the next veyears, which will be fed by a 7 million tpy iron

ore pelletizing plant now in the planning stage.Like several steel mills in the region, Omans

Sohar Steel started out as a pure rolling mill forrebar, and has since integrated back intosteelmaking. The rolling company, Sharq SoharSteel Rolling Mills (SSSRM), has a capacity for300,000 tpy of 8-32 mm diameter rebar, whichcan be epoxy coated. Sister company Sohar Steelwas built with a 36-tonne EAF and ladle furnacefeeding a 3-strand caster for 100, 120 and 130mm sq billet. It can produce 250,000 tpy ofbillet.

Sohar Steel is now being upgraded by DanieliCentro Met with a 75-tonne FastArc EAF,

increasing steel output to 700,000 tpy. Danieli isalso supplying a 140-tonne teeming crane tohandle the larger tapping weights. The newmeltshop is due to start up in mid-2013.

The port of Sohar is developing into a focus forsteel products in the Gulf, with Al Jazeera SteelProducts also being established there. Thiscompany buys billet and has four ERWtubemaking lines with a total capacity of300,000 tpy of international-standard tubeproducts with plain, threaded and coupledends. It also has three galvanizing lines forcorrosion-protected tube up to 219 mmdiameter.

Al Jazeera Steel has subsequentlycommissioned a 300,000 tpy merchant bar millfor producing angles, channels, squares, atsand rounds. The company says it is exportingproducts to 25 countries, including NorthAmerica, Europe and Australia.

QatarQatar Steel (Qasco) started production in 1978 asone of the rst DRI-based integratedsteelmakers in the Gulf, and has continued toaugment its capabilities, both in Qatar and alsoelsewhere in the region: it established asubsidiary rolling mill Qatar Steel Co FZE inDubai in 2003.

Last year the company awarded Siemens VAI acontract to supply a new 1.1 million tpy billetmeltshop for its Mesaieed site, comprising a110-tonne EAF, a 110-tonne ladle furnace, a6-strand billet caster plus a new dedustingplant and all auxiliary equipment. This new millis expected to go into operation in 2013.

The $250 million investment was originallyintended to replace the companys existing

meltshop in Mesaieed, but because ofincreasing steel demand in the Gulf, it has beendecided to employ it as an additional facility,with the original 95-tonne EAF and ladlefurnaces ordered also being enlarged to 110tonnes. Qatar Steels current capacities are 2.4million tpy of DRI/HBI, 1.9 million tpy of rawsteel, 1.8 million tpy of rebar and 0.3 million tpyof wire rod.

Looking further aeld, Qatar Steel is alsostudying the possibility of establishing a 2.5million tpy rebar mill in Algeria (see earliersection in article).

Saudi ArabiaThe Kingdoms biggest steel company, SaudiIron & Steel Co (Hadeed) is continuing to investin new capacity to meet the needs of itsdomestic market. A new 1 million tpy mini-millfrom Danieli is under construction at Al-Jubail,consisting of a 150-tonne EAF, a 150-tonne ladlefurnace, a 6-strand caster for 130 mm and 150mm sq billet, with materials handling forferro-alloys and cold DRI, and fume treatmentfacilities.

A 120 tph walking beam furnace will chargedirectly into an 18-stand wire rod rolling mill.This rolling mill is being put together byupgrading and augmenting an existing rolling

mill. The new wire rod mini-mill is in the nalstages of construction and is expected to start upin the second quarter.

This investment will increase Hadeeds totalcapacity to 6 million tpy, with long productsaccounting for two-thirds of this. The new plantwill also make Hadeed self-sufcient in billet,says Abdulaziz Al-Humaid, Hadeed chairmanand Sabic executive vp for metals: We import

400,000 tpy of billet, but we will substitutethese imports and produce about 4 million tpyof both billet and nished long products, hesays.

Alongside other grades, the new rolling millwill produce high-carbon wire rod, which isnow imported. The Saudi market for this isestimated at some 200,000 tpy.

Hadeed has ve DRI modules with totalcapacity of about 5.4 million tpy. The companyuses a mix of DRI and scrap in its ve electric arcfurnaces; the ratio varies according to product,but averages about 20% scrap, which isimported. We import about 600,000 tpy ofscrap now, but when the new mini-mill startsup, an additional 600,000 tpy of imported scrapmay be needed, Al-Humaid says, and pointsout that most of Hadeeds products, 95-96%,are sold to its domestic market.

Another Saudi steelmaker, Rajhi Steel,commissioned a 1.0 million tpy high-speed barand rod mill in May at its site at Alkhumra, southof Jeddah. It produces 10-40 mm diameterdebar, and 5.5-16.0 mm smooth and deformedwire rod. In order to feed this mill, thecompanys 0.85 million tpy meltshop here hasbeen upgraded to produce more billet, with a200 tph walking beam reheat furnace connecteddirectly to the billet caster. All plant has been

Saudi Iron & Steels latest investment will make it self-sufcient in billet and introduce new longproduct grades

SABIC


18/24

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19/24


Project review


supplied by Danieli, which also designed a 4,000HP 120 tph scrap shredder for the steelmaker.

The company has another 1 million tpymini-mill for Jeddah in the feasibility studyphase.

Sister company Rajhi Heavy Industry andIndias state-owned Rashriya Ispat Nigam (RINL,or Vizag Steel) are discussing the possibility of a

joint-venture 3 million tpy integrated DRI-fedsteel mill to be built in Saudi Arabia. The$8 billion plant would take ve years to build,

and produce long and at-rolled products.ArcelorMittal and Saudi Arabias Al Tanmiah

Industrial and Commercial Investment Co plan tocommission their joint venture 600,000 tpyseamless pipe plant in 2013. The $800 millionmill, based in Jubail Industrial City 2, will supplyits oil, gas and petrochemicals industries.

United Arab EmiratesOne of the fastest-growing operations in theregion is Emirates Steel (ESI) of Abu Dhabi.Starting out with a single 500,000 tpy rolling millcommissioned in 2001, the company 100%owned by Abu Dhabi Basic Industries Corp, a

subsidiary of General Holding Corporation hassubsequently pursued a policy of establishingintegrated DRI-fed mini-mills, and rolling awidening range of products at its site inMussafah.

The phase 1 expansion, inaugurated in 2009,comprised a 1.6 million tpy HYL/Energiron DRIplant, a 1.4 million tpy meltshop and rolling millsfor rebar (0.62 million tpy) and wire rod (0.48million tpy).

The phase 2 expansion commissioned in March

2011 consisted of another mini-mill of similarsize: a 1.6 million tpy Energiron DRI plant,feeding a Danieli meltshop consisting of a150-tonne FastArc EAF and a 5-strandFastCast caster for billet, blooms and beamblanks. The rst two expansion phases representa $2.45 billion investment, giving Emirates Steel anominal 3.2 million tpy of DRI capacity and 2.8million tpy of steelmaking capacity, with 3million tpy of rolling capacity.

The beam blanks from the second conticasterare now feeding a 1 million tpy heavy sectionsmill which was commissioned in January 2012 the rst such rolling mill in the region. Theblanks are reheated in a 250 tph walking beamfurnace. The $650 million Danieli heavy sectionsmill produces parallel-ange beams, columnsand sheet piles with web depths up to 1,016 mmand ange widths up to 419 mm, plus up to 430mm parallel-ange channels, 250 mm angles,750 mm U-sheet piles and 630 mm Z-sheet piles.

The heavy sections mill comprises a singlereversing stand breakdown mill and anultra-exible reversing pre-nishing/nishingmill made up of three coupled universal stands.Auxiliary plant includes a gauge unit forclosed-loop control, cooling bed, in-linestraightener, cutting-to-length, automaticstacking and collection.

Demand for medium and heavy sections willbe over 4 million tonnes this year in the MiddleEast, with the UAE and Saudi Arabia the biggestconsumers, and demand for heavy sections inthe GCC region is expected to double by 2015.

Both of Emirates Steels DRI plants are nowbeing upgraded from 1.6 million to 2.0 milliontpy, which should be completed in 2013. Thecorresponding meltshops are also beingexpanded from 1.4 million to 1.7 million tpy. Theupgrades are being carried out by Danieli.

Without pausing for breath, Emirates Steel isnow planning phase 3 of its expansion,announced in September 2011: this will mark amove into at-rolled products with a hot-rolledcoil mill, and a slab meltshop fed by another DRIplant. The future production of plate is alsoenvisaged. This investment would add about 1.6million tpy to the companys existing 3 milliontpy of steelmaking capacity. While still in theplanning stage, this next phase is likely tocommission from 2014 onwards.

Emirates Steels growing output and range ofproducts has increased its share of its domesticmarket to 60%, the company stated last month,with its steel output rising 33% year-on-year inthe rst three quarters. Around 70% of itsnished products are sold on the domesticmarket, with the rest exported.

Elsewhere in the UAE, Al Ghurair Steel, aproducer of pickled and oiled hot-rolled,cold-rolled and galvanized sheet and coil, isexpanding its operations in Mussafah, AbuDhabi, to double galvanizing capacity to400,000 tpy, and raise cold rolling capacity to thesame level from 250,000 tpy. This expansion isexpected to commission next year. The companyis owned 80% by the Al Ghurair Group and 20%by Nippon Steel & Sumitomo Metal Corp ofJapan.

Capacities for value-added products such asgalvanized coil are rising

ALGHURAIRSTEEL

Breakdown mill at ESIs heavy section millEmirates Steels (ESIs) new conticaster produces beam blanks for the heavy sections millEMIRATESSTEEL


20/24

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DRI


The production of direct reduced iron, DRI, asa feedstock for steelmaking continues to growin the Mena region. With its large gas reserves,it is no surprise that this region is becoming aparticular focus for gas-based DRItechnologies such as Midrex and Energiron,while India with its coal reserves is a rapidly-growing centre for coal-based reduction.

The relative paucity of local steel scrap inmany Mena countries has been anotherincentive to invest in DRI production, which,when used in electric arc furnaces sometimes combined with a proportion of

imported scrap is seen as the mosteconomic way to make steel.

Last year the Mena area produced over 25million tonnes of DRI, out of a world total ofover 73 million tonnes. However, this Menavolume represents nearly 45% of allgas-based production, which amounted to

56 million tonnes last year, according toMidrex.

The biggest DRI producer in the region isIran, an early developer and user of directreduction technology. Today, the country hasmore projects in construction, includingMidrex process modules at Arfa Steel (0.8million tpy) and a second module at KhorasanSteel (0.8 million tpy) following the rstmodule that started up in 2010. Another 0.8million tpy plant using the Midrex processstarted up recently at Iranian Ghadir Iron &Steel (Igisco) in Yazd.

DRI technology has evolved so that manysteelmakers are now able to hot-charge thematerial directly at 600C or higher into theelectric arc furnace. This saves energy and hasseveral benets, says Midrex: an increase inEAF productivity by 15-20%; reduced EAFelectricity requirements by 120-140 kWh/

tonne of steel; reduced electrodeconsumption by 0.5-0.6 kg/tonne of steel;and reduced EAF refractory consumption by1.8-2.0 kg/tonne of steel.

Hot or cold

Increasingly exible plants are also able toproduce either hot or cold DRI, or bothsimultaneously, according to market orproduction conditions. Some plants are alsodesigned to produce merchant hot briquettediron (HBI) as an alternative for any surplusDRI.

Saudi Iron & Steel (Hadeed), for example,now has ve Midrex DRI modules, the largestof which is now producing 2 million tpy thisis hot-linked to an EAF. The company is nowrevamping one of the modules in order toincrease its output, says Hadeed chairmanAbdulaziz Al-Humaid, although theimpending increase in steel capacity from its

new 1 million tpy billet mini-mill means thatthe steelmaker will still have to raise its scrappurchases to top up the DRI feed (see page 14).

In Egypt, the natural gas resources offshoreinspired an early use of DRI from the 1980s, tofeed electric steelmaking at thethen-Alexandria Iron & Steel, now EZDK, partof the Ezz Steel group. The groups investmentin DRI has subsequently grown along with itsbuild-up of EAF capacity.

Most recently, subsidiary Ezz Rolling Millshas been building a 1.9 million tpy HYL/Energiron module at Ain Sokhna to feed bothEzz Flat Steel (which is adding a 1.3 million tpy

meltshop) and other mini-mills in the group.This module was about 80% complete whenan Egyptian court revoked the constructionlicences in 2008. However, the issue wasresolved last month and the licencere-awarded, so that construction can nowproceed.

Direct reduction is

the primary choiceA range of factors not least the cost-effectivelocal availability of natural gas has led to thegrowing popularity of direct reduced iron as amain feedstock for steelmaking in the Menaregion. Steve Karpel looks at the overall pictureand some recent investments

The Jindal Shadeed 1.5 million tpy Midrex reduction plant in Sohar, Oman, was the rst Hotlinksystem for feeding hot DRI to an EAF when it started up last year

MIDREX REDUCTION WITHHOTLINK

JINDALSHADEED

The Midrex process with Hotlink transfer of DRIto the EAF


22/24


DRI


This implies that the DRI licences for otherEgyptian steelmakers which were annulled atthe same time could also be re-awarded. Oneof the projects was a 1.76 million tpy Midrexplant for Egyptian Sponge Iron & Steel Co(Esisco, owned by the Beshay group) in Sadat

City. Another project, for a 1.95 million tpyDanieli/Tenova HYL/Energiron plant for SuezSteel in Attaka, had its licence re-awarded inmid-year, and a Suez Steel spokesmanexpects both the DRI plant and new meltshopto start up early in 2013. The latter module isreported to be complete, and training ofpersonnel is under way.

Another DRI plant which is just about tocommission is the United Steel Company ofBahrains 1.5 million tpy Midrex plant, whichwill feed a meltshop with 0.8 million tpyheavy sections rolling mill. Nameplatecapacities for DRI plants are oftenconservative, and 51% owner Gulf United

Steel Holding Company (Foulath) states thatthe module will actually be capable ofproducing 1.8 million tpy. The plant has anadjacent source of iron ore pellets from theGulf Industrial Investment Company (GIIC),the 11.0 million tpy pelletizing companywhich is wholly owned by Foulath.

Flexible facilitiesA modern example of the exible DRImodules now being built are the twoEnergiron plants that started up at EmiratesSteel, Abu Dhabi, in 2009 and 2011. These 1.6million tpy modules can produce either cold

DRI or hot product charged directly to the

electric arc furnaces. They are now beingupgraded to 2 million tpy each, which shouldbe complete in 2013.

Cold DRI is stored in an open stockyard andtransferred to the meltshops by means of beltconveyors. Hot DRI can be discharged at 700Cand sent directly to either the meltshop orthe cooler; the Energiron plant uses the

enclosed Hytemppneumatic transport forhandling hot DRI, developed jointly byDanieli and Tenova HYL.

The direct reduction process uses a steamreformer to convert natural gas into thehydrogen and carbon monoxide reducingagents, which reduce the iron oxide to(impure) iron inside the reactor. In theprocess, wet reformed gas is rst dried in aquench tower and then injected into thecircuit, where it joins the recycled gas comingfrom the reactor.

The reducing gas is heated and sent to thereactor distribution ring. Oxygen injection is

provided between the heater and reactor inorder to increase the gas carburizationpotential when higher percentages of carbon above 2.5% are required by themeltshop.

The top gas leaving the reactor is treated toclean it and remove the water and carbondioxide formed in the reactions. Its heatcontent is recovered and delivered to theprocess gas heater. This treated gas, havingbeen cleaned of dust, is sent to a carbondioxide absorber where this gas is removedby a liquid absorber. This absorber alsoremoves hydrogen sulphide, giving an almostsulphur-free process gas and minimisingsulphur addition to the DRI.

The gas leaving the absorber is free ofoxidised components and has regained itsreduction potential. It then rejoins thereformed gas and passes again through theprocess gas heater, forming a closed loop.

Shortly after commissioning, the plant wasable to better most of its nameplateguaranteed parameters, says Danieli. Itachieved a 250 tph capacity, compared with aguarantee of 200 tph. DRI metallization wasabove 94%, with carbon content above2.5%. Natural gas consumption was 2.45Gcal/tonne compared with a guaranteed 2.6

Gcal/tonne, and electrical energyconsumption was 25 kWh/tonne against aguaranteed 35 kWh/tonne.

Oman frst

The rst HotlinkMidrex DRI plant was the

1.50 million tpy module at Jindal Shadeed inOman, which commissioned at the end of2010. The plant, with its adjacent steel plantnow being built, is situated at Sohar Port,with a dedicated quay having a draft of 19metres. This means that it can receiveCapesize vessels of 180,000 dwt, which thecompany claims results in substantiallyreduced costs of raw materials.

A Capesize vessel can be discharged withinve working days, and the raw materialhandling and stacking system is designed tohandle 3,600 tph. The discharge facilitycomprises two ship unloaders, plus beltconveyors and a stacker/reclaimer.

The raw material furnace charging facility isdesigned for a capacity of 400 tph, withweigh feeders, vibro screens, belt conveyorsand hoppers.

The Hotlink system delivers hot DRI at 650Cby gravity feed to the EAF, in a fully sealed link(see diagram). The DRI can also be fed to abriquette machine for producing hotbriquetted iron, HBI. The capacity wasdesigned for a production rate of 187.5 tph,allowing for 1.1 million tpy of hot DRI and 0.4million tpy of HBI. The port loading facilitycan handle 850 tph of HBI, with a soft loadingfacility of 1,600 tph being built.

Shadeed points to various features of itsdirect reduction plant which have beendesigned for increased productivity andproduct quality. Combustion air is preheatedto 675C and feed gas to 580C. An oxygeninjection system with ten injection nozzlesfor the bustle reduction gas is used toincrease bustle gas temperature: this allowsfor increased productivity while maintainingproduct quality. An oxygen ow of up to4,000 cu metres/h is employed. The gasreformer consists of 16 bays with 30 tubes perbay.

Higher reduction temperatures are assistedby the on-site iron ore pellet coating system,which coats the iron oxide pellets with limesolution, at a design rate of 1.5 kg/tonne ofiron ore. A coating of lime hydrate on thepellets allows a signicant increase inreducing gas temperature, says Midrex, whichresults in a production increase of up to 20%.

The DRIs nominal specication is 93%minimum metallization with 1.5% minimumcarbon, and a discharge temperature of650C.

Other plant which has been built as part ofthe greeneld steel complex includes an airseparation plant and 4,800 cu metre/daydesalination plant.

DRI PRODUCTION*

Country 2009 2010 2011

Egypt 2.91 2.86 2.97Iran 8.20 9.35 10.37Libya 1.11 1.27 0.30Oman - - 1.11

Qatar 2.10 2.16 2.23Saudi Arabia 5.03 5.51 5.81UAE - 1.18 2.25World total 64.44 70.37 73.32

*million tonnes. Includes HBI. Source: Midrex Technologies

The second 1.6 million tpy Tenova HYL DRImodule at Emirates Steel in Abu Dhabi startedup this year, and, along with the rst identicalmodule, is already being expanded to produce2.0 million tpy

TENOVAH

YL


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Middle East Steel Supplement 2012

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Transcript of Middle East Steel Supplement 2012