Evraz is a major supplier of plate and tubular goods for the traditional oil and gas markets. At the same time, it is a leader in the use of renewable energy, with an electric arc furnace mill in Pueblo, Colo., powered primarily by solar. Jefferson Shaw, vice president of strategy for Evraz North America, sees no contradiction in the two. Cutting greenhouse gas emissions is not an “us vs. them” – oil versus solar – proposition, he said during Wednesday’s SMU Community Chat. “Starting with our customers in the [oil and gas] business, many are leading the charge toward hydrogen, solar or carbon capture, so we need them in the conversation.”
Reducing climate-changing carbon emissions from the steelmaking process has been a long-time priority for Evraz. Pointing to the ambitious solar project in Pueblo that came online this year, Shaw noted the company has been looking into energy alternatives for many years. “We are seeing an accelerated pace of change in terms of hydrogen, carbon capture, solar and wind. We are looking at how we can decarbonize our footprint across Scopes 1, 2 and 3,” he said during the webinar.
Evraz North America operates six mills in Colorado, Oregon and western Canada with 2.3 million tons of EAF steelmaking capacity, supported by a company-owned network of scrap processing yards.
Encouraged by its success at the Pueblo mill, Evraz is considering renewable-energy options for its other facilities, but solar may not be the best choice. Canada is not as sunny as Colorado. “Whether it is solar or the introduction of hydrogen into our process, there are various pathways we are evaluating,” he said.
The push toward more environmentally friendly EAF-based steel production, and new capacity announced in the U.S. Midwest and eastern Canada, could create a shortfall of prime and possibly obsolete scrap grades over the next few years. “Scrap is quickly becoming what some people call a precious metal,” Shaw said. “We do see risk in the number of EAFs planning to come online, adding 15-20 million tons to the market. There will be a shortage, or at least a resetting in the price of scrap,” he predicted.
The goal of Evraz’s recycling business unit is to continually increase the percentage of scrap the company can supply to itself. The strong M&A activity in the scrap sector suggests other mills have the same idea. “There is a rush to acquire dots on the map and fill that scrap pipeline,” he noted.
Based on the nature of its products, Evraz is not a big consumer of prime scrap or scrap alternatives such as direct-reduced or hot-briquetted iron. But that could change in the future. “We are evaluating at what point it may become necessary to introduce higher cost, lower residual DRI/HBI into our mix. Right now we just use a little pig iron,” he said.
Shaw is bullish on the impact of the new federal infrastructure spending bill, though its effect on steel demand is not right around the corner. “As a supplier of plate, rod and bar, we see more opportunity in 2023 and beyond than in the near term. It should supply a nice tailwind for sustained demand,” he said.
Looking ahead to 2022, Shaw offered an optimistic forecast. Though energy prices are likely to remain volatile and there is some downside risk to steel prices, the mill’s order book is strong across all its product lines.
He also expects more genuine progress on the decarbonization front next year. “This time I think it’s different” given the global focus on sustainability, the pace of the transition from oil and gas, and the new funding behind renewable energy, he said.
(Editor’s note: Did you miss this Community Chat? No problem. Click here to view a recording. While you are at it, register for the next Community Chat, which will feature Tom Derry, CEO of the Institute for Supply Management, beginning at 11 a.m. ET on Wednesday, Dec. 15. There is no charge to view SMU’s twice-monthly Community Chats.)
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim TriplettRead more from Tim Triplett
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