EAF steelmakers likely to benefit from technological innovation

The technological innovation that is occurring in the steel industry will be beneficial to scrap-fed electric arc furnace (EAF) steelmakers and detrimental to integrated steel producers, said Peter Marcus of World Steel Dynamics (WSD). The managing partner of the Englewood Cliffs, New Jersey-based steel information service spoke during one of the keynote sessions at Steel Success Strategies, which Fastmarkets Metal Bulletin hosted in partnership with WSD online Oct. 26-28.

Marcus said this technological advancement is threatening to the integrated mills because it offers reduced economies of scale, lessens barriers to entry and reduces production costs for high-end products, which is leading to the commoditization of these products.

He added that steel industry jobs are being eliminated by machines faster than overall economic growth can create new jobs. “Karl Marx is turning over in his grave,” Marcus said, adding that the technological advancement could leave developing economies behind because low wages no longer offer the advantage they did previously.

Marcus predicted that basic oxygen furnace steel production would decline by 256 million tons to 753 million tons by 2050 while EAF production would increase by 218 million tons to 758 million tons.

He also said a glut of metallics will be available, predicting the scrap reservoir will grow from 14.4 billion tons to 32 billion tons by 2050 while direct-reduced iron production will more than double from 111 million tons to 235 million tons.

Marcus said protectionism likely will continue as will mergers and acquisitions in the steel sector.