Refractories for the Steel Industry: A Customer Perspective

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Refractories for the Steel Industry A Customer
Perspective

• Oct, 13th 2009
• Fernando Pessanha Procurement Manager

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The Gerdau Group

• Capacity of 25 MM mt of crude steel
• 13th Largest Steel Producer in 2008
• Presence at 14 countries
• History of 108 years
• 1 in the Americas Long Products
• 2 in the world SBQ and Long Products
• Shares listed at Sao Paulo, New York and Madrid
• GERDAU VISION
• TO BE A GLOBAL STEEL COMPANY AND ONE
• OF THE MOST PROFITABLE IN THE SECTOR c

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How Gerdau uses refractories?
Approx. 132.000 mt of Refractories world wide
distributed on
Others Reheating Furnaces Cowpers Glendons Torpe
do Cars Heating Shields etc...
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Some methods to acquire refractories
Common Market Practices 1 - Item by Item
(oldest and most known) 2 - Kit per Equipment
(simplest and effective) 3 - Kit per Equipment
with Performance Guarantee 4 - Fixed US /
tapped steel (when trust begins) 5 - US /
tapped steel with gain/loss sharing 6 - US /
tapped steel with gain/loss sharing plus services
7 - Total Cost of Ownership Additional
Services (VALUE TO THE CUSTOMERS) - Labour for
Refractory assembly - Consignment of materials
and equipments (parts maintenance) - Technical
Assistance (Dedicated at mill and Experts by
demand) - Refractory Project and
Engineering .
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The impact of the crisis. A typical EAF case.

• 4 shifts
• Full Production including peak hours
• No daily maintenance
• Usage of noble refractories to increase
  productivity
• Time is money Any lost ton is lost profit
• Main KPI Production

• 1, 2 or 3 shifts
• Production ranging from 0 to 80
• Reduction of EBT (tap hole) size - less slag x
  higher tap time
• Daily repair of bottom ramp during daily
  maintenance, better sintering of the refractory
  mix
• Substitution of noble materials at hot spots to
  reduce cost
• Substitution of monolithic slag door to
  conventional bricks, (lower cost x assembly time)
• Reduction of delta thickness
• Time is money available time should be used
  to reduce cost
• Main KPI Overall Cost

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What are the steel mills expectations from
refractories suppliers?

• 1) SAFETY (material quality, safer devices and
  mechanisms, automation)
• Human life above anything
• 2) COST and PROCESS
• Lead continuous improvement process and cost
  reduction
• Capacity to solve problems and identifying
  causes
• Recycling of refractory waste
• 3) FLEXIBILITY, KNOWLEDGE and SPEED
• Possibility to change from FOCUS ON COST to
  FOCUS ON PRODUCTION quickly
• Knowledge management and continuous assessment
  best practices
• Working capital management by inventory control
• Refractory performance and cost (KPIs)
  reporting capabilities
• 4) DREAM The infinite lining - A cost
  effective EAF refractory with a BOF campaign.
• THREE DO NOT FOR REFRACTORY SALESMAN
• My costs are increasing, therefore I need a
  price increase Price is market, not cost
• Refractory is only a small portion of the steel
  cost Everything matters on the overall cost

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What are the future challenges for Steel and
Refractory industries?

• STEEL INDUSTRY
• Mergers and acquisitions in the steel industry
  seems to be in a slow pace again. The focus now
  is on improving and consolidate the current
  assets.
• The challenge of the steel industry is to be
  competitive against China and CIS, which accounts
  for more than 50 of the global steel production.
  
• This only can be achieved through innovation,
  differentiation, and by adding services to our
  products.
• REFRACTORY INDUSTRY
• The refractory industry is more consolidated and
  more vertically integrated than steel, however
  the rising competition from the Eastern world is
  a future threat.
• The challenge is to increase the ability to
  provide a broad solution to the customer base
  (maybe through consolidation or Joint Ventures
  between companies).
• To develop and increase refractory performance
  in all equipments (Rolling Mill Re-heating
  furnaces,) not mainly in the melt shop.
• To secure good quality raw materials (upstream or
  with a strong supply chain).
• To be prepared for a sudden increase in the
  demand of refractory (whip effect).
• Retain and develop people with technical skills
  and knowledge.

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What are the future challenges for Steel and
Refractory industries?

• COMMON CHALLENGES
• The current economic scenario creates a more
  open environment for cost reduction
  opportunities, new technologies, process reviews,
  change of product application and suppliers.
• To reach competitive advantage through the
  development of fully new solutions for both
  scenarios FULL PRODUCTION MODE and SURVIVAL
  MODE. A couple of decades ago, refractory
  consumption at the melt shop was around 30 kg/t,
  now is around 6 kg/t. What is the new level for
  the next decade?
• Steel and Refractories are more than ever
  interdependent partners. So the Supply Chain
  cannot afford to have a weak link in this
  important chain. Strategic alliances between
  customer and supplier should be reinforced.
• There is no good that never ends nor an evil
  that lasts forever
• - WE MUST SURPASS THE CRISIS AND SURVIVE
  TOGETHER INTO MORE FRUITFUL YEARS! THANK YOU!