A remark by CC got me looking into the current state of the steel making business in the United States, a subject of interest to me as a native of Pittsburgh, a city largely devoid of its legacy. Could Donald Trump close the doors on globalism and make Pittsburgh a great steel making city again? Not a chance in hell.
First a few basics about steel and steel making. Iron ore is a very abundant element in the Earth’s crust. Before steel, iron was melted and some of the impurities removed to create things made of iron, including early railroads. But iron has limits – it rusts easily, it has a tendency to fracture under temperature variations and has a relatively low tensile strength (how much you can pull on the ends before it snaps). Cast iron has a strength of 130 MPa (unit of measure). You can make a bridge with iron girders supporting the deck from below, but not a suspension bridge holding the deck from above. Steel has a tensile strength of from around 400 up to 2,600 MPA. Iron also is “ductile” which means it tends to permanently bend after pressure and relative low temperature. Nice for patio furniture, not for skyscrapers.
Making iron into steel involves removing impurities and most of the carbon. Various civilizations found different ways to produce steel, but very high temperatures are needed. Steel was labor intensive to make and used for high values things like swords, not 1000s of tons for buildings, railroad tracks, bridges, ships, etc.
The Bessemer process changed everything – the type of steel mills that used to be in Pittsburgh. Pig Iron was melted with other alloys and then air was blown into the molten steel. The carbon in the iron ore would bind with the oxygen and become carbon dioxide, leaving behind a malleable, non ductile low carbon metal with a high tensile strength – at very low cost.
In the 1950s, that changed. A new process called BOS – Basic Oxygen Steelmaking arrived from Austria. By injecting Oxygen rather than air, the molten iron does not pick up nitrogen and other contaminants. In 1920, it took 3 man hours per metric ton of steel – with BOS, it takes 1000x less labor, processing a batch in 40 minutes instead of 12 hours. US steel makers resisted the new technology, undoubtedly partly due to union demands. The USW steel workers believed Pittsburgh would own the steel business forever, so they were unreceptive to change. By 1970, half of the world production of steel was BOS and 80% of steel in Japan. Pittsburgh was stripped of most of its young people who saw no future “working at J&L”.
The UAW struck, the steel companies declared bankruptcy, and dismantled the Bessemer furnaces and sold them to Asia.
Then about 20 years ago, BOS started to become obsolete. If enough scrap steel is available, new steel can be made by heating the scrap steel using an electric arc furnace (EAF). Having access to iron ore and coal (why Pittsburgh was important) no longer matters much – just access to electricity at low cost and scrap steel.
Here is a map of the current locations of steel making operations. The BOS plants are generally where the original Bessemer furnaces were – the smelting of iron into steel is only one step in the process, so the rolling mills, finishing mills, etc are still useful to be located nearby.
The story of River Rouge is instructive if you aren’t yet convinced.
Henry Ford wanted to be in charge of his own destiny, not trapped by the people in Pittsburgh and New York who controlled the Steel Business, the coal mines, the railroads and oil production. He built his own steel mill South of Detroit where the Rouge (red) River flows into Lake Erie. He bought the DT&I railroad so he could get coal and iron ore to River Rouge, and his finished cars at least to places where he could make the railroads compete for his business.
In 1964, Ford added two Basic oxygen furnaces, and in 1976 added two Electric Arc furnaces.
With the changes in the steel business – with Ford ahead of the curve compared to the US steel producers – and slumping car sales due to the recession and imported cars, Ford decided in 1982 that it would take on the steel business – selling half of its steel to other steel consumers. That got the attention of Japan, who wanted to buy a 25% stake in the Rouge Steel plant and fund further upgrading of the facility. However, NKK’s demands to reduce labor costs was a deal breaker.
Concessions by the UAW -after- the deal fell apart (not the USW) encouraged Ford to invest in improving the plant to get the costs down, but they were increasingly reliant on other countries to provide the more advanced technology. Ford put the subsidiary up for sale in 1988 and washed its hands of the steel business in 1989, selling 80% of its equity to the former Weirton (WV) Steel company.
Rouge Steel company declared bankruptcy in 2003, and was sold to a (post Soviet Union) Russian Steel company called Severstal
NY times: The Russians are coming!
So there is a really good chance your American Ford Car made in America in the last 10 years is made of Russian steel. By buying a US Steel company, Severstal would not be subject to import tariffs imposed by George W Bush.
In 2014, Severstal sold its North American operations for a bit over $2 billion – the River Rouge plant to AK Steel (Armco/Kawasaki) and a more state of the art plant in Mississippi to Steel Dynamics, a steel company based in Fort Wayne Indiana.
While there was speculation in 2013 that gas from fracking would be useful in making steel, that hasn’t turned out to be true. There is no facility in the US interested in the Direct-Reduced Iron (DRI) process that uses natural gas to create pig iron without needing to raise the tempersture to 1200°F. The process is used mostly in India. Making coke for blast furnaces to create primary pig iron is still cheaper using coal rather than natural gas.
The economic boost to the steel business is from making lots of pipe, not burning the gas in the steel making process, except indirectly to create electricity.