Mexican steel company Deacero, which claims to be the largest recycler of metal scrap in Mexico, is preparing to import from the United Kingdom a new input for production that will partially replace scrap metal, which has a lower price and could improve its profitability.
Managers in the company's decision-making commented that Deacero will directly import a "new product (raw material)" for the company from England: "Beach Iron, a material with high performance expectations in our castings and costs."
To find out about the potential import volumes of "beach iron," SteelOrbis requested support from Deacero spokespersons. However, there was no response.
"Beach Iron," is known in Mexico as "chorreadura," which is the waste from the steel production process in blast furnaces. They are the losses or waste in the production of pig iron, which due to operational and cost reasons for some integrated steel companies, is not consumed and is disposed of in specialized landfills, a specialist in the steel production process in Mexico told SteelOrbis.
This iron already thrown on the ground and contaminated with other products has a high iron content, around 90 percent, slightly lower than the 99 percent iron content of metal scrap. Although the price is much lower, which is why this "beach iron" or "blasting" is used in steel mills, commented the specialist.
“Deacero will reduce its costs in casting with beach iron, which is much cheaper than metal scrap,” commented the expert.
He said the price of beach iron could be tied to the price of HMS scrap on the Chicago Mercantile Exchange (CME), minus a penalty for lower iron content. Of the $330/mt of HMS scrap, the beach iron could range between $220/mt and $260/mt, commented the expert.
Due to the lower iron content of beach iron compared to HMS, a 25 percent discount could be applied.
This lower cost of between 21 and 33 percent, considering the current price, will increase Deacero's profitability. This considering that the company consumes 4.0 million metric tons (mt) of scrap per year. The latter was also reported by company directors.
This greater profitability due to the consumption of “beach iron” will increase considering a “considerable” personnel cut at Deacero. Unofficially, it emerged that the payroll reduction “was strong,” mainly in Mexico. This was also one of the topics to be discussed with the Deacero spokesperson, but there was no response to SteelOrbis' call.
Prior to the personnel cut, Deacero had a payroll of more than 10,000 workers, distributed in its three mini mills, 19 production plants and in its more than 20 metal scrap collection centers. The company is also in the process of building another steel mill in the northern city of Ramos Arizpe, Coahuila, where it already has an operation.
The other steel mills are in Saltillo, eight miles from Ramos Arizpe. Another is in the central city of Celaya, Guanajuato.