Photo courtesy of Thermal Ceramics, Augusta, Ga.
The steel industry is by far the major consumer of refractories (>55-60% of the total market), so the status of steel production provides a general gauge of the refractories business level. The other refractory consuming industries (e.g., non-ferrous, cement, glass, chemicals, petrochemicals, etc.) each constitute less than 8% of the refractories market in the U.S.
Figure 1. 10-year trend in steel production (China, Japan, U.S., Germany and Brazil).
Figure 1 shows the 10-year trend in steelmaking for China, Japan and the U.S., which are the top three steelmaking nations in the world. The increase in steel production has been more consistent and greater in China than in the other countries.
Table 1. Steel production, 1999-2000 and 1st quarter 2001.
Germany and Brazil are also shown to represent the steelmaking activity in Europe and South America. The percent change in steel production between 1991 and 2000, and the 1st quarter change in 2001,1
are shown in Table 1.
Figure 2. Refractory production and price per ton in the U.S.
U.S. – There is Hope that the Value Increase will Resume
The steel industry capacity utilization rate2
increased in 1999 from 76% in January to 88% in December, and continued into 2000, rising to 94% in April before declining to 75% in December. The year 2000 ended with a total steel production of 101 million metric tons (mmt)3
, or an increase of 5% for the year, and was the first time the U.S. production of steel has exceeded 100 mmt since 1981. If the trend of the last few years continues, it can be expected that the U.S. refractory market value for 2000 will be slightly higher than the $2.243 billion of 1999, coupled with some increase in the tons manufactured. The refractory production and average price per ton for the U.S. from 1970 through 1999 are shown in Figure 2. Production has been declining since 1979, while the average price has commonly increased each year, except for 1984, 1998 and 1999. The actual performance of the U.S. refractories industry in 2000 won’t be known until September, when the annual results are published by the U.S. Department of Commerce (www.census.gov/cir/www/ma32c.html).
Figure 3. Refractory production and price per ton in Japan.
Japan – Was 2000 an Anomaly, or a New Trend?
The annual refractories data for Japan in 20004
showed that there was a rebound in market value and manufacturing, associated with a 13% increase in steel production to 106.4 mmt. The market value in 2000 was 195 billion yen (~US $1.7 billion), and 1.33 mmt of refractories were manufactured; these values increased 5% and 4%, respectively, compared to 1999. Figure 3 shows the refractory production and average price per ton data for Japan since 1970. The average price per ton increased for the first time since 1993. The tonnage of bricks and monolithics manufactured both increased, with monolithics accounting for 59% of the total production, compared with 60% in 1999. But bricks accounted for more of the market value (63%) than monolithics. The steel industry consumed 71% of the refractories manufactured in Japan in 2000, followed by the cement industry (4.6%) in second place and incineration (4.4%) in third place. Since 1991, the tonnage of refractories imported by Japan from worldwide sources (excluding China) has increased roughly five-fold, whereas the refractories imported from China have increased more than nine-fold, including a 2100% increase in basic bricks.
Conditions in the refractories industry in Japan resulted in a significant change last year, with the merger of Krosaki and Harima. Given the effects of the sluggish Japanese economy, more imported refractories, and the increasing need for cost reductions, other mergers could occur, as well as other changes/reductions that don’t normally occur in Japan, including personnel, equipment, R&D, etc.
China – Leads the World in Tons of Refractories Manufactured5,6
There are approximately 2500 refractory companies in China, including state-owned, town/village-owned, private enterprises, joint ventures, and a few wholly owned foreign enterprises. Total refractory production was 8.07 mmt in 1991, 14 mmt in 1994, increasing to 20+ mmt before declining to 17 mmt in 1998 and 15.4 mmt in 1999. The Chinese production in 1999 was about four times greater than U.S. production and 12 times greater than Japanese production. The refractories manufactured are still mainly bricks (e.g., 15% fireclay and 5% alumina), with only 10% monolithics. In other developed nations, monolithic production is more than 50%. The average refractory consumption rate by the steel industry in China is reportedly high (possibly 20-30 kg of refractories per ton of steel produced), compared with 9.5-10 kg/ton in Japan and the U.S, which indicates that major improvements are still needed in refractory quality and use practices throughout the country. However, this will certainly happen in time; the Baoshan Works in Shanghai already has a world-class refractory consumption rate of 9.9 kg/ton.
There has been a significant change in the refractory export practices by China. In 1978, China exported only raw materials, including 65,200 tons of magnesia (avg. price = US $94/ton) and no manufactured refractory products. But the export of manufactured refractory products has progressively increased, with China exporting 100,000 tons in 1992 and 230,000 tons in 1995. In 1999, China exported about 3.3 million tons of raw materials, of which 1.7 million tons were magnesia (average price = US $123/ton), and 350,000 tons were manufactured refractory products. China is a major participant in the international refractory raw materials market, supplying 60% of the bauxite, 30% of the magnesia, and 80% of the graphite. Its export of value-added products has also increased, and no doubt will continue to increase.
India – Unused Capacity and Changing Practices Offer Opportunities
Steel production in India has increased continually since 1991, going from 17.1 to 26.9 mmt in 2000. During that time, the total refractory production has fluctuated from a minimum of 651,000 tons in 1994 to a maximum of 780,000 tons in 1995; in 2000, the total production was 704,000 tons (www.irmaindia.org). The utilization of refractory manufacturing capacity was 45-47% during 1998, 1999 and 2000. The refractory products manufactured in 2000 included 24% fireclay bricks, 36% high alumina bricks, 25% basic bricks, and 6% monolithics. These data indicate a continuing emphasis upon traditional refractory practices, with significant opportunity for advancement.
Advancement Continues Worldwide
The advancement of refractories technology is continuing worldwide. More durable, longer-lasting refractories are continually being developed and supplied to customers, which reduces the demand for refractories and promotes the downward trend in refractory consumption. But the need for refractories is forever, so the business opportunities and growth (i.e., emphasis on value instead of tonnage) are limited only by the creativity, efficiency and persistence of the manufacturers. The global market is readily available to all companies, no matter what their size or location, but success continues to be based on maximizing product quality and cost-effectiveness, filling needs/niches, and providing personal contact and technical service. However, the impact of China and other low-cost manufacturers must be watched because of the probability that they will contribute to a continuing change in the ground rules and capture an increasing portion of the world market.