2017 was a challenging year for most Refractory producers and it's user industries in India, mainly steel plants. The challenges were not in terms of technologies towards producing the highest grade of steel with highest grades of Refractories OR reducing the specific consumption of Refractories in line to advanced countries, but in terms of availability of Refractories to keep the operation up and running. The year started with crises on availability of Magnesite followed by most of the raw materials produced through fusion, calcination or sintering process. Since Chinese suppliers control almost 70% of the Magnesite market, the pinching for MgO based Refractories raw material were louder for the industry. While the industry was dealing with this given problem further winter closure of many Chinese raw material producing units have again triggered the availability issues.
Somewhere in an article, I found a very interesting information related to Chinese Refractories raw material prices and availability. It says availability and stability of our price is derived from our sky. If you see the sky is clean that means we have a stable price which is likely to be on higher side and a lessor availability. If you see the sky to be more smoggy , our prices will be at the lower side and abundant availability. While this is a very interesting and candid representation, the bottom line from this representation is “pollution and it’s control”. As the government of China putting it's measures to curb the operation of polluting industry by asking to install pollution controlling set ups OR eventually asking to shut some operations. This is creating a demand / supply gap and hence forcing availability and prices of Refractories raw materials going in its direction.
During 2017, The Indian Refractories industries and its intellects have dealt with this crises successfully so far and have enabled suppliers to its end customer, the steel plants. Cost of Refractories being less than 3% of the total steel production cost, forward looking steel company’s have supported the crises mitigation by increasing prices for its Refractories procurement. This helped Refractory produces to secure raw materials from stable suppliers and a sustainable supply to its customer. While this short term support is remarkable from the user industry, the user industry must be looking towards Refractories manufacturers to bring long terms sustainability. One of the short term solution to endure the crises is to wait till Chinese industries stabilizes their environmental norms with respect to installing set ups to curb pollution. But defining a definitive time frame for this to happen in China is impossible by Indian Refractories makers.
What could be the other sustainable approach ? Safe and efficient production with reduced specific consumption of Refractories is the main objective of user industry. User industry would always be ready to pay higher price than the current trend if they see a clear reduction in their kilogram of refractory consumption per ton of steel reduces each year. Effectively they will be handling lesser tonnage of Refractories with significant savings at all points of supply chain.
Focus on total cost of ownership (TCO) than just upfront purchase prices – linking to TCO, user industry must focus to control and trend it's Fleet Refractories cost shell to shell ( FRC -STS). User industry buying fraternity must look into this direction.
The industry may look into alternative type of Refractories where the availability is more secured than the critical grades available and control from China. Example based on steel type and slag chemistry ; use of non MgO based spinel bricks in majority part of steel ladles. Use of Doloma lining, use of spinel monolithic lining etc.
Recycling and re use of spent Refractories – User industry along with Refractory makers need to deploy higher discipline to control waste generated from wrecked Refractories lining. A higher discipline and superior engineering technique to be engaged to collect and segregate spent Refractories with higher value. This will help higher availability of reclaim raw material for further use for re production.
What’s coming from China in 2018 will be interesting to note. However, Engineering solution with advance material techniques will be the sustainable MANTRA for the industry as a whole. Wish you all a happy new year and wonderful Christmas !
