Steel Buyers Basics: Iron Ore

In the United States approximately 60 percent of the steel produced is through electric arc furnaces (EAF) used by so-called “mini-mills.” Electric arc furnaces use primarily scrap along with pig iron or DRI (direct reduced iron) to charge the furnaces. All of the long products (rebar, bar, angles, beams) are produced through EAF technology and a portion of the flat rolled products (plate, carbon sheet and coil) are produced this way. The balance is produced by fully integrated steel mills using blast furnaces and basic oxygen furnaces (BOF) where pig iron is produced the old fashion way using iron ore, coking coal and limestone in the blast furnace and then is coupled with scrap in the BOF to produce steel. Almost all of the exposed automotive sheet steel is produced by fully integrated mills (blast/BOF) in the United States.

The growth of the mini-mills in the United States is due to the abundance of available scrap since the North American economies have been large consumers of steel for many years and the life span of the products is such that we collect and recycle vast quantities of the scrap. The U.S. is a net exporter of scrap.