Good furnace control critical for India’s growing MSME steel sector

 The share of MSME growth in the steel sector has implications on the energy footprint of major processes used to a) make and b) re-roll steel.

In both steel making and steel re-rolling, furnance operations are a critical focus point for both productivity, energy and resource efficiency gains, while also being a primary source for harmful emissions and solid waste. 

Steel Making 

The steel sector employs three major routes for making crude steel. These three steel-making routes are given below, and in particular, the steel making routes in India are significantly different to what is typically seen in non Indian markets:

FIG 1:

Source: Ministry of Steel, cKinetics analysis

The secondary steel sector partipates in crude steel making by collection of steel scrap, and DRI iron, which are then cast into steel ignots or processed into finished products – the primary technologies for steel making include electric induction furnaces, mini blast furnaces and smaller electric arc furnaces.  

Virtually all secondary steel making units have started adopting induction furnances.  The growing share of induction furnance suggests the increasing share of secondary steel-makers in the last decade. Crude steel in the secondary sector is cast into steel ignots for sale to re-rolling mills, or in some cases, directly cast and rolled into finished steel products. 

An example of this process using an induction furnace is given below:

FIG 2:

Source: cKinetics analysis

Of the steel making process, nearly 64%-80% of the energy is used up in the melting furnace (often an induction furnance).

FIG 3:

Source: EMT India, cKinetics analysis 

Steel Re-Rolling

Once crude steel has been produced, it is then rolled  into finished steel products  The secondary sector also comprises of steel re-rolling mills which process steel ignots, slabs, billets, booms into customised finished products for automotive, construction, machine-works and parts industries. For re-rolling, a re-heating furnance is required to hot-charge the steel input and prepare it for rolling and stripping. This re-heating furnace is typically coal, gas or oil fired – however, experts at the National Productivity Council suggest that an induction furnance can be used in typical re-rolling mills if some technological adjustments are made. The use of induction furnaces in re-rolling  to simply heat steel has not yet happened in India, even though many are using induction furnaces to melt metals in steel making)  

FIG 4 and 5:

Source: cKinetics analysis

In a re-rolling mill, reheating energy requirements are 70% of the total energy consumption of the mill. 

The share of energy costs associated with these levels of energy consumption can vary between 32% to 84% of total costs for a steel unit. Some observed values have been given below:

FIG 6:

Source: cKinetics analysis

From an industry perspective, hot re-rolling mills and induction based steel plants dominate the Indian MSME steel sector (based on capacity) when compared to other parts of the steel production and finishing supply chain.

FIG 7:

Source: Ministry of Steel, Planning Commission, cKinetics analysis

Hence, resource efficiency in the secondary steel sector must enable good furnace control as part of any programme to increase productivity and manage footprint of this sector.

Business case already exists, but needs implementation support

An energy efficiency programme for re-rolling mills in Raipur demonstrated that in general, that the cluster is underperforming and generally, there was substantial room for improvement which was achieved by a selection of ‘model re-rolling units’. 

FIG 8:

Source: EMT India, cKinetics analysis, publically available energy audit reports 

The typical investment required to make such savings possible range from Rs. 12 – 170 lacs per intervention to yield savings as high as 20-40% per intervention. The lowest estimated payback time was 10 months and the highest estimated payback time is 16 months.

For typical small sized steel re-rolling units, our research suggest that for interventions with a payback of less than 12 months could be delivered within investment of Rs. 6 to 15 lacs, which is equivalent to the monthly profit after tax for firms of this size. However, the case for progressively moderning mid-sized firms is more challenging and may require government / development program support to enable and catalyse investment action in this space.

FIG 9:

Source: EMT India, publically available energy audit reports, cKinetics analysis 

However, these high level calculations exclude the technical consulting, staff training, baseline feasibility studies, subsequent process imporvement and change management costs that are borne by MSMEs in addition to business-as-usual operational costs. Hence,  the case for progressive and change is financially challenging for most of the mid-sized firms in this sector. 

Government support is required – not just to incentivise this sector towards resource efficiency, but to enable each MSME to remain a viable business, as discussed here. Nevertheless, enabling MSMEs to focus and act on good furnance technology and processes will form the best scenarios for pay-back.

 Image Credits: Wikipedia Creative Commons / H005