March 2007 - "Narrow-width strip rolling days are over." That prophecy comes from Eduardo Gonzalez, president of Ferragon Corp., which has metal processing plants in Ohio, Michigan and Mississippi, including the toll processing facility Ferrous Metal Processing in Cleveland. Customers are found throughout a good percentage of the steel-producing United States, from New York to Chicago and as far south as the Carolinas.
His prediction is definitely a bold one; however, in light of the changes in the U.S. steel industry in the past ten years--industry consolidation, pressure from offshore producers, overall manufacturing challenges--it's probably within the realm of possibility.
Gonzalez continues, "There are some things in the steel business that just won't exist 10 years from now. One of them is rolling narrow strip."
That outlook is based on the need for cold-rolled strip converters, service centers and OEMs to reduce costs and remain competitive. Gonzalez sees a significant opportunity for cost reductions in the shifting of strip production away from narrow producers' mills to toll processors that provide the full range of processing services in one location.
Walking the talk, Gonzalez quotes his company motto: "He who wastes least profits most." Reducing costs and eliminating waste is a continual effort at Ferrous Metal Processing. Two aspects of that effort are equipment upgrades and additional capabilities structured to improve productivity and create processing economies.
Three years ago a 66-inch-wide, rebuilt United four-high combination reversing mill, the largest in the United States, was installed in the Cleveland plant. The mill processes wide strip coils, hot band and cold-rolled steel from 24 inches to 60 inches in carbon, HSLA and alloy grades. Increases in the market for outsourced rolling services initiated the addition.
"Buying the mill and putting it in operation allowed us to bring things to a precise shape, temper, gauge and hardness, and to service the strip market," Gonzalez says. "When we did that investigation we realized that you had to go to 60 inches wide to give the marketplace the most versatile way of converting hot-rolled product into strip.
"But when we gave it some more thought," he continues, "we thought there may be some efficiencies here even for the traditional cold-rolled strip makers in certain orders because the cost to produce strip or sheet in our mill is usually 50 percent below what it takes to produce it on a 24-inch mill. We produce it wide and then just slit it." In essence, overall processing costs for individual coils are reduced by half while maintaining strip gauge tolerances closer than those demanded by the commercial market.
Gonzalez says part of the reason for installing the 66-inch mill was to offer strip producers a way to lower their costs. By using the toll processor's services, strip producers, service centers, OEMs and even mills gain the flexibility of purchasing services on an as-needed basis without dealing with a committed, fixed investment in equipment and personnel.
Advantages of hydrogen In the fall of last year, a hydrogen annealing facility joined the mill and processes of pickling, slitting, leveling, shearing, decambering, cold rolling and temper rolling were added as other options within the service mix.
"When we went to think about what kind of annealers we needed to have to provide the marketplace with the best product, it was obvious that it had to be hydrogen annealing because hydrogen annealing is the newest, best technology out there," says Gonzalez.
Hydrogen annealing is a cost-effective process for soft annealing, recrystallizing and spheroidizing various steel grades. Annealing under a controlled atmosphere of hydrogen prevents oxidation or discoloration. At times referred to as bright annealing, the process also offers surface cleaning of some alloys by reducing the oxide. The process of heating the coils followed by gradually cooling is computer-controlled to produce a variety of material characteristics for a broad range of applications.
"The products we are usually rolling around here are the graded, hot-rolled steel, which is the high carbon, medium carbon and the alloys," says Gonzalez. "Our annealing processes allow us to fully anneal those with zero decarbon which is a great feature of the hydrogen. Decarburizing would alter the physical properties of the steel. The hydrogen annealing doesn't decarburize while the old traditional pot annealers do."
Three 72-inch Ebner furnaces and six bases in the new facility produce about 6,000 tons a month of fully processed cold-roll strip. Two of the six bases are higher temperature, enabling processing of ferritic grades of stainless steel and other exotics such as silicone electrical steel, in addition to all the traditional carbon grades. Coil sizes can range in diameter from 36 inches to 72 inches with an inner diameter of 20 inches or 24 inches. Widths range from 24 inches to 72 inches, and the maximum coil weight is 60,000 pounds.
With the addition of the hydrogen annealing capabilities, Gonzalez says Ferrous Metal Processing can do it all. "You send us the hot-rolled steel and we will take it from pickle all the way up to fully converted cold-rolled strip if you want. Or anywhere in between. The intention is to give people one place to send all their material without having to ship it all over to get it done."
His business strategy of eliminating waste and reducing the cost of strip products is paying off. Gonzalez referred to a recent gain for his business when a Midwest strip producer shut its rolling operations down and transferred its processing to Ferrous Metal Processing--a dramatic move that was based on pure economics.
By eliminating its own production and shifting to the toll processor, the company gained in three key areas. First, lower overall cost per coil, largely due to conversion capabilities for 60-inch coil rather than the typical 24-inch to 30-inch coils. Second, the ability to pick and choose the number of processes needed per customer without costs of maintaining an array of processing equipment and personnel. And third, the move made customers' costs completely variable.
Without the obstacle of investing millions in processing equipment, Gonzalez points out that anybody can "get in the game." Invest in inventory from the mill, add value through toll processing services and resell. Although he is quick to say that he will sell to anybody who pays his bills, he has a definite preference. "Our approach is to do business with people who support us and make a commitment to the steel industry.
"I'm always trying to figure out how to make the marketplace more efficient, reduce costs, take shipping out of the equation, improve yield losses, anything I can do," he says. "I try to stay up with whatever the market needs and I try to anticipate where it's going to go. Like I said, our motto is, "He who wastes least profits most.'" MM
By Sue Roberts, from the March 2007 issue of Modern Metals.