Merchant Pig Iron Use
The 96%Fe MPI can be used in any steel making plant in the world as a high quality source of pure iron units but it is in the EAF steel making plants that MPI has the greatest value in use.
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EAF steel making plants represent about 35% of world steel production, which equates to more than 400 million tonnes annually. The feed material for these EAF plants consist of around 75% scrap iron (recovered from the steel making process itself, from manufacturing of goods and from obsolete steel that has been recycled such as car bodies, ships, buildings and other old machinery). This scrap contains impurities such as copper, plastics and other materials that limit the steel makers ability to produce high quality steel. To reduce the percentage of the contaminants in each batch of steel, the EAF steel makers will try to source ‘clean’ quality scrap iron and scrap alternates such as MPI, DRI and HBI. These scrap alternates are low in impurities. DRI is around 92%Fe (about 85% metallised iron available for steel making) and MPI is 96%Fe, the premium scrap alternative. HBI is a compressed form of DRI that is suitable for transport and merchant sale.
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A high quality EAF steel maker may use around 30% of scrap alternates, such as MPI, in each steel production batch. MPI commands a premium price over the best quality scrap because of its pure iron nature. The price of MPI therefore tracks the price of high quality clean scrap but at a premium. In turn, the price of high quality scrap is largely governed by supply and demand. When world steel production is growing, the demand for good quality scrap iron outstrips supply and causes higher demand for MPI and higher prices.
