Bahrain Review

Pellets output declines

The Bahrain Steel plant in the Hidd Industrial Area

Production of direct reduction (DR) pellets at Bahrain Steel, formerly Gulf Industrial Investment Company (GIIC), dropped significantly in 2013 following a disruption in raw material supplies from two Brazilian companies due to Force Majeure declaredby them.

Output was down to about 4.0 million tonnes   from 5.5 million tonnes in 2012. The two affected suppliers were CSN and Amapa. Bahrain Steel has annual production capacity of 11 million tonnes and usually imports most of its raw material from Brazil with some quantities also coming from Russia and Chile.

With shipments from Brazil disrupted, Bahrain Steel had to reschedule its own supply network, cutting deliveries to some of its strategic customers in the region.

The emergency in the Brazilian mines is expected to be lifted in 2014 and Bahrain Steel expects to receive more quantity. However, it will not be able to receive the usual quality levels because the Brazilian mines have to resolve quality issues. But whatever material Bahrain Steel receives from the affected Brazilian firms will be pelletised and delivered to markets such as China and Japan which can use them for blast furnace processes.

As much as 70 to 80 per cent of Bahrain Steel’s production goes to GCC states. Despite the raw material problem, the company will continue to try to meet its commitments to the best extent possible in the coming year.

Demand for DR and blast furnace pellets is expected to rise in the medium and long terms with new steel plants coming up in Egypt and Libyan output set to reach normal levels. Egypt’s Beshay plant has been delayed while another Egyptian steel plant in Suez is in the ramp-up stage. The Ezz plant, in the same country, is working normally. Bahrain Steel expects to supply them in 2015 because currently there’s a shortage of iron ore.

Bahrain Steel expects to move closer to capacity in 2015, after a new mine opens. It will produce at full capacity in the following year.

While business prospects for the next several years look good, Bahrain Steel has no plans at the moment to expand production capacity. However, Foulath has licences to build two pelletising plants in Egypt, one in Alexandria and the other could be located south of Suez.

Foulath’s subsidiary Sulb Company BSCC’s plant in Bahrain is currently in the ramp-up stage. The company is working to 75 per cent of its capacity and exporting heavy and medium sections mostly to Saudi Arabia. The melt shop has annual capacity of 1 million tonnes, the same as the rolling mill, while capacity of the DR plant is 1.5 million tonnes.