Continuous casting and steel industry capacity collapse

One of the things that happened, again in my lifetime, is they went from ingot casting to continuous casting. In the old ingot casting technology, one-third of your steel you had to recycle. You had to cut off the tops of the ingots. In steel mills of the 1960s you'd have a big mold and you'd cast the steel in there and you actually would have to cut off the top third because of shrinkage. One of the numbers we always had to worry about at Bethlehem Steel was trying to improve the yield. We were at about sixty-five percent overall for the whole corporation, which meant for every 100 pounds of steel you poured you only could ship 65 pounds.

The core teaching case of the lecture. Tom contrasts ingot casting (sixty-seven percent yield at Bethlehem Steel in the mid-1980s) with continuous casting (ninety-five percent yield), explains the 1968 Armco Steel decision to install ingot casters anyway, and frames the late-1970s retrofits as the moment US steel managers finally accepted what they should have known a decade earlier.

There were also some big changes in the industry. They used to make steel — and you'll find this when I talk about casting — by pouring it into an ingot mold. Then in the 1960s some people, Voest-Alpine I think it was, in Austria, decided to see if they could continuously cast steel. People had been continuously casting gold and silver and copper for several decades, but steel melts at a higher temperature, and Voest-Alpine decided in the '50s and '60s to try to develop a continuous caster for steel — much bigger market. In the '60s they actually would sell you a unit. But the "rocket scientists" as I used to call them, who were hired into the steel industry after World War II — remember I told you, after World War II the United States had bombed out all the competition, that's one of those externalities — and we had seventy-five percent of the world's steel market in the mid '60s. When these guys were the middle-level managers, they and the upper managers decided not to put in continuous casting in most US steel mills when they were building a new casting shop.

1970s continuous casting raised yield from 65% to 97%, creating 30% global overcapacity, collapsing prices, leading mills to scrap rather than resell.

Siemens Metal Technologies is going to sell a 140 million dollar plant to some Chinese to build a complete cold rolling complex. So the Chinese don't have the latest and greatest process controls for rolling steel — what do they buy? They buy it from us. In the 1980s, I showed you the big productivity increase in steel, like a twofold increase in productivity from 1980 to 1990. There was the change to continuous casting, which in the 1970s went from 65 percent yield to 97 percent yield. All of a sudden the world had thirty percent more steel-making capacity than they needed, and the price of steel dropped.

Technical exposition of the continuous caster — tundish, water-cooled copper mold, breakout risk, copper-check defect on startup.

If I look between 1975 and where we are today, over thirty-five years, over my lifetime — I stole this out of a metals magazine. Here's the converter, the basic oxygen furnace, there's the oxygen coming in. You can see it says slag — you do have a slag in there, but the whole thing forms a froth. Then you have to degas it, because you've got lots of oxygen in this thing and it won't make very good steel. You can degas by argon bubbling, or by pulling a vacuum on it. They do both. Or you can just cast it as is and you get another type of steel, but usually that would be ingot casting. You're going to go to the continuous caster nowadays. You've got to get the oxygen out, because if you didn't, you'd end up with Swiss cheese for your steel.

Yield jumped from 65% (ingot casting) to 97% (continuous casting) over 1965–1985. Effective capacity grew 50% with no capital expansion. Overcapacity drove price competition that nearly bankrupted the integrated mills. Tom's "be careful what you wish for" — disruptive productivity gains were painful for incumbents.

In fact at the steel mill you have a buy-to-fly ratio in a sense — they call it yield, whether it's a steel mill or aluminum mill, how much you cast to how much you ship. When I started at Bethlehem Steel in 1974, the overall product yield was about 65% for the whole corporation, all products. Bethlehem was the second largest steel company in the world at the time. They made everything from wire to I-beams to huge forgings, sheet metal — everything. They had an overall 65%. If they could have gotten to 67%, they could have doubled their profitability — maybe even with a 1% change. What happened is, somewhere between '65 and the early 1980s, over about a 20-year period, they went from ingot casting to continuous casting. The yield ratio got up from 65% to 97%.

Continuous casting raises buy-to-fly ratio from 65% (ingot) to 97%; another billion-dollar process innovation the integrated US producers were slow to adopt. Bethlehem and Armco both put in ingot casting at greenfield mills then had to rip it out within a decade.

In the 1960s the Japanese and others, trying to get an edge in the industry, developed continuous casting. This is about another billion-dollar facility. So if you start thinking about building an integrated steel plant: two blast furnaces, billion dollars apiece; one continuous caster at a billion dollars; one basic oxygen furnace [open hearth] at a billion dollars — and you haven't even started on your rolling mills or your facility to bring in your iron ore. A billion here, a billion there, soon you're talking about real money.

Continuous casting raised yield from 65% to 97% (pounds poured vs. shipped) — eliminated the cut-off-the-top-of-every-ingot loss. Combined with BOF and mini mills, drove the productivity gains of the 1980s that halved the workforce and produced 30–40% overcapacity. Tom's "we used to have to pour 150 million tons to ship 100 million" is the canonical framing figure.

But then some people — again I think it was Austria — decided they could try continuous casting. Continuous casting had been done on lower temperature metals like brasses, copper alloys, and I told you they were doing it on gold alloys, which is not all that different than brass. In continuous casting, you have a ladle with molten metal that you melt somewhere else, and you pour it into something called the tundish, which is just a bathtub holding things, and it drops the metal into a mold. The mold is water-cooled copper, and you solidify a little skin on this. In this yellow band, you actually have molten metal, and the whole thing is pliable, and so you have these rolls. This whole thing stands about seven stories tall, with liquid metal in the center. If you get a breakout, it takes about a week to clean it up, because you've got three or four hundred tons of molten steel hitting the floor of this shop. They do have a stopper in the tundish, but even there you've still got this thing that can be ten feet wide and ten inches thick, and it's 50% liquid on average. If that skin breaks — and they did break, we'd have breakouts once or twice a year in the '70s when I worked at the steel company. They almost never have it today because they've got all kinds of process controls and infrared temperature sensors, and it's too expensive to have a breakout.

Continuous casting yield: 65% (ingot) → 97% (continuous). Tom's anecdote about the Bethlehem Steel yield-improvement VP. Combined with BOF, the productivity doubled in 20 years, halving employment from 500K to 250K in the 1980s.

They do other things to de-gas the steel, and then they cast the steel into a ladle, and then into a holding pot called a tundish. You have this seven-story building with the ladle, the tundish, and you cast the steel into a water-cooled copper mold. You can pass it into an ingot mold — we still do that with about five percent of the steel — but ninety-five percent of steel is continuously cast in a water-cooled, vibrating copper mold. The tundish is up here, the steel drops down, water-cooled copper, it solidifies a skin of solid steel, and that skin is held by rollers, with water spraying on it for seven stories. Because it's solidifying hot steel, you can bend it with those rolls, turn it so it goes horizontal, and continuously cast. The Japanese have run continuous casters for three or four years continuously, never stop.