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Winter Storms Prompt Voestalpine to Temporarily Halt HBI Production in Texas

February 18, 2021

Voestalpine has temporarily halted production as its hot-briquetted iron plant in southern Texas, the company said. “Our HBI plant in Texas experienced a temporary shutdown and made the decision to continue the shutdown,” a spokeswoman for the Austrian steelmaker said in an email to Steel Market Update on Feb. 18.

snow The company made the decision to conserve energy at the recommendation of the Electricity Reliability Council of Texas (ERCOT) and the AEP Texas. ERCOT manages electricity flows to more than 26 million customers in Texas representing approximately 90% of the state’s electric load, according to its website. AEP Texas is part of electric utility American Electric Power.

Winter weather has slammed much of the United States, including parts of the South and Gulf Coast unaccustomed to and unequipped for snow and cold.

Approximately 500,000 people were without power in Texas on Thursday morning, many of them in south Texas, according to poweroutage.us.

Voestalpine’s HBI plant is located in Portland, Texas, along the Gulf Coast near Corpus Christi.

The $740 million facility sports HBI capacity of 2 million tons per year. Approximately 40% of that volume is shipped back to Voestalpine’s mills in Linz and Donawitz, Austria. The remaining 60% is shipped to outside customers, according to the steelmaker’s website.

One of those third-party HBI buyers was electric-arc furnace (EAF) steelmaker Big River Steel, now a part of U.S. Steel. Big River had a four-year offtake agreement for 240,000 tons per year of HBI from Voestalpine’s Texas plant, per the company’s website. It was not immediately clear whether that agreement was still in place when this article was filed.

U.S. Steel, Big River’s parent company, did not directly address whether the Osceola, Ark., mill had been impacted by severe weather, power issues or potentially interrupted HBI supplies.

EAF mills across the South have been impacted by the winter storms, multiple sources told SMU.

“While there have been some regional weather-related impacts on operations, none of those are currently expected to have a material impact on the company or our ability to fulfill customer commitments,” a U.S. Steel spokeswoman said. She declined to comment on the issue of HBI because U.S. Steel does not typically discuss third-party supplier arrangements.

Alternative metallics such as HBI, direct-reduced iron (DRI) and pig iron are important feedstock for EAF steelmakers, which need purer iron units to produced more advanced grades of steel. They also provide an alternative to prime scrap, supplies of which are expected to become tight as more EAF steelmaking capacity comes online in the U.S. and abroad.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is managing editor for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.