Production of iron and steel is generally recognised as being a fairly high fixed cost activity. Maximization of asset use, with operation of plant at high levels of capacity utilisation is therefore important. This raises the question however, of how steelmaking capacity should be defined.
Defining plant capacity
Nominal plant capacity is often defined by suppliers of plant and equipment against a particular set of operating conditions. Usually, nominal capacity is calculated based on a 21 shift operation (meaning three shifts per day, 7 days per week) with provision for normal maintenance periods and assuming ‘typical’ product mix. Quite often however, reality may be somewhat different from these conditions.
Some typical variables that can impact maximum steel plant production potential (i.e. capacity) include:
- Product size: With small diameter bar, for example, maximum output will generally be lower than if average diameter bar is made [e.g. 12mm versus 16mm average diameter]. The same situation arises if thin gauge coil is produced [e.g. 1mm rather than 2.5mm average coil thickness]. This is best explained in terms of less steel moving through the mill at any one moment in time. Product mix therefore can have a large impact on capacity, impacting this by plus or minus 25% or even more
- Grade mix: Complex grades (e.g. those requiring special thermal and mechanical treatment in a stop-start rolling schedule) may take longer to pass through a mill than commodity grades. Similarly, alloy grades may need more working than do carbon steels, reducing mill throughput
- Order sizes: In a mill making different product shapes (such as square, round and angle-shaped long bar products) small average order sizes can result in greater set-up time – with an adverse impact on mill capacity – if rolling mill schedules are not optimized by maximization of batch sizes
- Coating weight: For some lines, weight is added to the steel during the production process. That happens for example with zinc coating, which can add up to 250 g per square metre to each side of a steel sheet. Depending on the coating weight (which can be as low as 25 g / square metre) the weight of final material sold can vary quite significantly. In fact, we have seen several coating lines where capacity utilisation exceeded 100% for just this reason
- Unplanned stoppages: Clearly, if a mill stops running for some unexpected reason (e.g. because of a ‘cobble’ or a ‘breakout’), maximum production potential will be impacted for a period. With modern approaches to mill maintenance, especially when a ‘proactive’ preventive maintenance approach is applied, this issue tends to be less common than in facilities where ‘reactive’ maintenance practices are used. It should be remembered however that in some parts of the world, steel rolling mills can be 50 years old or older still. In such cases, frequent breakdowns can have a very significant impact on capacity
- Capacity creep: This terms refers in the steel sector to the tendency of a given facility to produce greater output year by year, as minor bottlenecks are relieved, small productivity-related investments are made (possibly impacting planned downtime), operator understanding increases, etc. The trend may increase plant capacity by no more than 1% per year; but over a 10 or 20 year period the overall impact on production potential can clearly be significant.
A common sense approach?
From the foregoing, it is clear that capacity is not always what it seems. If in doubt, our recommendation is firstly to check the nameplate capacity provided by the equipment supplier, to double-check maximum output across a recent period and if possible to discuss the findings with local management. That approach should give a consensus answer at least, and one that is underpinned by actual performance.