Global Cement recently caught up with Charlie Zeynel, of supplementary cementitious material (SCM) trading firm ZAG International, to talk about current and future trends in granulated blast furnace slag (GBFS), fly ash and potential SCMs of the future...
Global Cement (GC): How has demand for granulated blast furnace slag (GBFS) changed in the past 12 months?
Charlie Zeynel (CZ): The trend towards using GBFS as a supplementary cementitous material (SCM) has really come on since we last spoke in October 2016. The demand side has continued to increase and, on a macro-level, is outpacing supply almost everywhere around the world.
GC: Where is demand increasing the most?
CZ: Africa is becoming a hot-spot very rapidly and shows a lot of potential. It has received well over 2Mt in the past 12 months and demand is much higher than that. Africa is taking GBFS from anywhere and everywhere.
GC: How have these changes affected GBFS prices?
CZ: I know that a major steel producer’s price has more than doubled since the start of 2017 as a result of these and other factors. The major Japanese exporters have also doubled their prices.
GC: How have supplies changed over the past year?
CZ: There has been a wholesale constriction in GBFS supplies. In Japan, which was sold out already in early 2017, supplies are even more restricted than before. This is partly due to the build up to the 2020 Summer Olympic Games in Tokyo. However, there were also three significant outages at major Japanese steel producers that forced production down by around 10% in 2017. Of course, domestic use has been given priority, so most of the reduction in GBFS supplies from Japan has been on the export side.
In Europe, Arcellor Mittal is sold out, due to European demand and falling SCM supplies. Europe is kind of a closed box in that it consumes its own GBFS. Before 2017, it would export to outside of the continent, but not any more.
China has also drastically reduced GBFS exports due to the winter closures of steel and cement plants on environmental grounds. 5Mt of GBFS was exported from China in 2016 but export volumes are unpredictable and could be lower in 2018. The domestic consumption of GBFS is strong in China right now. Prices have also doubled on the back of these changes. There are only spot prices and the cash must be paid up front. It’s almost like an auction!
GC: Is anywhere ‘stepping up to the plate’ and replacing this lost supply?
CZ: We have seen the first exports of GBFS out of Brazil, which was unheard of 12 months ago. This is the first new source of GBFS in 10 years. Along side this, we are beginning to see a resumption of supplies from Ukraine following the political upheaval there in recent years. However there are concerns still about quality and reliability of supply. These new supplies are quite important due to the constrictions in supplies from Japan and elsewhere.
GC: Is there anywhere left where supply is higher than demand?
CZ: There used to be a few ‘stockpiles’ around the world but now there is only one major location, in the upper Mid West / Great Lakes area in the US and Canada. The GBFS is far from the markets.
The use of GBFS is developing in the United States, based on 3-5%/yr growth in cement consumption anticipated for 2018. On top of this, the knowledge of using GBFS in cement products is becoming more widespread in the country, which will drive demand in the future. The growth in demand is primarily in the coastal regions where it is still easier and more cost effective to import slag than bring it by rail from the upper Mid West. There are also few GBFS grinding facilities, which mean you have to either build a new mill or import pre-ground GBFS powder.
GC: Last time we spoke you mentioned a strong up-tick in GBFS demand in the Middle East. Has this continued?
CZ: Demand for GBFS cements in the Middle East will remain strong, certainly over the timeframe to 2022. This is due to ongoing projects such as the Dubai EXPO 2020 and the FIFA World Cup 2022 in Qatar. What we termed the ‘silly price wars’ that were going on seem to be over now, as companies realise that GBFS is a valuable resource.
GC: Which region is ‘up next’ with regards to the use of GBFS in cement?
CZ: I think we are beginning to run out of regions!
Seriously though, the region with the biggest scope for growth is Africa, but not everywhere. The countries taking the lead at the moment are in the west of Africa, in Ivory Coast, Senegal, Mauritania and Ghana. There is also a cluster of countries over in the east, for example in Kenya and Tanzania. Algeria is also switching on to the possibilities of GBFS use. Egypt is also taking in GBFS but it is still a price-conscious market. It is not being used to make better material but to lower clinker costs. The cost of fuel to make clinker is pretty important in Egypt at the moment.
GC: Will further suppliers come to the fore?
CZ: It is possible that Iran will step up supplies of GBFS in the future. However, currently at around 1Mt/yr, this will hardly make a drop in the ocean, especially as western companies won’t touch it due to the sanctions. We do know that Iranian GBFS is making it as far as the Middle East. As far as the four major GBFS supplying regions - China, Japan, Brazil and Europe - are concerned, they still are the main players, and will be for some time to come.
GC: Let’s move onto fly ash. How have the supply and demand trends changed recently?
CZ: Supply has fallen and demand is on the rise, just like with GBFS. Countries are switching from coal to natural gas or biomass and fly ash supplies are falling as a direct result. This is the case in much of Europe and the US. The Netherlands for example has switched from being a net exporter of fly ash to a net importer in just under a year.
GC: Are there any major new sources?
CZ: There are no major new sources but rather point sources. Wherever anyone builds a coal-fired power plant, the fly ash is being contracted right off the bat. There was a recent new build in Morocco and a major cement international came in and contracted all of the material in one go. Such cases highlight the issues of scarcity and reliability of supply.
GC: Which material, fly ash or slag, are cement producers more ‘worried’ about securing?
CZ: I don’t think there is a one-size fits all answer to that question. It is dependent on the specifics of the cement producer in question. The UK for example was a major user of fly ash. When the major power plant switched to biomass, a lot of cement and concrete producers switched to using GBFS. This is an example of GBFS solving a problem made by a lack of fly ash. There will, of course, be other examples where the opposite is true.
However, for many cement producers, both materials are proving hard to secure. Essentially these ‘very cheap’ materials are no longer very cheap. It is no longer the case that a local plant can just contract some local GBFS or fly ash. It is a major strategic headache for multinationals and local producers alike. A lot of senior management time is being invested in the search for these materials.
GC: In the face of reducing GBFS and fly ash supplies, what other material(s) can be used?
CZ: The major replacement could be natural pozzolans, which are formed in volcanic regions. There have been increasing amounts traded locally in places like Indonesia, the Philippines and Italy of late. They are being looked at but it is too early to tell how they will be used and to what degree.
Aside from new material, people are also looking at fly ash dumps, with 15-20Mt in landfills in the US alone. I should point out that they are being looked at but face many unknowns. What is really in there after all these years? How usable might the material be? What are the environmental regulations? Finally, how much it will cost and is it viable?
GC: Thanks for your time today Charlie.
CZ: You are very welcome indeed!