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How Much Does It Cost to Produce A Ton of Steel?

Author : Hongteng Time: 2023-02-06

How much it cost to produce a ton of steel is a question that every steel plant will pay close attention. Of course, everyone who wants to build a steel plant also wants to know the answer to this question. So, how much does it cost to produce a ton of steel? Is steel mill profitable? Now, Luoyang Hongteng will calculate for you in detail.

wire rod steel rolling line - Hongteng

Under normal circumstances, the construction of steel plants to produce steel factories will have the following costs: Venue and Equipment Cost, Raw Material Cost, Electricity Cost, Labor Cost and Environmental Protection Costs. Below, we will introduce one by one.

Venue and Equipment Cost

Building a steel plant first requires a venue. The size of the venue depends on the size and quantity of the equipment. The size and quantity of the equipment need to be determined according to the annual output. The smaller the annual output, the smaller the specifications of the equipment required, the less the quantity, and the lower the cost.

Taking the equipment contained in the annual output of 100,000 tons of steel production lines as an example (covering an area of 50m*350m).

Equipment Specification Quantity
Induction Melting Furnace 3.5t 3
Continuous Casting Machine R4, Single Flow 1
Roughing Rolling Mill 400 1
Intermediate Rolling Mill 350, One for two 2
Intermediate Rolling Mill 250, One for two 4
Flying Shear / 1
Cooling Bed 40*4m 1
Package Table / 1
Cut to Length Shear 250T 1
Roller Table / some

In general, the equipment cost of the steel rolling line with an annual output of 100,000 tons needs to be about 15 million, plus the cost of the site. This is indeed a large investment. But this cost is one-time. Once the production line is put into normal operation, it will bring a steady stream of profits.

Raw Material Cost

The raw materials of the steel rolling line are mainly some scrap steel. According to the market situation in recent years, the cost of steel scrap per ton is about 250 US dollars, equivalent to about 1,800 RMB. Although scrap steel prices will vary slightly from region to region, the difference will not be too large.

Electricity Cost (1 Ton of Steel)

At present, in the steel bar production line with relatively advanced technology, the electrical equipment includes induction melting furnace, induction heating furnace, rolling mill and other auxiliary equipment. Calculated according to the average level, the power consumption and cost of each device are shown in the table below.

Equipment Power Consumption(KW.h) Cost(Yuan)
Induction Melting Furnace 700 700
Induction Heating Furnace 400 400
Rolling Mills 60 60

The three main sets of equipment of induction melting furnace, induction heating furnace and rolling mill consume a lot of electricity, while the electricity consumption of other auxiliary equipment is very small. It is easy to see that the electricity cost of the entire production line is very low, less than RMB 1,200.

Labor Cost

Labor costs vary by region. Labor costs in developing regions are relatively low, while labor costs in developed regions are relatively high. Therefore, the labor cost of the steel bar production line will be quite different. Moreover, the number of workers required for steel bar production lines with different outputs is also different. Below we illustrate with an example.

If ten workers are needed to produce 1 ton of steel, each worker gets 100 yuan paid a day, and 1,000 yuan a day for ten workers. This is a cost that can be quickly calculated.

From the above points, we can easily see that if you want to build a steel plant, the biggest investment is in equipment and space. These two also happen to be one-and-done investments.

Are Steel Mills Profitable?

With the recovery of the world economy, the number of infrastructure projects in various countries will definitely increase day by day, and the industry’s demand for steel products will increase year by year. In the market, the price per ton of finished steel must be well known to everyone. Therefore, you know the profit per ton of steel. What we can assure you here is that if the steel rolling line is officially put into production, it will be profitable within half a year at most.

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