The desulphurisation cost change in an integrated iron and steel plant: An empirical analysis

ABSTRACTTHE DESULPHURISATION COST CHANGEIN AN INTEGRATED IRON AND STEEL PLANT:AN EMPIRICAL ANALYSISSever, Süleyman NazifDesulphurisation is an important phase in the iron and steel productionprocess, and the cost of desulphurisation takes an important part in the totalcost of production. In İsdemir it was observed that the monthly 2005desulphurisation costs became drastically increased in comparison to monthly2004 desulphurisation costs. The subject matter seems to give a goodexample of solving a problem of engineering origin by managerial methodsthrough a stepwise approach.Firstly the observational evidence was tested statistically. Difference ofMeans Test and Dixon?s Test were used and it was shown that per unit costshift was quite severe. To detect the main reason, seven majordesulphurisation cost increasing reasons were quantified on monthly basis.With the aid of forward selection method by stepwise regression procedure,the main reason was determined as the shift of the stone coal cost in 2005.By the examination of 2004 and 2005 purchase data of stone coal, thecost components analysis had shown the cause. The gain of 0.53 US$/tonliquid hot metal due to the relative cheapness of American coal was reducedivby 1.79 US$/ton cost increase in desulphurisation. Therefore the strategy tobuy the American stone coal for the reason of its low price was wrong due tothe high sulphur content of that sort of stone coal.v