Raw Materials Strategy
Scrap metal and scrap substitutes were Nucor’s single biggest cost-all of Nucor’s steel mills uesd electric arc furnaces to make steel products from recycled scrap steel, scrap iron, pig iron, hot briquetted iron (HBI), and direct reduced iron (DRI). On acerage, it took approximately 1.1 tons of scrap and scrap substitutes to produce a ton of steel-the proportions averaged about 70 percent scrap steel and 30 percent scrap substitutes. Nucor was the biggest user of scrap metal in North America, and it also purchased millions of tons of pig iron, HBI, DRI, and other iron products annually-top-quality scrap substitutes
ware especially critical in marking premium grades of sheet steel, steel plate, and special bar quality at various Nucor mills. Scrap prices were driven by market demand-supply conditions and could fluctuate significantly (see Exhibit 6).