The induction furnace is a contraption for melting steel scrap or directly reduced iron, or a combination of both through the use of electricity in order to produce steel ingots of sizes smaller than those produced in the Blast Furnace. The induction furnace comes in at a fraction of costs of the Blast Furnace and depending upon the quality of inputs, it can produce standard grades of steel. India is perhaps the only country in the world where the induction furnace has been able to produce nearly half of its 100 million tonnes of mild steel. In this sense India has been able to tweak and also stabilize this route of steel making. To my mind, this is the crux of innovation in Indian steel. It is on the shoulders of the induction furnaces and the innovations that it entailed that India has moved from being the 8th largest steel maker in the middle of the 1990s to being the third largest steel making country in the world today.
The bad press against the induction furnace is that it it has limited refining capabilities and due to the chemistry that emerges in its bath, it cannot, with any conviction remove sulfur and phosphorous from the iron feed. When it uses scrap, it can do little but to reproduce the very same pre-melting properties of the input. This is perhaps the reason why the induction furnaces are limited in their product mix; producing only rebars for house construction. Despite such limitations, induction furnaces can achieve higher productivity than the Blast Furnaces due to the greater capacity to control the processes of melting.
The trials of the induction furnaces emanate neither from the raw materials nor from their emissions, neither from the process, which as mentioned above is well controlled, but from the changing consumer demand for steel mill products. It is not important to forecast volumes of steel demand but the value; the value of steel consists not more than 6 to 8% in residential construction but can go as high as 12 to 15% in construction of flyovers, bridges and airports. The latter needs heavier sections, clearly beyond the scope of the induction furnaces.
The induction furnace thrived and proliferated in India due to its economics; these were small and affordable investments by rerollers who moved backwards to ensure a supply of billets or pencil ingots. While many sponge iron producers move forward into the induction furnace industry, the induction furnace industry have used the cheaper sponge iron to heckle and bargain with scrap merchants. The induction furnace sector can single-handedly keep scrap prices at bay.
If the induction furnaces want to produce alloy steel then it has to redo its economics for its economics lie in its forward integration with rolling mills; alloy steel rolling mills are very different from the mild steel rolling.