Steel Rebar Plant Financial Model

Description

A fully integrated financial model for a scrap-based Electric Arc Furnace rebar plant, covering the entire production chain from scrap yard to finished rebar. The model is built for monthly granularity and captures the real operational dynamics of a melt shop with continuous billet casting and a high-speed rolling mill.

The melt shop section models variable metallics yield based on scrap mix quality, dressing recovery, and metallic losses. It dynamically calculates liquid steel output, billet casting yield (including tundish skull and cutting losses), and internal billet movements. The rolling mill block adds further yield loss for cobbles, grade changes, and size-dependent shearing, ensuring that plant throughput is not overstated.

Cost modeling is detailed down to individual operational drivers: EAF electrical and chemical energy per heat, electrode consumption, refractory wear, and alloy additions with grade-specific recovery rates. By-product credits from slag and mill scale are accounted for, and fixed costs are modeled with step changes for capacity utilisation levels. Scrap procurement considers multiple grades with price differentials and inventory dynamics.

Revenue is built from the product mix (diameter, grade) with a flexible price book. Working capital is driven by inventory days (raw materials, billets, finished goods), receivables, and payables. A full debt schedule with senior debt sculpting, multiple tranches, and grace periods completes the financing picture. The output includes a comprehensive set of KPIs: unlevered/levered IRR, NPV, payback, DSCR, and production-based unit costs.

Modeling specifics

• Dynamic scrap mix optimization with up to six scrap grades, each with distinct yield, density, and price.
• Metallics yield calculation that adjusts liquid steel output based on scrap quality and charging practice, preventing yield overestimation.
• EAF energy model that simulates electrical and chemical energy consumption as a function of scrap mix, tap-to-tap time, and hot heel practice.
• Electrode and refractory consumption modeled per heat, linked to EAF tap count and ladle furnace treatment time.
• Alloy addition module with grade-specific recipes and recovery rates (e.g., FeSi, FeMn, SiMn), accounting for residual elements from scrap.
• Continuous billet caster modeled with strand count, casting speed, and scheduling efficiency, producing yield losses for tundish skulls and cutting.
• Rebar rolling mill with diameter-specific yield cascade, cobble allowance, and groove change downtime, ensuring throughput reflects true product mix.
• By-product credits from sale of EAF slag and mill scale, with volume linked to steel production and scrap quality.
• Step-function fixed cost treatment for labor, maintenance, and overhead as production transitions between shift patterns or capacity thresholds.
• Flexible debt module with multiple tranches, interest-only periods, and sculpted repayments based on cash flow available for debt service.

What's included in the base version

• Integrated monthly production plan: melt shop, billet caster, rolling mill, and product mix scheduler
• Scrap and raw material procurement hub with inventory and price management
• Melt shop cost model: electricity, electrodes, refractories, lances, oxygen, lime, and direct labor
• Rolling mill cost model: natural gas, rolls, guides, re-heating furnace energy, and direct labor
• Alloy cost module with fixed recipes and recovery rates per grade
• By-product credit lines for slag and mill scale
• Revenue model with size/grade price book and annual escalation
• Capex schedule with category-level depreciation (straight-line and declining balance options)
• Debt drawdowns, interest calculation, and repayment per tranche, including grace periods
• Monthly financial statements: P&L, cash flow, balance sheet, and working capital schedule
• Key investment metrics: unlevered/levered IRR, NPV, payback period, DSCR, LLCR
• Executive dashboard with unit cost breakdown per ton of billet and rebar
• Integrated checks and error-tracing page for model integrity

Common modeling mistakes

• Ignoring the impact of scrap quality on metallics yield – liquid steel output is overstated by 5–15%, leading to unrealistic capacity utilization.
• Assuming constant electrode and refractory consumption – melt shop opex is underestimated by 10–20%, especially when using lower-grade scrap that requires longer arcing.
• Not accounting for alloy loss during melting and ladle treatment – addition rates appear sufficient, but actual grade compliance is missed, causing off-spec production and hidden rework costs.
• Fixing rolling yield at 98% regardless of product mix – for small-diameter rebar (8–12 mm), actual yield drops by up to 10% due to cobbles and front-end trimming, distorting delivered tonnage.
• Linear scaling of fixed conversion costs without step changes – profitability during ramp‑up is misrepresented; unit costs appear lower than reality when running below a shift threshold.