It is no secret that recent worldwide refractories demand
has been shrinking, due in part to deteriorating consumption of
steel and cement in mature markets like Europe and the US,
while emerging growth centres, such as China and South America,
have come off the boil.
The increasing strength of the US dollar has also had a
ripple effect on other currencies and made US imports more
expensive for overseas buyers.
As a result, suppliers of refractory products are working
tirelessly to keep costs down and offer customers more in order
to maintain market share.
In this fiercely competitive market, United Refractories Co.
(URC) has managed to keep its year-on-year (y-o-y) sales
largely stable, through a combination of customisation of its
products to end user needs and growing its relationships with
local and international companies via licencing and
With its headquarters in Pittsburgh, US, the privately-owned
business runs a manufacturing facility in Brookville, Indiana,
where it manufactures products which are then sold domestically
or exported to customers all over the world, including in
Canada, Mexico, South America, Europe and China.
While the strengthening of the dollar may have hindered
sales for some US refractories manufacturers, URC has
sidestepped this barrier by having qualified international
licensees manufacture its products in several global locations.
This representation in over 20 countries in four continents
allows it to maintain market share, even when demand slows.
"Because the dollar is so strong, we can no longer export
many products. Fortunately we have licence agreements
throughout the world where those products are now being made,"
URC’s CEO, Doug Niesen, told
URC manufactures refractory products at
its plant in Brookville,
Indiana. (Source: URC)
To help sure up its demand profile, URC targets a number of
industries, rather than focusing on one sector. The
company’s vice president, customer and product
development, Jim Caprio, estimates that around 45% of
URC’s business is dedicated to foundries, 25%
focuses on the steel sector, while the remaining 30% falls
under contractors, accounting for end uses such as power,
cement and petroleum plants and incinerators.
Within the foundry industry, the company’s
sales are split between supplying steel melting furnaces and
iron melting furnaces. One of the niche foundry products URC
focuses on is dry vibratables.
"The world market is very interested in our products because
of our dry vibratables. They’re used in coreless
induction furnaces and are being installed all over the world
to produce iron and steel. They used to be mostly used in
foundries, but that type of furnace is now being used in mini
steel mills, especially in places like India and China, and
that’s why the world is showing interest," Caprio
told IM. "Only a handful of companies around
the world have this kind of technology and we’re
one of those companies."
URC supplies steel companies in an indirect way, offering
pre-cast pieces or products for companies to make their own
pre-cast shapes, which Caprio says is another niche area URC
A further speciality offering from URC is its low cement
technology, which, according to Caprio, is seeing an increase
in popularity among contractors in various industries.
"The kinds of products that we specialise in are low cement
shotcretes, gun mixes and pumpables – as one of our
focus areas is low cement technology," he explains, adding that
this specialism is another enticement for international
While low cement technology may not be a new customer
requirement, URC is also seeing growing interest in cement-free
technology, which Caprio says offers cost and performance
advantages in certain applications.
Although URC cement-free products are becoming more popular
in certain applications because of their special properties
according to Caprio, there is room for both low cement and the
cement-free products, because cost effectiveness requirements
vary between customers.
"We customise [these products] with aggregates like silicon
carbide, or different materials that might help with the
performance, whether it’s abrasion resistance,
thermal shock resistances or other properties," Niesen
In total, the company produces around 30,000 tpa
refractories, including those supplied via its licence holders.
However, rather than concocting its own recipes and selling
these off the shelf, URC prefers to move with its
customers’ requirements, changing its offering
according to their needs.
Cupola melting furnaces tend to use large amounts of silicon
carbide products and carbon-type additives, "because these are
non-wetting to slag, and they help the performance of the
refractory," Niesen outlines. "But using a lot of silicon
carbide or a lot of carbon isn’t necessarily good,
because it may not be cost effective or it may not be as
strong, so the trick is in using the right amount."
URC offers around 150 products containing silicon carbide.
These are often customised for various applications to improve
performance and the company prides itself on its "URC4U"
offering, tailored to specific needs. As well as being ISO-9001
certified, URC says it tests every single batch to ensure the
product is exactly what the customer ordered.
The raw ingredients
The base components for around 50-60% of URC’s
mixes are similar to those offered by most refractories
producers; alumina-based or tabular, white or brown fused
alumina (WFA or BFA), bauxite or mullite grains.
"All refractory folks are using similar raw materials
– it’s just how you put them together,
that is the magic," Caprio told IM.
URC sources its raw materials from China, the US, South
America, Mexico or Europe, with sourcing dictated by
cost-effectiveness for the best quality. "The cost of a
refractory is usually dictated by the raw material costs, so
the prices of the raw materials are critical to what profit you
make," Caprio outlined.
In terms of raw material prices, URC has seen a softening in
bauxite and calcined alumina prices, while the costs of some
specific raw materials have seen an increase, according to the
company’s purchasing manager, Kimberly Sweder.
"There hasn’t so much been a softening of
WFA in the market, but there have been a lot of changes in the
supply chain, in terms of where producers are importing
feedstock. This has mixed up the market," Sweder told
Meanwhile, the rapid rise and fall of oil and gas prices and
the subsequent slowdown in drilling activity over the last two
years have had a knock-on effect in other industries, with
silicon carbide prices seeing a decline.
"The thing you have to remember is that most of our key raw
materials prices are controlled by other industries. For
example, fracking drives sand and alumina demand, while bauxite
is impacted by the aluminium industry. Fumed silica is
considered a waste product. But we’re never the
number one industry that controls raw material prices," Caprio
While a decline in raw materials prices may seem like a
cause for buyers to celebrate, according to Sweder, all this
means for URC is that the supply chain is finally starting to
balance out. The company made some small price increases in
January this year to cover costs, but refused to raise them
when raw materials prices were increasing, in order to maintain
its customer base and market share.
Within the foundry industry, URC
supplies products for steel
and iron melting furnaces.
"We took that hit and now the softening of raw material
prices means that the situation is finally stabilising for us
and prices are balancing out," Caprio added.
URC keeps up to date on the latest product and technology
developments in refractories through a network of global
"Through these relationships around the world and our
technology transfers, we always know what’s going
on. We have that global feel but we’re a
privately-owned company that has a personal relationship with
most of our customers," Caprio told IM.
URC’s model means it can assist smaller firms
that don’t necessarily have the scope of global
manufacturers, helping them to remain competitive despite their
size. "These are niche companies. They may just service foundry
or cement industries; they may need some technology which we
have, and since we have no intention of building a plant in
these places ourselves, the relationship is a win-win," Caprio
The technology that URC licences to companies –
including operators in China, Taiwan, Japan and India
– enables smaller firms to compete with global peers.
With international sales accounting for around 25-30% of
URC’s overall activity, this diversification
enables it to ride out downturns, when activity in one region
Despite bumps in the global economic recovery, Niesen told
IM that the company is confident in its
outlook, as URC has so far managed to keep sales at the same
pace as in 2014.
"We feel good about our approach because we’re
not just focused on North America. We have niches in these
other countries that are allowing us to expand," Niesen said.
"So even though China’s business is slow, we found
a good niche there and we’re expanding in
However, while flat sales are comforting during a downturn,
this isn’t enough for URC. The company is aiming,
through a focus on its base domestic foundry market, to expand
in new industrial business areas, such as cement and power, as
well as growing its international segment through transfer
technology and building relationships.
"Our goal for our partners is to help them to build and
improve, transfer our technology, and have them running and
profitable as quickly as possible. If we can’t do
that for them, why would they want to use our technology?"
URC is well aware of the potential pitfalls of licencing
technology in China, infamous for copycat products, but Niesen
argues that such concerns should not place a limit on
"We guard our technology, but fear can’t stop
us – it would be ridiculous to allow that, because
then you just stop yourself," Niesen said, adding that being
able to service and improve the technology is key to keeping it
Rare products in the industry, Caprio told
IM, are few and far between, so rather than
choosing to focus on purely developing technology that cannot
be replicated, URC is committed to becoming a knowledge source
to complement its product offering.
"20 or 30 years ago, plants used to have more refractory
experts on hand, but now they can’t afford that.
There aren’t a lot of refractory experts around
and the furnace jobs constantly turn over. So what
we’re trying to do is be the knowledge source to
Motivation to innovate
While the slowdown in the economy hasn’t left
URC completely untouched – the company admits that
sales have slowed in
the last month and, like everyone else, it is feeling the
strain of pricing pressures – slimming margins in the
refractories business are driving it to innovate.
"Our customers are demanding more – like our US
customers and international partners – they need us to
help them become more cost effective and more profitable,"
According to Niesen, an innovative approach
doesn’t necessarily hinge on new products, but
could refer to technology transfers as a solution to shipping
product around the world, instead producing it locally. It
could also mean a different approach to installing an existing
product, or even re-evaluating the supply chain.
"In a stable economy, customers ask for that. In an economy
that’s sluggish, they demand it. Because there is
so much pressure on them, the pressure comes back on us,"
Niesen adds: "It does make it exciting –
it makes us better and we’re excited about that.
We don’t welcome slow economies, however, we do
get much better because of them."