Carbon compulsions may see rise in EAF share
China’s ferrous scrap generation could touch 340 million tonnes (mn t) by CY’25 and more than 400 mn t by CY’30, an increase of more than 1.5 times compared to CY’20, as per the State-run think-thank, Chinese National Institute of Metallurgy. The share of ferrous scrap used in the country’s crude steel production is expected to rise to 30% by CY’25.
The share of electric arc furnaces (EAFs) is a mere 10.4% because of high manufacturing costs and smelting challenges. But there is need to grow this share. Further, as China’s steel industry advances, it is expected that the share of EAFs will rise to 15-20%.
Ferrous scrap share
Substitution of iron ore with ferrous scrap is expected to increase gradually. Li Xinchuan, a researcher and director with the think-tank, emphasised that the Chinese steel industry should increase the use of ferrous scrap to reduce carbon emissions and dependence on iron ore. He explained that by increasing one tonne of ferrous scrap, iron ore concentrate can be reduced by 1.7 tonne (t), iron ore by 4.3 t, coke by 0.4 t and coal, by 1.00 t.
In CY’20, China’s ferrous scrap supply was 260 mn t.
The country’s ferrous scrap consumption has continued to increase despite the Covid pandemic. Consequently, in CY’20, scrap consumption was 230 mn t, 6.5% higher than in the previous year. Consumption over Jan-Sept’21 touched 200 mn t, an increase of 31.2% compared to the corresponding period last year (CPLY). It is expected that ferrous scrap demand will also increase as supply expands over the next 5-15 years.
Since 2018, the Chinese government has restricted exports and imports of ferrous scrap. But, imports were re-licenced from the beginning of this year, but all materials will have to follow the national recycled steel benchmarks.
However, imports have risen significantly while exports have remained low. Over Jan-Sept’21, imports amounted to 4.91 lakh tonnes, over 17 times higher compared to CPLY, while exports were at a mere 2,690.50 tonnes, 6.5 times higher compared to CPLY.
Need to grow EAF share
There is need for steady development of the EAF segment which uses scrap as the main raw material.
As decarbonisaton becomes a trend worldwide, interest in EAF is growing because of its high energy saving and carbon emission reduction characteristics compared to the blast furnace method of steel-making.
The researcher said that carbon emissions from China’s steel industry account for more than 60% of the global steel industry’s carbon emissions and 15% of China’s total carbon emissions. In such a scenario, reaching peak carbon emissions and carbon neutrality is expected to be the policy direction that will have the greatest impact on the Chinese steel industry over the next 10 years.
However, China’s EAFs account for only 10.4% of crude steel production. This is low, considering that the EAF share in USA is 70%, and the global average is 30%, and, excluding China, 50%.
The researcher said the EAF costs RMB 200-500 per tonne ($31-78/t) more compared to the BF convertor in China. Also, the smelting cycle of the BF converter is 32 minutes compared to the EAF’s 58-120 minutes. Therefore, the Chinese steel industry has been rather passive about EAF implementation.
In developed geographies like USA, EU, and Japan, and where annual crude steel production exceeds 100 mn t, it has taken anywhere between 10-30 years to increase the share of EAF steel-making from 10% to 20% and to eventually around 30%. He added China would take similar time too.
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