Mr. Li Xinchuang, VP of China Iron and Steel Association (CISA) and Secretary of the party committee of China Metallurgical Industry Planning and Research Institute, has recently shared his view on EAF developments.
According to him, EAF has embraced notable opportunities for its development in the respects of policy, availability and environment protections.
1. The production capacity swapping policy encourages the EAF development. At the end of 2017,the policy issued by MIIT(ministry of industry and info technology) allowed mills replacing BOF with EAF to have 1:1 swapping in capacity, which is an incentive compared with the 1.25:1 swapping ratio for mills in environment vulnerable regions. This policy helped boost EAF development and contribute to optimize structural adjustment in steel industry. Also, another policy issued in Aug’19 by MIIT proposed to have at least 30% of the total newly constructed swapping capacity to be EAF in each province by the end of 14thFive Year plan.
2. Xinchuang said that with the ongoing process of industrialization and urbanization, scrap recycling will see rapid growth. Along with this, the continuous regulation of the industry coupled with improved tax policy, steel companies will get easy access to scraps at more affordable rates, laying solid ground for EAF development.
3. EAF is supported by environment protection policy. At present the 2+26 cities are implementing production limit based on BF capacity calculation and 100% scrap dependent EAF mills are barely affected. In addition, the emission from BF-BOF is obviously more than that from scrap centered EAF process. With the inclusion of steel industry into carbon emission right trading markets route will enjoy more development opportunities.
He also pointed out that at present EAF cost is about RMB300/MT higher than long route due to uneven economic development in different regions resulting to varying access to scraps at different costs and the relatively high costs in power and closely co-related with GE price fluctuations.
Moreover, process is also facing constraint in steel variety upgrading. Hence, the development of EAF should be at regulate pace and guide it in order to grow. The co-existence of long route and short route is still the mainstay in trend.
In his opinion, EAF development is a must path follow the gradually ample supply of scraps. The development of China’s EAF is likely to go through three stages:
1. Starting stage featured with rebound from the bottom, where EAF ratio will reach 15-20%;
2. Rapid developing stage: the EAF ratio will increase from 20% to 30%
3. Slowed down and balanced stage: EAF route will gradually reach new balancing state after getting used to factors like market, scrap availability,environment, technology and power rates etc.
It is expected that EAF development will be at stage one reaching 15-20% during the 14th Five Year plan.
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