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Kallanish Kallanish

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July, 11th 2020

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JUN 05
04:43

China faces difficulties in developing EAF steelmaking

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The director of the Iron & Steel department of China’s Ministry of Industry and Information Technology, Xu Wenli, says that he wants to create better conditions for electric arc furnace development in China. He was speaking during the second China EAF Steelmaking Scientific Development Forum, monitored by Kallanish.

Although China is the world's largest steelmaker, it is dominated by blast furnaces and converters. EAF production has been below 10% of total steelmaking capacity up to 2018, far behind the global average of 25.2%.

Steel produced down the EAF route in China in 2018 was almost 90 million tonnes. Total scrap use in all steelmaking was 220mt. But with integrated steelmakers consuming 160mt, only 60mt was used by EAFs. If the percentage of EAF steel output increases, scrap will be in short supply therefore in the near term.

Costs are also restricting the development of scrap steelmaking. The cost of EAF steel is higher by around CNY 400-500/tonne ($58-72/t) compared to that from converters. One reason is the high price of scrap, with raw materials making up around 75% of EAF costs. Benchmark scrap prices of around CNY 1,600/t would leave EAFs competitive, but current prices are around CNY 2,300-2,400/t. Another reason is the high cost of electricity, which comprises 6-15% of the total cost.

Although facing such difficulties, the ministry still hopes to support the development of EAF production through policies, such as emphasising the ban of newly-added capacity. Xu Wenli hopes new capacity projects will adjust capacity towards EAF steelmaking. He also believes that by upgrading industrial technology, the steel industry could move away from the twin threat of high pollution and high energy consumption.