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Kallanish Kallanish

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October, 27th 2020

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SEP 23
12:23

EAF outlook better than BF, say Irepas traders

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The outlook is brighter for electric arc furnace mills than for their blast furnace-based counterparts not least because of growing environmental pressure, according to International Rebar Exporters and Producers Association (Irepas) traders’ committee members.

“I would rather be someone using an EAF as the scrap supply pool is certainly bigger than the iron ore miner oligopoly,” traders committee member Wilhelm Alff said during Irepas’ virtual meeting this week attended by Kallanish. EAFs therefore have more buying power.

Moreover, the environmental costs of steelmaking are on the increase and it is becoming “…more and more fashionable” to convert scrap into new steel products, Alff observed. This process will be supported by governments rather than making investments into new iron ore mines.

“At the same time, China is the biggest iron ore consumer and one to suffer most from higher prices,” Alff continued. But it is building up a huge EAF capacity in expectation of what is to come, he added.

Traders committee member F.D. Baysal meanwhile said there is “…considerable pressure on iron ore producers” to be more ecologically friendly. Even with this pressure, iron ore prices will come down by maybe -20%, thus pushing down scrap prices -10%, he added.