CONF: Divided opinion on the EAF expansion in China
“Rushing into EAF capacity expansion now, just to raise the scrap utilization because it is eco-friendlier, may not be a good idea,” said Wang Tianyi, director of the exports committee of the Chinese Society for Metals, at the conference. “Personally, I feel that EAFs should co-exist with blast furnaces for a few decades to ensure a seamless transition and evolution.”
A few pressing issues remain with EAF steelmaking in China that need to be attended to, Wang pointed out, among which are the lack of pricing competitiveness against BF steelmakers, with steel scrap being Yuan 400-500/tonne ($59.3-74.2/t) more expensive then molten iron. Secondly, power supply to EAFs is an issue, he said, and thirdly, scrap availability and quality.
“The existing EAF steel mills can’t even run at their full capacity because steel scrap is much more expensive, so they (the electric furnace makers) have to add hot metal to their furnaces, so what is the point of adding more EAF capacity to the steel industry?” he wondered.
A conference attendee from Beijing also felt there was little need to rush into EAF steel capacity expansion.
“In general, the central government is encouraging EAFs as they are eco-friendly and more energy efficient,” he remarked. “But Beijing is also aware of the competitiveness issue, so you can see that the central government has not been actively promoting the old BF-for-new EAF capacity swaps.”
However, Zhao Xizi, honorary chairman of China Chamber of Commerce for Metallurgical Enterprises, offered a counterview when addressing the conference on Thursday, arguing that now is a good time for China to accelerate EAF capacity expansion as the country currently enjoys abundant scrap availability.
Domestic steel scrap supplies are rather abundant with the supply having exceeded 200 million tonnes/year as of 2018, Zhao noted, thanks to the nationwide crackdown on 140 million t/y of illegal induction furnace capacity since the second half year in 2017. “I think China’s scrap availability may surpass 300 million t/y by 2030,” he added.
Moreover, using ferrous scrap instead of natural resources will be eco-friendly and can help to significantly cut carbon emissions, paving the way for China’s steel industry to see high-quality development, Zhao observed.
He shared his great confidence on China’s steel scrap market potential and urged scrap market players to pay close attention to developments in the following months in both quantity and quality.
Meanwhile, China’s EAF steel mills have been operating at a far lower capacity utilization rate of about 67% as against the over 80% rate among BF steel mills, according to Mysteel’s data.
For the first quarter of 2019, China’s crude steel grew 9.9% on year to 231 million tonnes, while the EAF-produced steel contributed 9.6% of the total, being 0.2 percentage point lower than the 2018 average, according to China Association of Metalscrap Utilization statistics.
Written by Hongmei Li, and Rebecca Zhu, rebeccazhu@mysteel.net.cn
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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