MYSTEEL: China EAF production to grow further in '24

Production among Chinese electric-arc-furnace (EAF) steelmakers is expected to rise in 2024 compared with last year as the recovery in mini-mill profit margins and the provision of central government policy support will both encourage domestic mills to extend operating times, according to Mysteel's annual report on the sector.

During 2023, capacity use among the 87 independent EAF mills under Mysteel's regular survey averaged 50.6%, higher by a small 2.64 percentage points on year. Most mills enthusiastically lifted their production during October-November last year when they could enjoy healthy profits, Mysteel Global noted.

EAF production

These mills may see their margins stay positive for a longer period this year as their production costs are likely to ease with the loosening availability of steel scrap, according to Mysteel's report. "Related authorities across the country are expected to take new measures to increase scrap supply to EAF mills as a part of their efforts to boost domestic EAF production," it explained.

Under Beijing's directive to reach carbon emission peak by 2030 and carbon neutrality by 2060, Chinese regulators last year formulated multiple plans to promote steel scrap utilization and accelerate EAF development among domestic steelmakers, Mysteel Global learned.

Last December, the State Council released an action plan for the improvement on air quality, which proposed that EAF-route production should account for 15% of the country's total steel output by 2025, as reported, while the present proportion is around 10%.

"To achieve the goal set by the central government, domestic steelmakers are bound to speed up their efforts to replace blast furnaces (BF) with EAFs," the report predicts.

In fact, according to some domestic mills' capacity swap plans released during the past two years, eight steelmaking companies will put new EAFs into operation this year whose total production capacity is around 9.5 million tonnes/year.

The expansion of EAF production will also lead domestic steel scrap consumption to nudge up this year, according to the report.

During 2023, total steel scrap consumption among Chinese BF and EAF steelmakers was around 248.6 million tonnes, generally unchanged from the previous year, according to Mysteel's assessment.

Written by Anthea Shi, shihui@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com