China's EAF capacity likely to grow by 4 mn t in 2021

China's electric-arc-furnace (EAF) steelmaking capacity may be growing another 4.1 million tonnes/year by the end of 2021 to reach a total of 186 million t/y in the context of Beijing's commitment to peak carbon emission by 2030 and to realize carbon neutral by 2060 and the domestic steel industry's aim to reduce the dependence on imported iron ore, according to Mysteel's latest survey.

The net increase of 4.1 million t/y in EAF capacity is a result of 8.3 million t/y that is under construction while 4.2 million t/y that to be scrapped for this year, Mysteel illustrated in the latest survey results.

China's Ministry of Industry and Information Technology, the country's top governing body of the industrial sector including light and heavy, aims to increase steel output by EAFs to 20% of the country's total during the 14th Five-year Plan period over 2021-2025, and the Chinese steel mills, thus, have been inspired to add on new EAF capacities in the next few years.

In the past few years, China's EAF capacity has been on the steady rise with the country's greater conscience of eco-friendliness and Beijing's greater encouragement of EAF capacities by having a more lenient old-for-new capacity swap ratio, and the country's EAF capacity grew 8.8 million t/y on year to 170 million t/y. For 2020, the pace picked up with the net increase in the EAF capacity reached 12.2 million t/y, according to Mysteel's survey in the steel industry.

For 2022, 2.46 million t/y EAF capacity will be under construction while 350,000 t/y will be erased, Mysteel understood when collecting the information from the Chinese steel mills on the projects in the pipeline and by the end of 2022, the country's EAF capacity may be at 188 million t/y.

The gradual expansion in China's EAF steelmaking capacity has been music to scrap suppliers both in and out of China, especially after China has reopened the door to recycling iron and steel materials imports starting January 1 2021, and the drive will also in the long run help to significantly cut carbon emission in the steel industry, Mysteel Global understood from the market sources.

It is a common understanding in China's steel industry that steel scrap utilization will replace around 1.6 tonnes of iron ore, 350kg of coking coal and reduce carbon dioxide emission by 1.6 tonnes in per tonne of steelmaking, and both sintering and coking processed can be removed from the process too.

Other than environmental protection, higher scrap utilization will also relieve China's heavy reliance on iron ore, which will in line with Beijing's industrial development strategy.

By 2021, China's steel scrap supply may grow to 280 million tonnes from 220 million tonnes by 2019 and to 270-300 million tonnes by 2025, and possible scrap price declines on higher supplies will also facilitate the Chinese steelmakers to better manage their steelmaking production costs, enabling them to switch between blast furnaces and electric arc furnace for higher productivity and less pollution, as reported.

Written by Lindsey Liu, liulingxian@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.