Chinese mills eye DRI usage in steelmaking to lower carbon emissions

Since the middle of this year, leading Chinese steel group Hebei Iron and Steel Group (HBIS) has been supplying its ultra-low carbon emission and low-carbon automotive steel to the Shenyang plant of German automaker BMW in northeast China's Liaoning province. The sheet, developed and produced by HBIS group member Tangshan Iron and Steel, uses direct reduced iron (DRI) produced by what HBIS describes as the world's first oxygen rich/full hydrogen gas-based DRI plant whose carbon emissions are 70% lower than from a blast furnace of the same capacity.

BMW's Shenyang plant, which has annual capacity of 830,000 vehicles, is HBIS's first customer for its 'green' low-carbon steel, though clearly the Chinese mill - like many of its counterparts - will be keen to expand its push into DRI further as more steel customers embrace a low carbon future.

Global production of DRI has been growing steadily during the past decade and has gradually taken up a larger proportion of pig iron output, with its relatively low-carbon production process attracting more attention from steelmakers worldwide, Mysteel Global learned.

During 2022, DRI production globally totaled around 124.9 million tonnes, increasing by some 4.7% from the previous year, according to World Steel Association (WSA) statistics. During January-September this year, output reached 87.7 million tonnes, 6.5% higher on year, WSA data showed.

"High-quality DRI can replace steel scrap as a steelmaking feed material in electric-arc-furnace (EAF)," a market analyst based in Shanghai said. "Carbon emissions from DRI-EAF process are at least 40% lower than those from the traditional integrated steelmaking process," she added.

Though natural gas is the most common reducing agent in DRI production, countries with developed coking industries such as China harness coke oven gas (COG) to reduce iron, as the hydrogen-containing COG is more economical for domestic producers.

"Global steelmakers are also working hard to develop the rich/full hydrogen gas-based reduction technologies, aiming to go a step further in reducing carbon emissions from DRI production," the market analyst said. Tangshan's hydrogen metallurgy demonstration project reportedly has a capacity of 1.2 million tonnes/year.

In China, the HBIS group is not the only steelmaker with DRI ambitions. Baosteel Zhanjiang lron & Steel Co., a subsidiary of China's largest steelmaker Baowu and located in South China's Guangdong province, is building a hydrogen gas-based DRI facility in Guangdong's Zhanjiang city, Mysteel Global learned.

The project is scheduled to start heat load tests by the end of this year, and is predicted to be able to reduce carbon dioxide emissions by more than 500,000 t/y compared with a blast furnace of the same capacity, according to Baowu's official website.

With "green development" becoming a prominent theme in the global steelmaking industry, DRI production is expected to keep expanding worldwide, the market analyst believed. According to Mysteel's tracking, in 2022, a total of 20 million tonnes/year of gas-based DRI production capacity is under construction across the world, which will be gradually put into production in coming years.

Written by Anthea Shi, shihui@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.