Posted on 06 Aug 2024
Morning Brief: Global crude steel production is estimated to grow by around 4% through to 2030 from a level of 1.89 billion tonnes (bnt) in 2023 to around 1.97 bnt in 2030, as per BigMint data.
Interestingly, the share of the primary blast furnace-basic oxygen furnace (BF-BOF) route in global steel production is projected to shrink to 60% in 2030 from 71% in 2023, as per data, while the share of the electric arc furnace (EAF) in steel production may reach around 40% from 29% in 2023.
According to this estimate, EAF-based steel production worldwide may rise to a level of 788-790 mnt by 2030 from around 550 mnt in 2023. By the same token, the share of the BF-BOF route is likely to fall around 12% by 2030, with production expected to drop to 1.18 bnt from 1.34 bnt in 2023.
Region-wise rise in EAF penetration
BigMint data shows that the sharpest growth in EAF-based steelmaking is likely to happen in China. The share of the EAF route in China is expected to increase to 22% in 2030 from just 10% at present. This is largely in alignment with the country's carbon peaking and neutrality goals, with the government targeting 15% of EAF-based capacity by end-2025 and over 20% by 2028-2030. For the first time in history, China did not add any BF-BOF-based capacity in H1CY'24 - a sure sign of things to come.
It is expected that in the EU the share of EAF will rise to around 57% from 45% in 2023 given the widespread shift towards clean technologies as part of the EU Green Deal and 2050 net-zero target. The shift to EAF is already quite evident with Tata Steel in the UK and the Netherlands, ArcelorMittal in Spain (1.1 mnt), France, Belgium and Germany, the Liberty Group in the UK, Galati in Romania (4 mnt), Acciaierie d'Italia in Italy, and H2 Green Steel in Sweden (2.5 mnt) - all of which are either underway or in the planning stage.
In Japan and South Korea the reliance on the BF-BOF route is expected to fall. In Japan, major producers such as JFE Steel, Kobe Steel, etc. have all announced EAF-based investments. In South Korea, POSCO has begun construction of a 2.5 mnt/year EAF in the company's Gwangyang steelworks, while Hyundai Steel is set to reduce BF-based production through a major overall of EAF facilities. Daehan Steel Co., Ltd is planning a 1 mnt/year EAF by 2025.
Reversing the trend
However, India will swim against the tide when it comes to EAF. Practically all major Indian integrated steel producers have pumped considerable investments into BF-BOF facilities and production from this route is expected to have a share of roughly 56% of the country's total expected crude steel output of around 210 mnt in 2030. The share of EAF-IF will slip to 44% from 56% currently although total production from this route will increase to over 92 mnt in 2030, as per data, from around 78 mnt in 2030.
In Southeast Asia, especially in the ASEAN countries, and also other Asian countries a similar trend is expected to unfold, with BF-BOF share in steelmaking projected to reach 58% in 2030 from 49% currently. Major BF-BOF investments either planned or underway in the region are by Krakatau POSCO in Indonesia (3 mnt), China's Baowu Group in Cambodia (3.1 mnt), Sarawak and Lion Group in Malaysia (11.6 mnt), Formosa Group in Vietnam (14 mnt), Panhua Group in the Philippines (10 mnt) and Kunming Group in Myanmar (4 mnt).
Outlook: Switch to EAF & challenges
Undoubtedly, the increasing shift to EAF-based production globally will be reflective of the industry's efforts to effect a sustainable transformation. According to the World Steel Association (WSA), the emissions intensity of the primary BF-BOF route of steelmaking globally is 2.33 tCO2/tcs (tonne of crude steel), while scrap-based EAF steel production has a far lower intensity of 0.68 tCO2/tcs. The DRI-EAF route has an emissions intensity of 1.37 tCO2/tcs.
However, there are many challenges involved in the low-carbon transition of the steel industry which will necessitate a shift from the emissions-intensive BF-BOF route to cleaner methods of production. Below are some of these challenges which are correlated with uneven economic development patterns seen globally and the uneven growth of EAF-based steel production in different parts of the world:
While the initial investment required to replace steel plant equipment may be similar across countries, access to raw materials and energy is different, with prices varying from country to country. Indeed, companies considering a shift from BF-BOF to EAF are worried over the growing need for energy and domestic scrap steel availability, along with the right public policy orientation.
Source:BigMint
