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China has accelerated the pace of steel capacity development based on electric arc furnaces in 2022 to mark the growing efforts of the steel industry, which is steadily aligning with the country’s high decarbonisation targets.
The country has approved the construction of 16 new electric arc furnaces with a total capacity of 13.67 million tonnes per year in the January-April period.
China is increasingly pushing for carbon neutral targets that would require energy-intensive industries such as steel to draw up plans to keep the sector closer to national targets.
The country has launched several plans and programmes in recent months as it charts a course towards carbon neutrality by 2060. Long before this goal is reached, China aims to peak carbon emissions by 2030.
EAFs are generally considered to be the closest of the steel industry to producing green steel. They mainly consume ferrous scrap and have much lower carbon emissions than steel production through the blast furnace and converter.
As approvals for the construction of EAFs are conditional on the replacement of ageing conventional capacity, the steel industry’s move would also help contain China’s overall crude steel capacity.
The 16 new approved EAFs will be commissioned mainly between the end of 2022 and 2024 and are based on the closure of 14.72 million tonnes per year of old crude steel production facilities that are still in operation. This would result in a net decrease of 1.05 million mt/year in China’s total crude steel production capacity.
Of the 14.72 million mt/year of crude steel capacity replaced, 8.72 million mt/year will come from the converters. The new EAFs will be located in 10 provinces, with Hebei recording the highest number of EAF approvals to date in 2022, with a total capacity of 4.28 million mt/year.
China may soon start imposing carbon taxes on the steel industry, which would increase production costs at blast furnaces and converters and give a further boost to EAF development.
China aims to increase the share of EAF steel in total crude steel production to 15%-20% by 2025.
Industry sources say 50% of China’s total crude steel capacity will come from EAFs, while total crude steel production will hover around 900 million-1 billion tonnes per year in 2022-2025, before settling at a lower level.
In 2021, China approved the construction of 43 new EAFs with a total capacity of 29.33 million tonnes per year. EAF-based capacity in 2021 increased significantly compared to 2020, when about 10 million mt/year of new EAF capacity had received approval for construction.
