1. What is EAF steelmaking? Why is it called the core of "green steel"?
Electric furnace steelmaking usually refers to "short process" steelmaking, the core of which is to use scrap steel as the main raw material, melt it by high-power electric arc furnace, and then smelt it into new molten steel.
Compared with the traditional "long process" of blast furnace-converter (using iron ore and coke as raw materials), the short process of electric furnace has overwhelming advantages in environmental protection:
- Energy consumption and carbon emissions are greatly reduced: for producing 1 ton of steel, the energy consumption of electric furnace process is only 1/3 of that of long process, and carbon emissions can be reduced by more than 75%. This is because the most energy-consuming and carbon-intensive link of blast furnace ironmaking has been skipped.
- Recycling of resources: The raw materials for electric furnace steelmaking are mainly social depreciated scrap steel, which is a typical "urban mine" mining, greatly reducing the dependence on primary iron ore and the environmental damage caused by mining.
- Less pollutant emission: avoiding heavy pollution processes such as sintering and coking, and greatly reducing the emission of sulfur oxides, nitrogen oxides and dust.
2. Reshaping the Market Structure: Three Potential Effects of EAF Steelmaking
2.1 For steel prices: the cost structure changes, and the volatility may increase.
The main cost of EAF steelmaking comes from scrap steel and electricity. This means:
- Scrap steel becomes "new crude oil": the price of scrap steel will become one of the decisive factors affecting the cost of steel. With the improvement of electric furnace capacity, the resource attribute and economic value of scrap steel will become increasingly prominent, and its price fluctuation will be more directly transmitted to steel products.
- Increased sensitivity of electricity price: In areas where the electricity price of renewable energy continues to decline, the cost competitiveness of electric furnace steel will become stronger and stronger. In the future, steel prices may show a stronger correlation with the electricity market.
2.2 For the supply chain: scrap recycling system becomes the strategic core.
The traditional steel supply chain revolves around "mine-steel plant", while the green steel supply chain will turn to "scrap recycling-steel plant".
- Intensified upstream integration: In order to ensure the supply of raw materials, large steel enterprises will actively integrate backward and control the scrap recycling, processing and distribution network through self-construction or acquisition. A stable and high-quality source of scrap steel will become the core competitiveness.
- The value of "urban mines" is prominent: the amount of scrap steel accumulated in industrialized countries is huge, and the localization of scrap steel resources will reduce the dependence on imported iron ore and enhance the autonomy of regional steel supply.
2.3 Industrial layout: tend to market and energy, usher in "redistribution"
Blast furnace steelmaking must be located in coastal areas or areas with large ports to facilitate iron ore transportation. While electric furnace steelmaking is more flexible:
- Close to the consumer market: the electric furnace factory can be built near the main steel consumption places, because the waste steel resources mainly come from cities and industrial areas. This can significantly reduce logistics costs and form a localization cycle of "scrap steel-short-process steel mill-manufacturing industry".
- Trend to green energy depression: Electric furnace steel mills will give priority to areas with abundant green electricity (wind power, photovoltaic, hydropower) and low electricity prices. In the future, there may be a number of "zero carbon" or "low carbon" steel production bases relying on renewable energy, and their products (environmental protection steel) will enjoy huge market premium and competitiveness.
3.Future Outlook and Challenges
Although the prospect is bright, the popularization of electric furnace steelmaking still faces challenges:
- Bottleneck of scrap steel resources: globally, the supply of high-quality and sufficient scrap steel still needs time to accumulate.
- Power grid load: Large-scale electric furnace production puts forward extremely high requirements for the stability and capacity of the local power grid.
- Technical upgrading: continuous investment is needed to improve the processing capacity of low-quality scrap steel and steel quality.
However, the trend is irreversible. Driven by global carbon tax, green finance and "carbon neutrality" policy, green steel represented by electric furnace steelmaking is no longer an option, but the only way for survival and development. It is pushing the iron and steel industry from an old model of "linear consumption" to a new era of "recycling", which will profoundly affect every link from raw materials to end products. Whoever can seize the opportunity in the green transformation will win the commanding heights of the steel market in the future.
