Influence of power limitation on electric furnace steelmaking plant

Due to the abnormal high temperature for many days, China has entered the peak of power consumption. Sichuan, Zhejiang, Anhui, Jiangsu and other provinces have successively introduced power limitation policies, which have an impact on industrial power consumption. According to the specific policies of each province, all industrial power users in Sichuan Province (including key security enterprises on the white list) will implement full production shutdown (except security load) and take high-temperature holidays to supply power to the public. The time is from 00:00 on August 15 to 24:00 on August 20, 2022, with the maximum intensity. Graphite electrode for electric arc furnace is committed to green, low-carbon, energy saving and environmental protection policies, and is increasingly praised.

East China mainly uses electricity in an orderly manner and requires industrial enterprises to stagger peak production. There is no large-scale shutdown phenomenon, however, if the high temperature weather continues, the possibility of full production shutdown is not ruled out. For the iron and steel industry, the electric furnace is the most affected link in the power limitation policy. Provinces with large short process capacity include Jiangsu (26 million tons), Guangdong (15 million tons), Hubei (14.5 million tons), Fujian (13.5 million tons), Shandong (14 million tons) and Sichuan (12.4 million tons).

At present, except Sichuan, several other provinces have not issued a clear comprehensive shutdown policy, mainly focusing on night shift peak production. According to the survey of the consulting organization, only a few short process steel plants in East China are closed as required, with little daily impact. For Jiangsu Province, which plays a very important role in short process production, according to last year's experience, it actively purchases power from other provinces and cooperates with other provinces to supply power. In addition, compared with last year, the power generation capacity of new energy has increased significantly.  Therefore, the power consumption intensity has decreased compared with last year, but it is mainly concentrated on ensuring the power consumption of people and important industries.

If the high temperature weather continues, the possibility of short process shutdown cannot be ruled out. Nanjing, Xuzhou and other places have started to alternate peak production and power consumption, and many enterprises have received the notice of power restriction. As a large power consumer, the electric furnace has low economic added value, and the capacity utilization rate is likely to be affected. Then, what is the situation in Sichuan and Anhui, which have relatively large power constraints? Sichuan electric furnace production capacity is about 12.4 million tons, accounting for about 6.4% of the national electric furnace production capacity. According to the calculation of relevant institutions, the total shutdown of Sichuan and Chongqing electric furnaces will affect the thread production of about 22,000 tons. In the first half of the month,Six electric furnace manufacturers in Anhui Province stopped production in the first half of this month, generally for 3-5 days. At present, part of the load has been restored, affecting 10,500 tons of construction materials per day.

The reason for this power restriction is that the abnormal high temperature increases the power load, and the drought in the Yangtze River Basin causes the hydropower generation and transmission capacity to be lower than the normal level. Therefore, the provinces with more power shortages are mainly concentrated in the provinces with small thermal power installed capacity, high temperature and large power load.

Last year, there were many factors limiting power. On the one hand, the power load of the manufacturing industry has increased significantly. At the same time, the policy requires "double control of energy consumption" and artificial power limitation. Therefore, last year's impact was even greater. The production reduction of Jiangsu, Guangdong and other large-scale electric furnace provinces is significantly larger than this year. In addition, the short process steel plant has large initial loss and low output. For example, before the power outage, Sichuan's capacity utilization rate was only 30% - 35%, so the production reduction caused by the power outage was not as large as last year. From the demand side, this year thread and hot coil demand are lower than the previous level.

In July, real estate construction decreased year-on-year, and new construction and completion scale expanded. Therefore, even if the supply side's production resumption speed slows down due to power constraints, the expectation of the contradiction between supply and demand in the peak season is not as good as last year. In general, in East China, especially in Jiangsu Province, the power restriction has little impact on the steel price when it does not need to be completely shut down. However, if the abnormal high temperature weather continues, the power shortage will not be alleviated, and the large-scale power outages and shutdown in East and South China will play an important role in promoting the steel price. Comprehensive analysis of steel market policy, learn more from us.