Factors Affecting the Development of Electric Arc Furnace for Plain Carbon Steel

Factors Affecting the Development of Electric Arc Furnace for Plain Carbon Steel

The factors determining the development of plain carbon steel EAF (electric arc furnace) are summarized as follows.  

1. Scrap steel price

At present, the cost of converter steel in China is lower than that of EAF steel, and the price of scrap steel in China is higher than that of molten iron. The cost of EAF steel mainly consists of scrap steel, electricity charge and electrode charge. Detailed specification and performance of graphite electrode for EAF steelmaking. Therefore, the high scrap price is the main reason for the low market competitiveness of China's EAF production of plain carbon steel. As shown in Figure 1, in 2016, scrap steel was 1200~1400 yuan/ton, and molten iron was 2000 yuan/ton. The EAF steel production cost was much lower than that of converter steel, and EAF production process of plain carbon steel was competitive. American scrap steel price is lower than molten iron price, and the electricity charge is relatively low, therefore the EAF steel plant in the United States is more competitive than the converter steel plant. Nucor Corporation and Steel Dynamics have better earnings than United States Steel Corporation.  

The price of scrap steel determines the competitiveness of EAF process. After 2000,  scrap steel price was higher than molten iron price. China's EAF special steel plant built a blast furnace to produce molten iron and improve the ratio of molten iron into the furnace. From 2013 to 2016, China's EAF steel production accounted for only 5.5~6.6% of the national steel output. The scrap price is decisive for the EAF steelmaking process. Only when the scrap steel price is lower than the molten iron price, can the EAF steelmaking be competitive.

Figure 1 Price Changes of Molten Iron Scrap in China

2. Environmental requirements

The main reason for global warming is the increase of greenhouse gas emissions in recent years, which causes climate warming, affects social and economic activities, and causes disastrous weather. According to the statistics of the United Nations Intergovernmental Panel on Climate Change, the global annual carbon dioxide emission is 23.7 billion tons. The increase in the proportion of electric furnace steel in China can reduce the total carbon dioxide emission of China's steel industry. At present, the proportion of EAF steel in China is 10%. When EAF steel proportion reaches 30%, replacing 20% of the steel output (produced by blast furnace converter), the carbon dioxide emissions can be reduced by 438 million tons based on China's steel output of 996 million tons in 2019. At present, China is the largest steel producer in the world. The converter blast furnace process accounts for 90% of the total steel production, and the total carbon dioxide emissions are 1.97 billion tons. Therefore, from the perspective of national strategy, the EAF steelmaking process must gradually replace some blast furnace converter processes. The National Development and Reform Commission released the key points of iron and steel overcapacity reduction in 2020, proposing to transform some blast furnace converter processes into EAF steelmaking processes to promote the overall energy conservation and environmental protection level of the industry.  

In 2019, China's gross national product (GDP) was $1.434 billion, the population was 1.404 billion, and China's per capita GDP was close to $10,000. As China's economy entered the stage of high-quality development and the steel industry entered the process of transformation and upgrading and structural optimization, green steelmaking and intelligent manufacturing were the directions of the steel industry. EAF steelmaking was one of the effective measures to solve environmental problems.  

3. Electricity and electrode costs

China's industrial electricity cost is 0.68 yuan /kWh, and the electrode cost is currently 50~70 yuan/kg electrode. According to the electricity consumption of 400kWh per ton of steel and electrode consumption of 1kg per ton of steel, the cost of electricity and electrode is 320~350 yuan per ton of steel. Controlling electric charge and electrode cost is also a factor for further development of electric furnace.

4. Countermeasures for increasing the proportion of EAF steel

In the process of increasing the proportion of EAF steel in China, Chinese steel enterprises will face some problems, such as product problems, equipment manufacturing, scrap sources, technology learning and many other follow-up issues. For the follow-up report and analysis on the EAF steel market, please contact us.