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Shift from BF to EAF steelmaking to start in earnest 2025: Eurometal webinar

Highlights

Shift may come earlier if carbon prices rise substantially

Quality considerations will boost DRI usage

London — The shift from blast furnace-based to electric arc furnace-based steelmaking as part of the industry's decarbonization drive is challenging in the short term but may start in earnest around 2025, according to participants on a webinar hosted by European steel traders and stockholders' association Eurometal .

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From 2025 quite a few steelmakers will start looking at investing more in electric arc furnances, incentivized by higher carbon prices, Luke Peters, metallurgical coal analyst with research organization CRU, told the May 20 webinar.

Currently blast furnace-based production, using coal and iron ore, accounts for around 70% of steel production worldwide, with steel scrap-based EAF production accounting for around 30% and inching up.

High carbon prices will force steelmakers to take decisions as to whether they should invest in further relines of blast furnaces or adopt different, potentially less pollutant technologies that don't use coal, Peters said.

Companies will want to get their monies' worth out of recent or current relines, which may extend their blast furnaces' operational lives for 10-15 years in many instances, he said.

"In the medium term we don't expect a massive shift in Europe from BF-BOF to EAFs," Peters said. "The shift will come close to 2025. But there has to come a point where there's an industry-wide shift. Once those [carbon] prices get to a high-enough level there'll be a much quicker shift."

But the transition could occur earlier if carbon prices get substantially higher than at present, he said.

Carbon prices surge

Carbon prices have risen rapidly in April and May, clocking up an all-time high of Eur56.65/mt ($69/mt) on May 14 in a sustained rally that has lifted prices from around Eur30/mt in October 2020. S&P Global Platts research indicates that in a tightening market, carbon prices can be expected to rise until they trigger CO2 reductions.

CRU principal iron ore analyst Erik Hedborg added on the webinar that there are quality constraints to be taken into account in the transition: iron ore is still needed to make some products including steel for the automotive industry or white goods. Still, the use of iron ore in the form of direct reduced iron used in EAFs may be a way around this, as already occurs in some works in the US, the analyst said.

In future DRI will increasingly be produced using hydrogen rather than natural gas, Hedborg said.

Blast furnaces typically burn coal to reduce iron ore to liquid pig iron. Relines involve replacing the refractory bricks inside the furnaces: this may take six or more months to complete, including time for the furnaces to cool down after intensive operation, the bricks replacement and then a period for the structure to heat up again and resume full operation.

German steelmaker Thyssenkrupp is expected to reline one of its major blast furnaces from mid-year which will take several months to complete.

The steel industry accounts for around 7% of global carbon emissions, the analysts said.