November 1, 2019 - The Chinese industry body for scrap metal recycling on Wednesday gave its endorsement to the scrap route to steelmaking, saying how its use over the longer-term was indispensable in light of the country's increasing emphasis on environmental protection.

This was despite the government's restrictions on the import of scrap, which have made this method of production uneconomical compared with the basic oxygen route, which uses iron ore as a key raw material.

"The development of electric arc furnace steelmaking based on scrap is an important and fundamental solution for China's steel industry to achieve ultra-low carbon emissions," Li Shubin, executive vice president of the China Association of Metal Scrap Utilization, or CAMU, said at an industry conference. "It is also the most effective way to reduce waste [buildup] and to use the country's [scrap] resources."

Li cited developed nations like the US, Japan and Germany, where steelmakers have taken to the EAF route of production, partly as a result of government regulation to reduce carbon emissions. The EAF route accounts for 68%, 25% and 30%, respectively, of the three countries in 2018, while only about 12% in China, according to the World Steel Association.

China may look to increase the share of crude steel production via the EAF route to 20% by the end of 2025, the end of its 14th Five-Year Plan period.

"With the gradual buildup of scrap reserves, it is becoming more inevitable for us to recycle scrap, which is helping the growth of EAFs steelmaking," Jia Yinsong of the Ministry of Industry and Information Technology told the conference in Chengdu.

Jia said each ton of steel produced via the EAF route would result in savings of 1.7 mt of iron ore concentrates, 4.3 mt of raw iron ore, 0.35 mt of coal, 1.6 mt of carbon dioxide emissions and 3 mt of solid waste as compared with the basic oxygen route.

Quality Standards, Power Costs Key to Sector's Growth

Policy steps that need to be taken in order to create better conditions for the growth of the EAF sector would address scrap quality standards and accessibility and power costs, industry participants at the conference said.

CAMU called for stricter standards surrounding ferrous scrap, a better classification system and better processing, distribution and monitoring system to upgrade the domestic industry.

"The locations where electric furnaces are set up should also be considered during the planning stage so that they can be closer in proximity to cities, where scrap and power are generated," the MIIT's Jia said. "This will generate savings on transportation."

Better processing and distribution of scrap could also lead to better yield, and see supply reach around 300 million mt by 2025, from 220 million mt in 2018, Jia added.

On power, industry participants called for further reforms to China's electric power pricing mechanism and for policies to help lower costs for EAFs.

"All these factors are costs for EAFs," Yan Liyi of the Northeastern University's School of Metallurgy said. "Steelmaking via this route is costlier than that of the blast furnaces here. Current margins are low, and some EAFs are reporting losses of about Yuan 200/mt to produce a ton of steel. This is a major blow on China's development towards more electric steelmaking processes."

Jia also proposed the conversion of blast furnaces into EAFs in regions of high concentration to help improve environmental conditions.