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EAF Steelmaking Embraces Promising Opportunities in China, Driving a Bright Future for VPSA Oxygen Generation



1.Necessity to Develop the Electric Arc Furnace (EAF) Steelmaking Short Process

Achieving carbon peak by 2030 and carbon neutrality by 2060 is a significant strategic decision made by the Chinese government and a solemn commitment to the world. Since the reform and opening-up, China’s steel industry has developed rapidly. Crude steel production increased from 31.78 million tons in 1978 (accounting for 4.4% of the world’s total) to over 100 million tons for the first time in 1996, reaching 101.24 million tons (13.5% of the world’s total), making China the world's largest steel producer, and then exceeding 1 billion tons in 2020 with 1.053 billion tons (56.7% of the world).

Although slight decline emerged over the past 3 years, it still reached 1.013 billion tons in 2022 (about world’s 54%). China's iron and steel sector remains heavily reliant on coal-based fossil energy, resulting in significant carbon emissions, accounting for about 16% of the nation’s total amount, second only to power generation and transportation.

Therefore, effectively reducing carbon emissions in the steel production process has become a major issue that needs to be addressed urgently for the steel industry and the country as a whole.

The low proportion of EAF steel production is one of the main reasons for the high carbon emissions, energy consumption, and pollution in China's steel industry.

Globally, the share of EAF steel manufacturing in total output has increased from 7.3% in the early 1950s to 32%-35% today. In countries like Iran, Turkey, the United States, and India, it accounts for over 50%, with some even exceeding 90%. According to the China Iron and Steel Association, in 2022, EAF steel production in China accounted for only 9.7% of the total crude steel production, far lower than the global average of 30%.

Compared to the traditional blast furnace-converter long process, the EAF short process all using scrap steel reduces energy consumption per ton of steel by about 50%, solid waste emissions by approximately 96%, waste gas emissions by about 78%, carbon emissions by about 73%, and overall air pollutants by about 90%. Following the industrial development patterns of developed countries, if China's total steel output remains constant and the proportion of EAF steelmaking rises to 30% by 2035, carbon dioxide emissions could be roughly reduced by about 15%. The energy saving and emission reduction benefits of developing the EAF short process are therefore highly significant.

Moreover, the EAF short-process steel making offers additional advantages such as the ability to start and stop production as needed, high efficiency and flexibility, and the potential to serve as a center for urban waste recycling. Consequently, emphasizing the development of the EAF short process, primarily using scrap steel as raw material, is a crucial strategic decision to achieve sustainable development in the steel industry.

2.China's EAF Steelmaking is Embracing Favorable Development Opportunities

China's EAF steelmaking is encountering favorable development opportunities, reflected in three main areas:

1) Increasing Availability of Scrap Steel Resources:

It is estimated that by 2025, China will generate over 300 million tons of scrap steel. The substantial release of scrap steel resources provides a solid foundation for the development of EAF steelmaking.

2) Promotion by Low-Carbon Development Trends in the Steel Industry:

The carbon emission intensity of the blast furnace-basic oxygen furnace (BF-BOF) long process is significantly higher than that of the all-scrap EAF short process. The inclusion of the steel industry in the national carbon emissions trading market and the introduction of carbon tax policies will further enhance the competitiveness of the EAF short process. Additionally, the incorporation of carbon footprint data and carbon reduction measures into steel product indicators by high-end specialty steel users will also promote the development of EAF steelmaking.

3) Encouragement by National Policies:

Since 2016, a series of policies and documents have been issued by the national and provincial governments to encourage the development of EAF steelmaking technology. Notably, in August 2019, the Ministry of Industry and Information Technology (MIIT) issued a document which explicitly proposed that by the end of 2025, the proportion of EAF capacity replaced and constructed by each province should be no less than 30% of the total production capacity undertaken. This provides a favorable policy environment for the development of EAF steelmaking.

3. What is the Development Direction for EAF Steel Mills in China?

Due to the relative shortage of scrap steel resources and the high cost of EAF steelmaking, it is not yet mature for China to massively develop all-scrap EAF steelmaking. A significant increase in the proportion of EAF steelmaking is expected to occur after 2030, or even after 2035. This depends on 3 factors:

1) It is anticipated that China will need another 8-10 years to have a relatively sufficient supply of scrap steel.

2) It is projected that after 2030, China’s total steel demand will decrease to less than 800 million tons. The closure of some long-process steel plants will reduce the consumption of scrap steel used in converters.

3) Green development will promote the construction of urban steel mills. The short process of the EAF can consume social wastes such as scrap steel, surplus electricity, and urban reclaimed water generated around cities, fostering harmonious coexistence between steel enterprises and cities.

So, how should China's steel plants using EAF short process develop at present and in the future? The following approaches can be considered:

1) Explore multiple channels for sourcing iron-bearing materials that can replace scrap steel. Direct reduced iron (DRI), hot briquetted iron (HBI), and blast furnace hot metal are currently the most common alternatives. Due to the lack of natural gas, China is not yet ready to develop gas-based shaft furnaces for large-scale production of DRI. Therefore, Chinese steel companies are encouraged to go out, build DRI plants in countries with relatively abundant natural gas and iron ore resources, and import the products into China as raw materials for electric furnace steelmaking.

2) To develop short-process urban steel plants. In developing EAF short-process steelmaking, China can learn from the experience of U.S. Minimills and strategically place steel plants on the outskirts of cities. This location would be advantageous for accessing scrap steel and other iron-bearing solid wastes from the city. Additionally, biomass pyrolysis furnaces can be used to process urban waste and agricultural residues such as straw, producing reductive gases like carbon monoxide and methane, as well as other low-cost carbon resources as reductants for rotary hearth furnaces. Waste gas and residual heat can be used for power generation, establishing an intelligent microgrid energy management system. This system can make full use of off-peak electricity or clean energy generation, allowing the EAF to help balance the urban power grid load. This contributes to green and efficient energy utilization, lowers steelmaking costs, and promotes harmonious coexistence between steel enterprises and cities. These urban steel plants, focusing on products like rebar and wire rods, should ideally have a production capacity of around 1 million tons per year.

3) Ultimately shift China's steel industry to be dominated by EAF short process under conditions of relatively abundant scrap resources and clean electricity. According to estimates by the China Iron and Steel Association and other relevant organizations, China's scrap steel resources could reach 400 million tons by 2035. At that point, the significant development of short-process EAF steelmaking will truly begin. By 2050, it is expected that China's scrap steel resources will reach approximately 550 million tons, with a crude steel output of about 800 million tons. In this scenario, a proportion of over 70% of crude steel will be produced using EAF short process, primarily with scrap steel as the main raw material, supplemented by DRI manufactured via hydrogen metallurgy, while that of long-process crude steel production will not exceed 30%.

Industrial VPSA (vacuum pressure swing adsorption) oxygen generation equipment plays a crucial role in short-process electric arc furnace (EAF) steelmaking. VPSA oxygen equipment can economically and efficiently provide enriched oxygen, increasing the internal temperature of the EAF, accelerating the melting process, and thereby significantly improving steelmaking efficiency. Additionally, it helps to reduce fuel consumption, lower energy costs and decrease emissions of CO2 and other harmful gases, supporting environmental goals. Furthermore, the introduction of oxygen promotes slag formation, effectively removing impurities from the molten steel, thus enhancing the steel purity and quality. The application of VPSA oxygen units makes the steelmaking process more flexible and controllable, better meeting the production demands of various types of steel products.

PKU Pioneer stands at the forefront of the VPSA oxygen generation industry, establishing itself as a leading brand renowned for delivering top-tier oxygen supply solutions. To date, PKU Pioneer has successfully provided high-quality VPSA oxygen plant solutions to nearly 70 prominent steel enterprises around the globe and has groundbreakingly reached a maximum capacity of 10,000Nm3/h in a single steel mill. Additionally, PKU Pioneer’s proprietary PSA CO purification technology for steel mill tail gases can separate 99.9% high-purity CO, which is then used to synthesize chemical products such as formic acid and ethylene glycol, setting multiple world-first records. The steel manufacturers have not only seen significant improvements in their production efficiency and product quality but have also achieved notable advancements in energy savings and emissions reduction. These benefits have been instrumental in facilitating green production practices within the steel industry, driving the transition towards more sustainable manufacturing processes.