Posts Tagged ‘Electric arc furnace’

Switch to EAF could save struggling EU mills: Laplace

As Europe seeks ways of maintaining its steel idustry in the current economic climate, one suggestion could make steelmaking more sustainable both economically and environmentally. More EAF-based steelmakign could significantly reduce greenhouse gas emissions per tonne of steel. But for this to be sustainable it would require far more significant closures of basic oxygen furnace capacity.

SBB 25 May – The construction of electric arc furnaces at currently idled integrated steelworks in Europe could be a way to secure a future for these sites, Marcel Genet, managing director of consultancy firm Laplace Conseil, told the SBB Steel Markets Europe conference this week in Brussels.

Genet said that closing completely an existing plant has a high financial cost and a strong impact on the relationships with clients. For that reason, Genet believes some of the 8-10 integrated sites currently closed or at risk of closure in Europe could benefit from the construction of electric arc furnaces. This would preserve the existing finishing lines at the site and lower significantly the investments compared to the cost of modernising some of the integrated steelworks equipment.

Europe has a plentiful supply of scrap and the price of scrap would not be impacted by the addition of 20-30m t/y of new EAF capacities. Genet noted that a number of scrap suppliers already price their scrap based on the iron ore prices.

Genet reported two contrasting examples of uneconomic integrated works in France during the 1980s. While the Neuves Maisons works in northeastern France was re-converted to EAF operation and is now producing under the control of the Italian Riva group, the works at Mondeville in Normandy ultimately faced closure after having decided to stick with the integrated route.

Laplace Conseil proposed a similar solution for the ArcelorMittal works in Liège, Belgium, back in January, as reported by Platts SBB. Crude production at the plant was halted permanently a year ago.

EU OKs compensation for big energy users hit by power costs

The European steel industry is undergoing a transition linked to its current economic difficulties and the slowdown of steel demand. At the same time, steelmakers are concerned by added regulatory costs. The environment would, in theory, benefit from an increase in EAF steelmaking capacity as opposed to blast furnace-basic oxygen furnace capacity. However, future electricity costs, the main cost element of EAF steel, will determine the relative level of investment.

SBB 24 May – The European Commission has adopted a framework under which member states may compensate high energy users, including steel producers. This is in response to the higher electricity costs expected to result from a change to the EU Emissions Trading Scheme as from 2013.

The regulation will allow subsidies of up to 85% of the increased cost faced by the most efficient companies in each sector from 2013 to 2015, a cap that will gradually fall to 75% in 2019-2020.

However, European steel industry body Eurofer says that is grossly insufficient and will not restore the level-playing field with competitors outside the EU.

At first glance, the most impacted products (EAF steel and downstream) would be covered by a maximum 50-60% of the indirect CO2 cost, should member states give the maximum they are allowed to as per guidelines, a spokesman for Eurofer told Platts Steel Business Briefing in an emailed response to questions on Wednesday.

“Given the current economic situation and the state of public finance in the EU, we don’t expect member states to give away much,” he added.

Spanish steel industry fears surge in electricity costs

The final cost of carbon pricing mechanisms varies across industries. While the energy industry can easily pass on the added cost of emissions to their customers, other industries, such as steel, find it harder. Some fear this could lead to a squeeze on margins in industries which face international competition. EAF steelmakers in particular are looking to the European Commission to propose rules for compensation by the end of the year.

SBB 27 May The Spanish steel industry is concerned about electricity costs rising further from the second half of 2013, Steel Business Briefing learns from Andres Barceló, general director of the country’s steelmakers’ association Unesid.

In 2013 electricity and utility companies will start targeting price increases following the start-up of phase three of the Emission Trading System (ETS) in the EU. These companies won’t be allocated any free carbon dioxide allowances and will try to pass on these higher costs to their clients, Barceló told SBB’s recent Steel Markets Europe conference in Barcelona.

“Spain will be particularly hit, being partly isolated from the European network. All over Europe prices will rise. Only France, having a strong nuclear production, may be hit to a lesser extent,” he explains.

The Spanish industry, with 70-75% of crude steel produced in electric arc furnaces, has been highly concerned about energy costs for some time. Local mills frequently check electricity prices and, in some cases, stop production when they get too high, he says. Around €30-50 are spent in Spain for producing 1 tonne of crude steel, SBB calculates.

“In Spain we are still repaying the costs of the renewable energy investments made in the past,” Barceló adds.

Eurofer and national steel associations are trying to pressure authorities to avoid such increases, but they are expected to be implemented, SBB notes.

CISA: China should delay expanding EAF sector

As the steel industry is increasingly under pressure to reduce its greenhouse gas emissions, one obvious solution is toswitch to EAF steelmaking, which emits around a quarter of the CO2. However, unlike iron ore, scrap cannot simply be dug out of the ground. EAF production is therefore limited by teh amount of scrap metal available. This option is therefore limited in teh key developing economies where iron and steel emissions have soared in recent years.

SBB 23 May China should not be considering expanding its electric arc furnace steelmaking sector significantly for the next few years. Chi Jingdong, deputy secretary general of the China Iron & Steel Association (CISA), says it is too early to consider expanding the sector, even though EAF steelmaking is more energy-efficient.

Addressing a recent conference in Guangdong attended by Steel Business Briefing, Chi admitted that EAF steelmaking can help China’s steel industry to reduce its reliance on imported iron ore and to cut its carbon emissions.

But “China’s barrier to more EAF steelmaking is its limited ferrous scrap supply, since the country has a relatively lower accumulation of steel compared to developed countries,” he warned.

Chi further predicted that after 2020 China’s scrap resources will peak and then domestic scrap prices will drop to favourable levels. “At that time, mills may phase in more EAFs to replace their blast furnaces and converters,” he said.

Currently, most Chinese mills prefer to produce steel with BFs and converters due to the country’s tight scrap supply and lower production costs. “Mills won’t find using EAFs economical unless they can get a financial subsidy,” a major eastern mill source tells SBB.

Steel made via EAFs accounted for just 9.7% of China’s total crude steel output for 2009, while the global average percentage was 28.1% during the same period, according to CISA data.

Outokumpu’s CO2 emissions up on renewable energy shortage

Unlike in the integrated steelmaking process, the greenhouse gas emissions related to electric arc furnace steelmakers come mainly from the use of electricity. While this gives the opportunity to reduce emissions by buying renewable energy, emissions can increase when such energy is in short supply.

SBB 21 February Outokumpu’s direct carbon dioxide emissions were up 45.6% year-on-year in absolute terms in 2010, Steel Business Briefing understands from the company’s annual report. A large part of the increase resulted from a 29.3% increase in stainless steel production.

However, a restricted supply of nuclear and renewable energy was also responsible for pushing these emissions up, the company tells SBB. The proportion of renewable and nuclear energy used fell to around 69% in 2010 from around 80% in 2009. Low water levels in Finland reduced the supply of hydroelectricity in the country and Sweden’s nuclear capacity was not connected to the grid for much of 2010, it notes.

Improvements in energy efficiency helped to counteract this effect somewhat: energy consumption per tonne of steel produced was reduced by 3% since 2007.

A reduction in secondary emissions from transport also contributed to a 0.3% reduction in combined direct and indirect CO2 emissions per tonne of steel. The company aims to reduce the total emissions per tonne of steel by 20% by 2020, as previously reported.

The company also managed to nearly double the amount of recovered metals from waste products to 80,408 t. The proportion of recycled and recovered scrap used per tonne of steel produced was nevertheless down from 94.5% to 91.1%.