China’s electric arc furnace steelmaking capacity is expected to continue growing in the foreseeable future as decarbonization drive gains pace, a development that is expected to weigh on the country’s pig iron and crude steel capacity.

          China has started implementing stringent capacity swap rules since 2021, pushing the commissioning of new EAFs that gained construction approvals during the year. This would lead to a net decrease in China’s pig iron and crude steel capacity from late 2022 and onwards.

          In 2021, China approved the construction of 43 new EAFs, with a total crude steel capacity of 29.33 million mt/year, S&P Global Platts calculations based on announcements by local governments showed.

          Hebei province saw the most EAFs approvals, with a total capacity of 7.4 million mt/year. It was followed by Jiangsu province, with 4.4 million mt/year of new EAFs.

          These new EAFs in China will be commissioned from late 2022 to 2025, predicated on closures of 34.24 million mt/year of old crude steelmaking facilities that still run on the traditional route.

          These capacity swaps will lead to a net decrease of 4.91 million mt/year in China’s total crude steel capacity, Platts calculations showed.

          Of the replaced 34.24 million mt/year of crude steel capacity, 16.21 million mt/year of capacity comes from converters.

          Together with some of the replaced converters, blast furnaces with pig iron making capacity totaling 5.9 million mt/year will be closed as well.

---- Steel Business Briefing