Coronavirus could accelerate EAF transition in EU: Genet

The coronavirus outbreak and its consequences on steel demand and production could well accelerate the transition from old and aging integrated steelmaking site to EAF-based new mills, Marcel Genet from Laplace Conseil tells Kallanish.

“There is ample room for increased scrap-based production of steel in Europe. The EU is the world largest exporter of scrap (> 20 million tonnes in 2019 to non-EU producers) and at the same time the largest importer of finished steel (44mt of finished steel from non-EU producers, often the same as the scrap importers),” Genet notes.

He says, for example, that the sudden outbreak of coronavirus had put EU steelmakers to the test and EAF producers were the first to reduce output in response to falling demand. “The efficient scrap based minimills have been most reactive in cutting production and temporarily closing their EAFs. In some countries, they are already restarting production,” he adds.

Since beginning of March many blast furnaces (BF) have also been halted across Europe, with more planned to be temporary idled due to the fall in demand in the coming weeks. But the response has taken longer due to planning needs. ArcelorMittal for example is scheduling the temporary closure of all crude steelmaking at its integrated site in Fos-sur-Me, France, from June.

“We believe that this difficult period is also an opportunity to revisit the balance between production and demand: Europe still has too many old or aging integrated plants and not enough modern plants recycling scrap in EAFs, particularly for flat products. By our account, out of 20 EU plants that produce hot rolled coils, only 5 are truly ‘world-class’ and there is only one producer that uses modern EAF technology with a thin slab caster and compact finisher. In contrast, in the USA, there are already 10 world-class minimills that produce nearly half of US hot rolled coil,” Genet explains.

In addition, EAF production is more CO₂ efficient than the traditional iron ore and coal processing in a BF. “The collection, processing and melting of scrap in an EAF require more domestic jobs per tonne of steel produced than the import of iron ore and coal to be smelted in blast furnaces and converted in basic oxygen steelmaking,” Genet adds.

Before the coronavirus outbreak there were already clear moves towards using more EAFs in the flats sector in Europe, Genet notes. Earlier this year, ArcelorMittal agreed to build in the future an EAF in Taranto, followed by a DRI plant. Liberty Steel also mentioned the possibility of replacing BF capacity in the UK with EAFs. SSAB, LKAB and Vattenfall have announced ambitious plans to close blast furnaces in Sweden and Finland and replace them with scrap-based EAF and DRI produced with green hydrogen. In France, Ascoval has received a large contract from neighbouring Hayange rail plant to supply EAF blooms produced in part from old rails.

“The discontinuity caused by the pandemic will no doubt accelerate the trend,” Genet concludes.