Steel decarbonisation gathers speed

  • : Hydrogen, Metals
  • 22/02/07

The announcement within the last week of over 6mn t/yr of new direct-reduced iron (DRI) capacity and five new electric arc furnace (EAF) sites by the early 2030s suggests that conditions are becoming increasingly favourable for low-carbon steelmaking.

German steelmaker Salzgitter will fully move to hydrogen and renewable energy-based DRI-EAF steelmaking by 2033. It will award construction projects for industrial facilities by the end of this year.

ArcelorMittal announced further DRI and EAF capacity in France, including 2.5mn t/yr of DRI-EAF capacity at Dunkirk and an EAF unit at Fos-sur-mer to be fed by scrap, requiring a total investment of €1.7bn ($1.94bn). This brings the steelmaker's total DRI capacity plans for 2030 to roughly 10.8mn t/yr, including projects in Spain, Belgium, Germany and France.

Swedish steelmaker SSAB announced last week that it would do the same, bringing forward plans for almost 3mn t/y of EAF capacity at Lulea, Sweden, and Raahe, Finland, to 2030 from 2030-45.

ETS phase-out incentivises decarbonisation

The timing of steelmakers' decarbonisation plans suggests that EU policy on carbon costs is having the desired push effect towards greener steelmaking. While so far only pilot-scale hydrogen-based steel projects are operational, several industrial-scale projects are planned to come on line around 2026, when the ETS-CBAM transition begins, and over 30mn t is planned by 2033, after the phase-out is to be completed in 2030.

The phase-out of free allowances under the EU emissions trading system (ETS) and the introduction of a carbon border adjustment mechanism (CBAM) over 2026-30 in theory provides protection for low-carbon steelmaking in the EU, while removing the incentive for steelmakers to cut costs by continuing to use coal or gas as an energy source. And the threat of paying over €80/t in carbon costs is an important incentive for EU steelmakers to decarbonise. But European steel association Eurofer argues that the EU should continue to grant free emissions throughout the whole ETS-CBAM transition phase to mitigate the carbon costs that steelmakers will bear, alongside the considerable investment costs of reducing emissions by 30pc by 2030, estimated by Eurofer to be around €25bn. "The combined effect of the huge investment needed to decarbonise — and also [of] simply cutting emissions by cutting production, which is inevitable given the existing technology, plus skyrocketing energy prices and rising production costs will put enormous and unsustainable pressure on our members," Eurofer director of market analysis Alessandro Sciamarelli said. Eurofer estimates the cost to the industry in 2030 will be €14bn at today's emissions levels or €8.4bn presuming a 30pc emissions reduction.

Cross-sectoral relationships pivotal

The EU plans to have 6GW of renewable hydrogen electrolyser capacity by 2024, and 40GW by 2030, as well as 40GW of production available for import from outside the EU by 2030. But partnership with companies in upstream and downstream sectors have been determining factors for steelmakers assessing the viability of hydrogen-based DRI-EAF steelmaking.

Salzgitter and Danish energy provider Orsted aim to establish a circular supply chain, within which Salzgitter will supply renewably-produced steel, largely for use in the construction of wind farms, and Orsted will supply renewable (wind-generated) energy, as well as returning windmill parts to Salzgitter as low-CO2 scrap at the end of their life span. The company aims to increase the amount of scrap it uses by 50pc to 3mn t/yr by 2033. Salzgitter will also supply low-CO2 steel to all of carmaker BMW's European plants from 2026 onwards.

ArcelorMittal recently added to its investments in the renewable energy sector, committing $100mn to sustainable energy-focused investment fund Breakthrough Energy, and $5mn to Israel's H2Pro, a company that has developed E-TAC (Electrochemical — Thermally Activated Chemical) technology that splits water into hydrogen and oxygen in a process similar to electrolysis.

For SSAB, the abundance of hydroelectric and wind power in northern Sweden has played an important part in allowing the steelmaker to fully commit renewable-powered EAF production within the next eight years, as has its partnership with iron ore mining firm LKAB and energy provider Vattenfall.

Further progress by steelmakers in forming supply or offtake partnerships might encourage further decarbonisation commitments in the near future. German steelmaker Dillinger-SHS has an initial agreementwith engineering company Paul Wurth and steelmaker Liberty to develop a 2mn t/yr DRI plant including 1GW of hydrogen electrolysis capacity at Dunkirk. The steelmaker is also working with seven energy and engineering companies to develop a "hydrogen economy" in the German Saar region, the French Lorraine region, and the state of Luxembourg by producing 61,000 t/yr of hydrogen and investing €600mn in production facilities and transport infrastructure.

Green steel projects

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ThyssenKrupp Schulte to close seven sites: sources


24/05/22
24/05/22

ThyssenKrupp Schulte to close seven sites: sources

London, 22 May (Argus) — ThyssenKrupp Schulte will close seven sites as part of its restructuring drive, market sources told Argus today. The company will close stockholding warehouses in Braunschweig, Rheine, Munich, Nuremberg, Freiberg, Mannheim and Frankfurt, according to multiple market sources. Last month the company said it would be closing sites and cutting around 450 jobs, but did not reveal which sites would be affected. "Fundamental structural adjustments are necessary to better respond to market changes in the future", the company said when it announced the restructuring, citing declining materials demand and increasing demand for materials-related services. All the impacted locations are stockholding sites and do not provide additional processing. ThyssenKrupp Schulte is part of ThyssenKrupp Materials Services and distributes stainless, carbon and non-ferrous metals from around 40 locations. A ThyssenKrupp Materials Services spokesperson said it could not comment on the affected locations, as "discussions with the respective co-determination bodies have only just begun and the details of the transformation are the subject of these discussions". "At ThyssenKrupp Schulte we are aiming to transform the business model in order to increase the company's profitability and enable Schulte to respond even better to changing customer needs," the spokesperson added. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s Kobelco to shut basic oxygen furnace, build EAF


24/05/21
24/05/21

Japan’s Kobelco to shut basic oxygen furnace, build EAF

Tokyo, 21 May (Argus) — Japan's Kobe Steel (Kobelco) will close one of the two basic oxygen furnaces (BOFs) at its Kakogawa steel works, looking to replace it with an electric arc furnace (EAF). Kobelco will invest ¥300bn ($1.9bn) to accelerate reducing greenhouse gas emissions by introducing a new EAF, the company said on 20 May as part of its mid-term strategy for the 2024-26 fiscal years. This will result in a closure of a BOF at Kakogawa. It will finalise the decision for introducing an EAF in the early part of its 2024-26 mid-term strategy period, Kobelco said, aiming to start producing crude steel with scrap metal sometime during the 2030s. Kobelco produced 5.9mn t of crude steel during the 2023-24 fiscal year ending 31 March, down by 3.5pc from the previous year. It forecasts producing around 6mn t during 2024-25, according to data separately announced by Kobelco on 9 May. The company did not disclose the production of each BOF at Kakogawa. This is the latest major Japanese steel firm that specialises in BOF production to announce proposed EAF operations, following Nippon Steel and JFE. Nippon Steel started commercial operations in 2022, while JFE plans to start in 2027. Kobelco's switch to EAF production will lead to further concerns about scarcity of scrap in Japan . The supply shortage could be as high as 5mn t in 2030 and 11mn t in 2050, according to a 2022 report by the country's trade and industry ministry. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Southeast Asian steel demand to rise in 2024: Seaisi


24/05/21
24/05/21

Southeast Asian steel demand to rise in 2024: Seaisi

Shanghai, 21 May (Argus) — The Southeast Asia Iron and Steel Institute (Seaisi) estimates that southeast Asian countries' steel demand will grow by 3.7pc from 2023 to 76.5mn t in 2024. But the growth rate fell below previous expectations considering high global inflation risks, volatile prices and a demand slowdown in China and many other regions, the institute said at the 2024 Seaisi conference in Vietnam held over 13-16 May. Steel demand in the six major countries of the Association of Southeast Asian Nations (Asean-6) fell by 1.9pc from 2022 to 73.5mn t in 2023, Seaisi said. Asean-6's steel production also dropped by 2.1pc on the year to 49.4mn t in 2023, in line with contracting demand. Asean-6's net imports slid by 1.3pc on the year to 24.3mn t in 2023. Lower external demand, high inflation and interest rates as well as tightening global financial markets were the main reasons for steel industrial setbacks last year. It led to a slowdown in construction sectors and steel industrial destocking activities in the region. Steel demand in Malaysia, Philippines and Vietnam fell by 14pc, 7.5pc and 4.8pc respectively in 2023, weighing on regional industrial performance although demand rose by 18pc in Singapore and 6.3pc in Indonesia, Seaisi said. Thailand's steel demand edged down by 0.1pc in 2023. Asean regional steel demand was expected to increase in 2024 because Asean-6 governments were optimistic about achieving their economic growth targets, given strong private consumption in most countries, the rolling out of infrastructure and construction projects, a recovery in tourism and electronics, and as inflation rates move towards targeted ranges. But the region will continue to experience challenges from supply chain uncertainties on the back of escalating geopolitical tensions and wars, weakening Asean currencies except for the Singapore dollar, economic slowdowns outside of Asean, volatile commodity prices, and extreme weather, Seaisi said. Seaisi did not provide a forecast for regional steel production in 2024, but it sees steel capacity expansions in the region leading to overcapacity issues. It expects Asean-6 crude steel capacity to rise from 78mn t/yr in 2022 to 94mn t/yr in 2024. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Roy Hill's WA iron ore loadings support WA exports


24/05/20
24/05/20

Roy Hill's WA iron ore loadings support WA exports

London, 20 May (Argus) — Iron ore shipments by the four largest producers in Western Australia (WA) rose in the week to 18 May on the back of a rebound of Roy Hill's volumes as the company completed routine quarterly maintenance. Rio Tinto's shipments ticked up too despite a derailment on its rail line. The four largest Pilbara iron ore producers — BHP, Fortescue, Rio Tinto and Roy Hill — loaded vessels with a combined capacity of 17.10mn dwt, up from 16.63mn dwt in the week to 11 May. The dwt capacity is the maximum capacity of a vessel and overestimates actual shipments by about 5pc. Rio Tinto's shipments reached 6.14mn dwt from 5.81mn dwt the previous week. This is below the 2024 average of 6.44mn dwt.There was a derailment on the rail line heading to Rio Tinto's Dampier facilities last Monday. "We have reopened our dual train line 80km from Karratha following a rail incident on Monday, with the first train travelling on one of the repaired lines on Friday and the second line reopening on Saturday," the company said. Roy Hill's exports jumped to 795,000 dwt from 208,000 dwt the previous week as the company appears to have completed its quarterly maintenance. But the volumes remain below the average of 1.25mn dwt. BHP's volumes ticked down to 5.88mn dwt from 6.22mn dwt the previous week. Fortescue's iron ore loadings edged lower to 4.29mn dwt but were still well above the rolling average of 3.74mn dwt. Overall iron ore shipments from WA increased to 48.95mn dwt during the 1-19 May period from 47.81mn dwt in the same period last year, provisional shipping data indicate. Shipments to China rose to 42.27mn dwt from 39.51mn dwt across the same timeframe. Spot freight costs have stepped down in recent weeks as demand has decreased. Capesize freight rates — for loading on 4-7 June — on the bellwether WA to north China route fell to $10.40/t today from the most recent peak of $11.95/t on 8 May. By Andrey Telegin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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