Is scrap steel replacing iron ore a short-term trend or a long-term revolution?
Essentially, the substitution of scrap steel for iron ore means that the steelmaking process shifts from a long process starting with iron ore to a short process using scrap steel as raw material. The carbon emissions in the long process are mainly concentrated in the coke reduction stage; while the core of the short process is electric furnace smelting, and its carbon emissions mainly depend on the cleanliness of the electricity. Under ideal conditions, when scrap steel resources are abundant and green electricity is cheap, the carbon emissions per ton of steel in the short process can be reduced by more than 60% compared to the long process. Therefore, from the perspective of the long-term goal of carbon neutrality, the substitution of scrap steel for iron ore is a definite ultimate goal.
However, achieving this substitution is a long-term process, and there are three key constraints involved.
The first constraint is the social stockpile of steel. Scrap steel is not produced out of thin air; it is obtained by recycling steel products after they reach the end of their lifespan. The amount of scrap steel produced by a country depends on the accumulation of steel consumption over the past few decades. Currently, although China is the world's largest steel producer, a large amount of steel still exists in forms such as buildings, bridges, and automobiles, and has not yet entered the scrap cycle. This means that even if there is a large-scale shift to electric furnaces, there will not be enough scrap steel available for use in the short term. From a resource perspective, the substitution of scrap steel for iron ore cannot be achieved overnight; it must wait for the stockpile to naturally increase.
The second constraint is the depreciation cycle of the asset structure. China has over 700 blast furnaces, most of which were put into operation in the past 20 years and are far from reaching the time for natural obsolescence. From an economic perspective, enterprises cannot voluntarily scrap their assets before recovering the investment. The process of replacing scrap steel with iron ore is essentially a process of gradually retiring existing assets. Only when the active blast furnaces reach the end of their economic lifespan and are rebuilt to use electric furnaces can the substitution truly occur. This depreciation cycle is calculated in units of several years and cannot be accelerated by a single policy.
The third constraint is the cleanification of the energy structure. Scrap steel replacing iron ore merely achieves a transformation at the raw material level, but the carbon emissions of the electric-arc furnace short process mainly depend on the source of electricity. If the power grid still relies mainly on coal power, then although the carbon emissions of electric-arc steel are lower than those of blast furnace steel, the overall carbon emissions are still not low. Therefore, true low-carbon requires both "scrap steel replacing iron ore" and "green electricity replacing coal power" to proceed simultaneously.
Copyright and Disclaimer: The above content is from the internet. If there is any infringement, please contact us to remove it.
Content Statement: Some of the content is generated by AI assistance and is for reference only.
