Electricity curbs in China are a challenge for steelworks – industrial group
BEIJING, Oct. 25 (Reuters) – Chinese steel mills’ production costs have risen, especially in electric arc furnaces, due to recent power rationing and government demands to reduce energy consumption, a the country’s steel association announced on Monday.
Steel mills have reduced or halted production due to the power shortage since September, which “will dramatically increase business costs” and weigh on profitability, said Qu Xiuli, vice president of the China Iron Association. and steel (CISA). a press conference.
The world’s second-largest economy has suffered from power cuts due to high coal prices for generators amid tight fuel supply, leading companies ranging from upstream metallurgists to downstream manufacturers to slow down operations while the government is committed to prioritizing residential electricity consumption. Read more
Daily crude steel production plunged last month to the lowest level since December 2018, according to official data from the Bureau of Statistics.
The capacity utilization rates of electric arc furnaces (EAF), which consume twice the electricity to produce a ton of steel compared to blast furnaces, plunged more than 20% year-on-year at the end of September, before to recover slightly in October, according to the Mysteel board.
Huang Dao, Deputy Secretary General of CISA, told the press conference that energy consumption and production controls pose great challenges and pressures for steel producers, especially for FEAs in due to possible increases in electricity tariffs in the future.
China’s electric arc furnaces account for about 10% of its total steel production. The country aims to increase this proportion to 15-20% by 2025, as the short metallurgy process helps conserve energy and reduce emissions, while reducing China’s dependence on the ore from imported iron.
“If you factor in green electricity, the benefit of reducing carbon emissions from EAF production is much more obvious than blast furnaces,” Huang said.
Qu said she expects the impact of power cuts on factories to improve next year as Beijing steps up efforts to increase coal production, and the long-term goal of the development of electric arc furnaces remains unchanged.
But electric arc furnace companies should manufacture more high-value-added products such as special steel and stainless steel to pass the rising costs with higher selling prices, Qu added.
Reporting by Min Zhang and Shivani Singh; Edited by Christian Schmollinger
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