GLOBAL STEEL INDUSTRY CONTINUES TO BET ON COAL, GREEN TRANSITION FACES NUMEROUS CHALLENGES

Despite pressure to reduce emissions and the growing global goal of carbon neutrality, the world steel industry continues to expand its coal-fired steelmaking capacity on a large scale. This is a notable point highlighted in the latest annual report on the global steel industry by Global Energy Monitor (GEM).

According to GEM, there are currently approximately 319 million tonnes/year of new blast furnace (BF) capacity being announced or under construction worldwide, an increase of about 5% compared to the previous year. Simultaneously, approximately 80 million tons/year of existing blast furnace capacity is also planned for overhaul (relining) to extend its operating life for many more years.

Meanwhile, the total blast furnace capacity planned for closure is only about 141 million tons/year. This means that global blast furnace capacity is still expected to increase by a net 88 million tons/year until 2035, instead of decreasing as expected by green transition targets.

The report shows that the "decarbonization" process of the steel industry is still progressing much slower than required. The steel industry currently accounts for about 11% of total global CO₂ emissions, with nearly 88% of the industry's emissions coming from coal-fired steelmaking technology.

Although many countries and large steel corporations have announced commitments to reduce emissions, the pace of transition to low-emission technologies remains limited. The share of electric arc furnace (EAF) technology – considered a more environmentally friendly solution – only increased slightly from 33% to 34% of total global capacity over the past year.

In the direct reduction iron (DRI) sector, only about 10% of current capacity uses DRI technology instead of traditional blast furnaces. Notably, only about 2% of global DRI capacity currently uses green hydrogen as the primary reducing agent, while the majority still relies on fossil fuels.

According to GEM, the biggest reason why the global steel industry remains "closely tied" to coal stems from the growing demand for steel in Asia, particularly India and China.

India is currently the world's largest developer of new blast furnace capacity, accounting for over 60% of total global new blast furnace capacity. Approximately 93% of the iron and steel production capacity under development in the country still uses coal-based technology. However, GEM believes that the majority of projects have not yet actually commenced construction, opening up the possibility of future policy adjustments.

Meanwhile, in China, approximately 94% of existing blast furnace capacity has no plans for closure. The country remains the world's largest steel producer and continues to maintain its central role in the global steel supply chain.

The continued expansion of blast furnace capacity is expected to maintain strong demand for metallurgical coal, iron ore, and ferroalloy materials such as silicomanganese, ferromanganese, ferrosilicon, ferrochrome, nickel pig iron, and many other inputs for the steel industry.

Conversely, this trend also suggests that the global steel industry's emission reduction targets may take longer than expected, especially given the continued high demand for steel in developing economies.

Source: Ferro Alloy.Net