China May Miss Target for Cleaning Up Largest Steel Industry

Beijing: So, it looks like China is going to miss its target for cleaner steel production by the end of the year. The new electric-arc furnaces, which are supposed to be more eco-friendly, just aren’t being used as much as expected. Plus, the ongoing property crisis is really hurting demand and prices.

China is the biggest steel producer and also the largest polluter in the world. They’ve been trying to clean up their act to meet climate goals, but it’s tough. The plan was to have electric-arc furnaces make over 15% of total steel output by 2025, but that’s looking unlikely.

Last year, the operating rate for these cleaner furnaces dropped to 49%, down from 54% in 2023. That’s the lowest it’s been since 2021. An analyst from Mysteel Global, Xu Xiangchun, said it’s pretty clear they won’t hit that 15% target. Even though there’s enough capacity, low sales and falling prices are causing production cuts.

The real estate mess in China is a big part of the problem. Home prices are down, and there are tons of unsold units, which is really hurting steel demand. This has led to some serious concerns among major steel producers.

According to the World Steel Association, the share of electric-arc furnaces in China’s total steel production was only about 9.9% last year. Some experts think it might have even been a bit lower. The target for this year was already a stretch, to be honest.

Electric-arc furnaces are a cleaner way to produce steel compared to the traditional coal-fired methods that have been around forever. This sector is responsible for a significant chunk of global carbon emissions, so the shift is important.

Still, some analysts are hopeful. Jiang Mengtian from Horizon Insights believes there will be some progress by 2025, especially with China’s goals for reducing carbon emissions.