Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Nippon Steel is shifting from traditional steelmaking via blast furnaces (BF) to electric arc furnace (EAF) production, which use scrap metal as feed. Eiji Hashimoto, the firm’s president, said that the move is driven by a desire to cut costs and carbon emissions.


Nippon Steel, the world’s third-largest steelmaker, previously hesitated in adopting EAF use due to challenges in producing high-end steel in this process. Having previously used this technology and making headway, EAF technology can now be used in making flat-rolled products used in automotive components. US-based Big River Steel and SDI lead the charge with the installation of new EAF mills, focused on high-end steel . 


Nippon Steel is building an EAF in western Japan to produce steel used in motors for electric vehicles. The electrical steel sheet EAF at its Hirohata Works was announced in Q4 2019, with a 720,000mt annual capacity and is slated to begin production in H2 FY2022. Hashimoto said Nippon Steel will also unveil a plan by March 2021 to achieve zero carbon emissions by 2050. As Chinese firms add capacity in Southeast Asia through integrated mills, Nippon Steel sees the opportunity in scrap-based steel production to facilitate overseas expansion, thanks to lower costs and better flexibility than BFs.


According to Worldsteel data for 2019, the US produced approximately 75pc of crude steel via EAF, while the EU is about 42pc, South Korea at about 35pc and Japan approximately 25pc. EAFs produce one-fourth the amount of carbon dioxide than BFs, due to reliance on scrap metal. 

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