WILL RISING SCRAP USE HURT IRON ORE TRADE?

摘要

The Chinese government is encouragingrnsteel mills to use Electric Arc Furnacesrn(EAFs) to produce steel as EAFs are morerneco-friendly compared with blast furnaces.rnEAFs are likely to dominate new productionrnfacilities, thereby increasing the use ofrnscrap in steel production instead of ironrnore. However, we estimate that the growingrnuse of EAFs, and subsequently of scrap, isrnunlikely to hurt iron ore trade, at least for thernnext five years because of three reasons.rnFirst, production by EAFs is going tornrise from a low base. The share of EAFsrnin total steel production is quite small –rnaround 6%. Most steel is being producedrnusing the Blast Oxygen Furnace (BOF)rnprocess.