Asia steel mills strive to make blast furnace-based steelmaking greener

Top crude steel producers in Asia, including China and Japan, have a high-ratio of BF-BOF utilization in their steelmaking, which reduces iron ore using carbon, typically coke, and is inherently carbon-intensive, with large volume of greenhouse gas emission, yet still vital to the industry due to its scalability and efficiency compared to other steelmaking routes in the past years.

However, mounting regulatory and social pressure to decarbonize globally has made this process a focal point that needs to become greener in the whole industry.

It is, however, a tough task in regions like Asia, where BF-based steelmaking dominates, sources said.

The large scale of BF-based steelmaking process in Asia also has contributed to the traditional trade flow of iron ore to China for years.

Fastmarkets’ daily index for iron ore 62% Fe fines, cfr Qingdao averaged $109.46 per tonne in 2024, down by 8.43% or $10.08 per tonne from $119.54 per tonne in 2023.

Market participants have indicated that there were presently many methods being utilized in the global transition to green steel, including shifting from BF-BOF based production to electric arc furnace (EAF)-based production with ferrous scrap for lower emissions. The building of natural gas and subsequently green hydrogen fueled direct reduction iron (DRI)-EAF steelmaking was also cited to be a method utilized in the transition, but this method requires significant capital, and thus presents a potential loss for steelmakers due to the need to shut existing BFs, which have more than a 10-year operating life.

Due to the higher costs of alternative green steel production methods, the development of decarbonization technologies for BF-BOF steelmaking has remained vital in the short to medium term for steelmakers in Asia. 

These technologies include alternative green fuels for BF steelmaking and carbon capture, utilization and storage (CCUS) is also a transitional technology to reduce emissions.

Evolving technologies to cut emissions in BF

Japan’s largest steelmaker Nippon Steel has made a technological breakthrough for cutting carbon emissions in the BF-based steelmaking process by injecting hydrogen rather than coal to reduce iron.

Nippon Steel said on December 20 that the company has made steady progress of hydrogen injection into blast furnaces technology to achieve a 43% reduction in CO2 emissions in the test conducted from November to December, a new world record high for carbon reduction.

“As global markets prioritize sustainable supply chains, Nippon Steel is well-placed to meet demand for ‘green steel’, especially from automotive and construction sectors,” Fastmarkets Principal Analyst Miriam Falk said. “Policies like the EU’s carbon border adjustment mechanisms (CBAM) will incentivize low-emission steel, [the new ironmaking technology] will enhance Nippon Steel’s competitiveness in export markets,”

Falk added, “the feasibility of hydrogen injection technology depends on the availability and cost of green hydrogen. Building a reliable supply chain for hydrogen, including production, storage and transport, requires significant investment”.

A Beijing-based steel mill source also added that “the hydrogen utilization in BF steelmaking is an important method to reduce carbon emission [in China], but another key issue to be addressed is the transportation and storage of hydrogen for large scale steel production”.

Japan’s JFE steel is also exploring carbon recycling technologies in BFs carbon capture and utilization (CCU) to reduce emissions.

China Baowu Steel Group Corp, the world’s biggest steelmaker, has demonstrated a commercial project with significant cut in carbon emissions for BF.

The company built the world’s first 400 cubic meter hydrogen-enriched carbonic oxide recycling oxygenate furnace (HyCROF) in 2022 and applied the technology in a 2,500 cubic meter BF from October 2023 in Xinjiang Uygur Autonomous Region in northern China.

The HyCROF technology can reduce carbon emissions by 31%, renewable energy-based electrification can reduce carbon emissions by 38%, while CCUS technology can deal with the remaining 31% of carbon emissions, according to Hu Wangming, chairman of China Baowu Steel Group Corp.

Asian low-carbon steel demand growing

Given the global drive to decarbonize and especially the EU’s CBAM expected to fully come into force in 2026, market participants suggested that overseas suppliers able to provide materials with lower carbon footprint will have a competitive edge, which has further pushed Asian steelmakers and downstream end-users, namely those in the property and automobile sector, to pursue low-carbon steel in the coming years. 

On November 15, major Japanese steelmaker JFE Steel Corp said that its trademark JGreeX green steel is set to be used in a major construction project in Vietnam, signaling the first export of green steel in this region after domestic adoption.

Fastmarkets’ weekly price assessment of the green steel import differential to HRC index, cfr Vietnam, which calculates the price difference between flat-rolled green steel and the CFR Vietnam price, was $104-212 per tonne on Friday December 20, unchanged from the previous week.

Chinese leading steelmaker HBIS Group on Monday December 16 began operation of the world’s first hydrogen metallurgy-based continuous casting production line and has previously established partnerships with leading end-users, including BMW Group, Great Wall Motor to provide low-carbon green flat steel.

This has suggested a new capacity to producer low-carbon steel in China’s domestic market and export market and increase the competitiveness of downstream products like vehicles for exporting to the European market under the CBAM structure.

Fastmarkets’ fortnightly price assessment of flat steel reduced carbon emissions differential, exw China, which calculates the premium for flat-rolled reduced carbon emissions steel over products produced from the traditional BF-based route, was at 0–800 yuan ($0-112) per tonne on Friday December 20, unchanged from the previous week.

China’s Baowu steel shipped 325 tonnes of BeyondECO low carbon emissions reinforcing bars made via a BF steelmaking process utilizing renewable energy and high ratio of recycled scrap, with a carbon emission reduction more than 50%, to Hang Lung Properties’ Plaza 66 Pavilion Extension project in Shanghai on November 21, Hang Lung said on November 27.

Baosteel will supply 1,171 tonnes of its BeyondECO low carbon emissions structural steel for this project, which is now underway and due for completion in 2026.

Moreover, World Steel Association has signed a Collaboration Statement on Low-Carbon Emission Steel for Real Estate with China’s Iron and Steel Association (CISA) and major steelmakers and house developers in China to support the consumption of low-carbon steel in the property industry, according to the company release on December 6.

A second Beijing-based mill said the property industry is the largest steel consumption sector in China, but it still takes time for end-users to get used to the green steel products and premiums in either the property or automotive sector.

Discover how our suite of steel prices can support your decisions while bringing transparency to the industry. Find out more.