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Nippon Steel said it will convert a portion steelmaking processes from blast furnaces to electric-arc furnaces (EAFs), after it was selected as a “2025-2029 Energy and Manufacturing Process Transformation Support Business” under Japan’s Green Transformation (GX) Promotion Act.
The company said the strategic shift was a cornerstone of its “Nippon Steel Carbon Neutral Vision,” which outlines three key technological pillars for decarbonization: high-grade steel production in large-sized EAFs; hydrogen injection into blast furnaces; and the production of DRI using hydrogen.
DRI and its less-volatile form, hot-briquetted iron (HBI), are viewed by many in the steel and steelmaking raw materials sectors as key components in green steelmaking because they reduce the need for sintering iron ore fines, which are a major contributor to carbon dioxide emissions in the steelmaking process.
Major miners and steelmakers have all announced projects to produce various forms of green briquettes or agglomerated iron, especially in areas with easy access to natural gas.
Fastmarkets’ price assessment for hot-briquetted iron, cfr Asia was $330-338 per tonne on May 23, unchanged from May 9.
While the conversion to EAFs promises a substantial reduction in carbon dioxide emissions, it requires a significant capital outlay and will inevitably lead to increased production costs, primarily due to the cost of energy and raw materials.
“Ensuring predictability of investment recovery is paramount for a private enterprise like Nippon Steel to undertake such monumental investments,” a company spokesperson said, emphasizing the need for a return on any investment.
“Beyond the government support we’ve gratefully received, establishing a robust green steel market where ‘CO2 reduction values’ are properly compensated remains our most significant challenge,” the company said.
Fastmarkets’ weekly calculation 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 $100-206 per tonne on Friday, unchanged week on week.
And Fastmarkets’ assessment of the green steel base price, HRC, cfr Vietnam, weekly inferred, which is calculated by adding new spreads to Fastmarkets’ Japan, Korea and Taiwan-origin HRC prices, was $600-721 per tonne on Friday, also unchanged from May 23.
Nippon Steel has been a vocal advocate for market-based mechanisms to support green steel and actively participated in the Ministry of Economy, Trade & Industry’s “Study Group on Green Steel for GX,” which has proposed public and private sector measures to foster the growth of the green steel market.
It has also helped to develop the World Steel Association’s “Guidelines on Green Steel,” based on the Japan Iron & Steel Federation standards.
The company is also actively promoting the understanding of green steel within the International Organization for Standardization (ISO) and other international bodies, laying the groundwork for a global social infrastructure that instils confidence in customers using green steel.
Other Japanese steelmakers have also announced plans to shut down blast furnaces and start up new EAFs in the next five years.
JFE Steel has plans for an EAF slated to commence operations in 2027, while Kobe Steel has said it is considering replacing two blast furnaces with a large EAF after 2030.
Domestic demand for scrap is likely to tick up from 2027 on, steel scrap market participants said, potentially reducing the amount of scrap available for export and, currently, Japan is a net exporter for steel scrap – supplying steelmakers across Asia, including those in Vietnam, South Korea, Taiwan and Bangladesh.
At present, traders and scrapyards do not expect to see any immediate impact on scrap prices, given the sluggish automotive and construction sectors and the potential impact of Japan’s ageing population which has dented general overall consumption.
Fastmarkets’ weekly price assessment for steel scrap H2, export, FOB main port Japan, was ¥41,500-42,500 tonne on May 28, narrowing upward by ¥1,000 per tonne from ¥40,500-42,500 per tonne.
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