China lags significantly behind its competitors in EAF steel production – research

China needs to reduce BF-BOF steel production by more than 90 million tons compared to 2024 levels in order to achieve its climate goals for the industry this year. This is according to a study by the Centre for Research on Energy and Clean Air.

If the country fails to meet its target of producing 15% of steel in electric arc furnaces this year, it will increase CO2 emissions by more than 160 million tons, which is almost equivalent to the carbon footprint of the EU steel sector. The actual share has remained unchanged at around 10% for more than a decade.

According to the center, China lags significantly behind its global competitors in terms of the share of steel production in EAFs. The average share worldwide is about 30%, in the US – 71.8%, in India – 58.8%, and in Japan – 26.2% as of last year.

From 2021 to the first half of 2025, the utilization rate of blast furnaces in China increased from 85.6% to 88.6%, while that of electric arc furnaces decreased from 58.9% to 48.6%.

Although the green steel policy offers support, manufacturers using scrap-based EAFs remain at a disadvantage due to high electricity costs, unreliable raw material supplies, and mounting financial losses. This has led to widespread plant closures and at least one bankruptcy in mid-2025.

China recently liberalized scrap imports. However, last year they fell by half, significantly hampering the profitability of electric arc furnace steel production.

As Belinda Shepe, an analyst at the center, noted, a reliable strategy to reduce high-emission production and curb excess capacity will not only solve the sector’s structural problems but also ease global tensions.

In June 2025, Chinese steel companies belonging to the CISA industry association increased their total emissions by 17.3% compared to June 2024.