China’s Electric-Arc Steelmakers Regain Edge as Profits Recover

Why It Matters

Higher EAF utilization signals a shift toward lower‑carbon steelmaking, improving profitability and aligning with China’s emissions targets. It also pressures traditional blast‑furnace producers, reshaping industry dynamics.

Key Takeaways

• Utilization reached 61%+, highest since Jan 2024
• 94 EAF mills surveyed by Mysteel provided data
• Greener EAF process now outperforms traditional blast furnaces
• Profit margins improve as carbon costs rise for rivals
• Signals accelerating transition to low‑carbon steel in China

Pulse Analysis

The latest Mysteel survey shows China’s electric‑arc furnace (EAF) sector operating at 61 % of capacity in the week to April 2, the strongest level since January 2024. After a prolonged period of sub‑60 % utilization, the rebound reflects both recovering domestic demand and the growing cost advantage of EAF technology over traditional blast furnaces. EAF plants, which melt scrap metal using electricity, emit roughly 30 % less CO₂ per tonne of steel, aligning with Beijing’s 2025 carbon‑intensity targets and the government’s push for greener manufacturing.

The utilization surge translates directly into higher profit margins for EAF operators. Lower energy tariffs, increased availability of cheap scrap, and the looming carbon‑pricing regime squeeze the economics of coal‑fired blast furnaces, forcing many to curtail output. As a result, EAF producers can capture a larger share of the market while maintaining healthier earnings. International buyers are also watching, because Chinese EAF steel often meets stricter environmental standards, making it more attractive for downstream automotive and construction firms seeking sustainable inputs.

Looking ahead, sustained EAF capacity use could accelerate the structural shift toward low‑carbon steelmaking in China, reshaping global supply dynamics. Investors may see increased capital allocation to EAF upgrades and scrap‑sourcing logistics, while traditional steelmakers could face consolidation pressure. If policy incentives for renewable electricity continue, the cost gap between EAF and blast‑furnace production may widen further, prompting a faster phase‑out of carbon‑intensive assets. Stakeholders should monitor utilization trends, carbon‑price developments, and export demand to gauge the long‑term impact on profitability and market share. Overall, the EAF revival positions China as a potential leader in sustainable steel production.