Example – constraints on steel production

Generic product activity or name

Carbon steel.

Context and background
Globally, steel is produced mainly via two routes: the blast furnace-basic oxygen furnace (BF-BOF) route and electric arc furnace (EAF) route. About 70% of steel is produced using the BF-BOF route. EAF uses electricity to melt scrap steel (World Steel Association 2017). Scrap steel is also added as a coolant in the BOF. The use of scrap metal feedstock greatly reduces the energy required to make steel when compared with primary BF-BOF steelmaking from ores. Another benefit is flexibility of the EAF plants that are more easy to start up and close down, allowing the steel mill to vary production according to demand.

Presentation of example
Within the last decade the market for steel scrap has become a global market, since the demand is steadily increasing and new buyers like China appear on the market as importers of steel scrap (Metalminer 2010).

Steel scrap is a fully utilized by-product or waste, either from production of steel (new scrap) and from uses of steel (old scrap). Even though there is a high demand for steel scrap it is by definition a constrained raw material since it is not the driver (determining product) in its production process. Thus a change in demand for steel cannot affect the output from plants that use the electric arc furnace (EAF) technology, since this technology is constrained by the availability of its main raw material (steel scrap). This leaves only the modern basic oxygen furnace (BOF) technology to be affected by a change in demand for more steel – making the BOF technology the marginal steel production technology.

Information sources used
Trade statistics and forecasts are available from the International Iron and Steel Institute (http://www.worldsteel.org/) and World Steel Dynamics (http://www.worldsteeldynamics.com/).

Metalminer 2010. http://agmetalminer.com/2010/11/10/global-steel-scrap-trends/ (Link no longer live)

Weidema B P (2003). Market information in life cycle assessment. Copenhagen: Danish Environmental Protection Agency. (Environmental Project no. 863) http://lca-net.com/p/1078

World Steel Association(2017). Factsheet – Energy use in the steel industry. https://www.worldsteel.org/en/dam/jcr:f07b864c-908e-4229-9f92-669f1c3abf4c/fact_energy_2016.pdf (accessed 23. May 2017)

Author of this example
Bo Weidema


How to reference this
Weidema B P (2017), Example –constraints on steel production. Version: 2017-05-23 www.consequential-lca.org