SteelWatch

SteelWatch Explainer: Why the auto industry doesn’t need blast furnace steel

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What needs demystifying?

There is an enduring myth that the automotive sector requires steel produced from coal-based blast furnaces to meet its quality standards. This has been advanced as a reason to perpetuate blast furnace (BF) production, at a time when the fight against climate change requires the steel industry to shift to less polluting methods.

Like many myths, this once had a kernel of truth in it, but is emphatically no longer the case. Steel produced from electric arc furnaces (EAF) – which has a much lower carbon impact – is now more than capable of meeting the vast majority of the auto sector’s quality needs.

But some companies which primarily produce steel in blast furnaces have an interest in maintaining this myth. And so the idea that BFs will be essential for certain steel needs into the future is repeated across the sector.

This SteelWatch Explainer sets out:

  • The origin of this myth, and why it persists, 
  • and why it is no longer true. 

How the blast furnace myth is maintained

The myth has some very vocal proponents. They claim that only blast furnaces can produce the top-quality, flat steel that the auto industry demands. Among them are:


Lourenco Goncalves, CEO, Cleveland-Cliffs (a leading US steelmaker with significant investments in blast furnaces). According to Reuters, he frequently argues that cars’ external panels require a quality of steel that EAFs cannot produce. In a quarterly  earnings call in 2023, he commented: “Try to build a car all with…flat-rolled steel produced in flat-rolled [EAF] mini-mills. It doesn’t work.”


Antonio Gozzi, President of Federacciai, the Italian steel federation, warned in October 2024 that closing blast furnaces in response to Europe’s decarbonisation drive would force the continent’s auto sector to import flat steel from Asia in order to meet quality standards. “Decarbonisation”, said Gozzi, “risks becoming deindustrialisation, and this would be a debacle for Europe.

Industry media regularly report such comments uncritically, so reinforcing the myth.

A kernel of truth

As with all myths, it contains a kernel of truth:

  • The prime determinant of steel quality is the proportion of virgin iron (sometimes also called ‘ore-based iron’) it contains, along with the relative quantity and level of purity of any recycled (scrap) steel, used to produce the finished steel product.
  • Steel made primarily from ore-based iron, which is currently mostly made in blast furnaces, predominates in the supply of higher-quality steel products. On the other hand, EAF-based steel plants, which have emerged more recently, tend to be primarily fed with scrap and have specialised in supplying less demanding steel grades.
  • In addition, steel scrap is not always well-sorted prior to going into the EAF, and so the resultant steel produced is considered lower quality, largely due to the possible presence of impurities (‘tramp elements’) that are difficult to detect in advance.
  • So producing the highest steel grades demanded by the auto industry has been seen as more challenging when using mainly scrap steel in an EAF.
  • Hence the conclusion that only steel from blast furnaces is suitable.

But while broadly true in the past, this argument is now out of date.

Quality steel does not need a blast furnace

The key factor in determining steel product quality is the composition of the iron mix which goes into the steel – not the type of furnace.

The assumption that ‘EAF = bad; BF = good’ is founded on the premise that EAFs only produce steel made predominantly from scrap. Using lower quality iron makes lower quality steel, likely to be so-called ‘long’ steel products (as opposed to ‘flat’), which are mainly used in construction and have less demanding quality requirements.

In reality, today’s EAFs use varying quantities of virgin iron to dilute impurities present in scrap. And improvements in steel recycling and scrap sorting techniques are in any case boosting the quality of the scrap selected. It is also the case that blast furnace-based steel plants make use of some scrap in addition to virgin iron.1

The DRI (Direct Reduction of Iron Oxides) method, which is becoming increasingly common, produces virgin iron without requiring the use of a coal-fired BF. Direct reduced iron can then be processed in EAFs to produce steel.

Britain’s trade association, UK Steel, sums up the changes: “Electric arc furnaces were previously limited in [their ability to produce] all steel grades and product ranges, as residual scrap elements like copper and nitrogen can have a detrimental effect on the steel product.

However, recent innovations have shown that EAFs can produce a vast range of steel products, even some previously only produced by integrated blast furnaces, by managing the raw material mix (i.e. high-quality scrap, mixed with ore-metallics where necessary)” (emphasis added).
With these developments in mind, it’s not surprising that a number of steelmakers are supplying car companies with steel made in an EAF

Figure 1: Steel quality primarily depends on the composition of the iron mix, not the type of furnace

EAF steelmakers are already supplying the auto sector

These include Arvedi in Italy and Salzgitter in Germany, both of whom supply Mercedes-Benz. Leading steelmaker ArcelorMittal Dofasco is set to supply General Motors with steel composed of at least 70% recycled content from its EAF plant in Hamilton, Ontario. It announced that it is moving to a DRI-based method at the facility, which, when complete, will mean all ArcelorMittal facilities in North America that make automotive steel will be using an EAF-based process. The supply agreement was hailed by Jeff Morrison, GM’s vice president of Global Purchasing and Supply Chain, as “another example of how we are innovating with our suppliers to reduce emissions… It also highlights how strong supplier relationships can help build a better, more sustainable future.” 
Tata Steel UK reported (as part of recent controversy over replacing blast furnaces with EAF at Port Talbot, UK) that “EAF technology can already make 90% of the grades of steel which blast furnaces can. Adding an iron source to the scrap in the EAF – i.e. direct reduced iron, hot briquetted iron or pig iron – would enable us to manufacture the most demanding steel products for customers. The US has arguably led the way in developing ways to produce more complex grades of steels using EAFs so they can be used in some of the most demanding end uses, including in the automotive industry. Automotive and packaging companies are already buying flat steel products made in electric arc furnaces” (emphasis added). 

Innovation is transforming the steel industry

While the automotive industry already sources EAF-made steel, specific steel grades remain more difficult to produce in EAFs. These include ultra-low-carbon steels (ULC, also called IF –  interstitial-free) and silicon steels (also called electrical steels), which are used in products such as electric vehicle engines.2

However, across the steelmaking world, continuous innovation in EAF-based technology is transforming its potential, and the use of metallurgical refining processes and equipment like ladle furnaces and vacuum degassers is closing the remaining narrow gap between the capabilities of an EAF and those of a blast furnace. 
For example, U.S. Steel’s Big River plant is developing processes to simplify the production in EAFs of advanced high-strength steel grades (AHSS), as used in the automotive industry. It has already started to produce electrical steel for electric vehicle engines. Tokyo Steel, which has committed itself to a low-carbon future, is specifically targeting the auto sector with steel produced in its Tahara plant – one of the largest EAFs in the world. And Sweden’s SSAB is pioneering using hydrogen in the DRI process to produce what it calls “fossil-free steel”, some of which will be supplied to Volvo.

Looking ahead 

Taken together, all these myriad developments prove that it is long-held assumptions, rather than facts, that prevent a decisive shift away from the blast furnace.

The main reason why the auto industry remains associated with blast furnace-produced steel is because of long-standing relationships between carmakers and steel suppliers. To date, many steel companies have simply assumed that their blast furnaces supply the high quality steel the auto sector demands, and have not had to innovate further. 

Now, as innovation in EAFs gathers pace, and as more and more carmakers have climate targets to decarbonise their product supply chains, in particular that of steel, these assumptions no longer stand up to scrutiny. Instead, forward-thinking steelmakers that have established relationships with automakers are moving from coal-based BF systems to EAFs fed with scrap and DRI, to produce steel that meets their customers’ expectations in both quality and sustainability terms.

This transition is pushing steelmakers and technology providers to innovate further in order to enable EAFs to produce the few, most demanding grades that have been historically more difficult for them to deliver. 

This innovation will continue. It’s time for assumptions to catch up.

This is part of the SteelWatch Explainer series, which aims to demystify confusing issues and set the facts straight on common industry claims, so as to build understanding and momentum for transformative steel decarbonisation.

The first SteelWatch Explainer, ‘Why steelmaking drives climate change’, explains why steelmaking that relies on coal-based blast furnaces drives climate change, and how the industry can move beyond it.

Thanks to Martin Wright for editing, and to John Cooney (Industrious Labs) as well as Chris Alford and Mat McDermid (The Sunrise Project) for having reviewed this Explainer.

End notes

  1. Bernhard Voraberger, Gerald Wimmer, Uxia Dieguez Salgado, Erich Wimmer, Krzysztof Pastucha and Alexander Fleischanderl, “Green LD (BOF) Steelmaking—Reduced CO2 Emissions via Increased Scrap Rate”, Metals, 12, 466, 2022. https://doi.org/10.3390/met120304662.  
  2. The main reason for this is that materials within an EAF have more contact with the outside air, leading to higher absorption of nitrogen which is detrimental to the electrical properties of silicon steels.

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Glossary of terms

Blast Furnace / BF-BOF

A blast furnace (BF) is where iron oxides are mixed with coal to produce molten iron. The iron is then processed into steel in a basic oxygen furnace (BOF). This overall iron and steelmaking process is referred to as BF-BOF.

Electric arc furnace (EAF)

This is a furnace that uses electricity to make liquid steel from iron and other raw materials. It can be fed by scrap iron or by certain forms of virgin iron.

Direct reduction of iron ore (DRI) 

Direct reduction of iron oxides (DRI) is an ironmaking process that is an alternative to the blast furnace. Unlike the blast furnace which cannot function without coal-based products, DRI can operate with a broad range of materials (coal, gas, hydrogen) to reduce iron oxides.

DRI is today commonly used with gas. It can get close to zero CO2 emissions if it uses green hydrogen. 

Confusingly, DRI is also used to refer to direct-reduced iron (the product rather than the process). This iron can be fed into an electric arc furnace or a combination of electric smelter and basic oxygen furnace to make steel, but certain other processes are involved along the way.

Virgin iron or ore-based iron 

This refers to iron that is produced directly from iron ore. It is contrasted with iron obtained by processing and melting scrap steel.

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