Environment and Energy

Fitch: BF-BOF Steelmaking Faces Long-Term Climate Risks

Written by Laura Miller

May 23, 2022

Because of their large amount of carbon emissions, blast furnace-basic oxygen furnace (BF-BOF) steelmaking and the raw materials used in the steelmaking process are extremely vulnerable to long-term climate risks in the transition to a low-carbon economy, according to Fitch Ratings.

Fitch has assigned Climate Vulnerability Scores to the metals and mining sectors in a new report, with the higher the score suggesting the greater vulnerability in the transition to a low-carbon economy. Sectors with lower scores will see fewer disruptions and may even benefit from the transition, while sectors with higher scores may face an existential threat.

The BF-BOF sector’s score rises steadily from 30 in 2025 to 80 by 2050. The EAF route, meanwhile, starts at 20 in 2025 and rises to just 40 by 2050.

As pressure increases on carbon costs and capex needs rise, BF-BOF steelmaking will become less competitive than the electric arc furnace route. EAF steelmaking is a much easier way for companies to achieve carbon neutrality, Fitch says.

The raw materials used in BF-BOF steelmaking, including metallurgical coal and iron ore, also face climate vulnerabilities and declining demand as more companies choose the EAF route. Iron ore’s long-term climate risk, with a score of 20 in 2025 and 40 by 2050, is lower than met coal, as iron ore is used in all steelmaking processes, save for EAFs utilizing only scrap, and demand is forecast to remain stable. Met coal’s score rises from 30 in 2025 to 80 by 2050.

By Laura Miller, Laura@SteelMarketUpdate.com

Laura Miller

Laura Miller is a reporter and editor for Steel Market Update. She has held a variety of positions within the steel industry since 2007, including reporting and editing for Steel Business Briefing/Platts, the Association for Iron and Steel Technology, and Kallanish Commodities, as well as marketing for what was then known as ThyssenKrupp Steel USA (now AM/NS Calvert). After a five-year hiatus working across other industries, she returned to steel in 2021 and has covered the flat rolled, tubular, and trade areas of the industry. She is a member of the Association of Women in the Metal Industries and a past-president of the AWMI Pittsburgh Chapter. She holds a BA in Latin American Studies from Edinboro University of Pennsylvania. She can be reached at laura@steelmarketupdate.com or 724-759-7869.

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