Why the Energy Use of Chinese Steel Industry May Peak As Early As 2015?

The iron and steel industry accounted for approximately 27% of China’s primary energy use for the manufacturing industry in 2010. This study aims to analyze influential factors that affected the energy use of steel industry in the past in order to quantify the likely effect of those factors in the future. This study analyzes the energy use trends of China’s key medium- and large-sized steel enterprises during 2000–2030. In addition, the study uses a refined Logarithmic Mean Divisia Index decomposition analysis to quantify the effects of various factors in shaping energy consumption trends in the past and in the future. The result of our forecast shows the final energy use of the key steel enterprises peaks in year 2020 under scenario 1 and 2 (low and medium scrap usage) and in 2015 under scenario 3 (high scrap usage). The three scenarios produced for the forward-looking decomposition analysis for 2010–2030 show that contrary to the experience during 2000-2010, the structural (activity share of each process route) effect and the pig iron ratio (the ratio of pig iron used as feedstock in each process route) effect plays an important role in reducing final energy use during 2010–2030.