According to data from Platts (S&P Global Commodity Insights), the production cost gap between steel billets manufactured using the Electric Arc Furnace (EAF) process and the Blast Furnace (BF) process in Southeast Asia has narrowed significantly in August 2025. The shift is driven by opposite movements in raw material prices, creating new considerations for steelmakers in optimizing production costs and operational strategies.
Production Cost Gap Narrows Significantly
In July 2025, the cost difference between EAF and BF billet production stood at USD 85 per tonne. By August, the gap had narrowed to USD 72 per tonne, representing a decline of more than 15%.
This change was driven by contrasting cost movements. The production cost of the BF route increased from USD 407 per tonne to USD 415 per tonne, while the EAF route became more cost-efficient, with production costs falling from USD 492 per tonne to USD 487 per tonne.
The increase in BF costs was mainly attributed to slightly higher iron ore and coking coal prices, although imported PCI coal into China remained relatively low at USD 106.05 per tonne in June, helping to ease part of the cost pressure.
Meanwhile, EAF producers benefited from lower imported steel scrap prices, particularly from Japan and the United States, reducing production costs and improving profit margins.
Raw Material Trends Reshape Technology Decisions
The BF process relies primarily on iron ore and coking coal, whereas the EAF process depends heavily on steel scrap. As a result, fluctuations in raw material prices directly affect the cost structure of each production route.
The narrowing cost gap suggests a new market balance, encouraging steel manufacturers to reassess which production technology best aligns with their operating conditions, raw material availability, and long-term business strategies.
Vietnamese Steelmakers Need to Stay Proactive
For Vietnamese steel producers, developments in the global raw material market remain a critical factor in production planning and cost management.
Closely monitoring price movements in iron ore, coking coal, and steel scrap enables manufacturers to make more informed decisions regarding raw material procurement, inventory planning, and overall cost optimization.
Tay Nam Steel – Building Sustainable Value
Tay Nam Steel continuously monitors market developments to provide customers with high-quality steel products at competitive prices. Beyond economic efficiency, the company also places strong emphasis on environmental responsibility and sustainable manufacturing practices.
Committed to delivering durable building materials while supporting greener construction, Tay Nam Steel strives to help customers create modern, energy-efficient, and environmentally friendly projects, contributing to the long-term sustainable development of the construction industry.
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