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Most steel is made by one of two industrial routes. The integrated blast furnace-basic oxygen furnace (BF-BOF) route turns iron ore into hot metal with coke, then refines it with oxygen and scrap. The electric arc furnace (EAF) route melts scrap and, where needed, direct reduced iron (DRI) or hot metal with electricity. Both routes cast and roll liquid steel into products, but their costs respond to different feedstocks, energy markets, plant configurations and product requirements. There is therefore no meaningful single global cost per tonne without specifying a location, route, grade, input mix and accounting boundary.
Steelmaking in one view
Worldsteel reports approximately 1,882.6 million tonnes of crude steel production in 2024. Its current explainers put the broad route split at about 70% BF-BOF and 30% EAF, although the percentages are approximate and vary by region. The routes are complementary rather than interchangeable: ore-based ironmaking supplies virgin iron units, while EAFs can recycle large quantities of existing steel and use other metallic inputs when scrap quality or availability is insufficient.
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| Characteristic | BF-BOF (integrated route) | EAF (electric route) |
|---|---|---|
| Primary metallic feed | Iron ore converted to hot metal; scrap is added in the converter | Scrap and/or DRI or hot metal |
| Main energy exposure | Coal and coke, with fuel and reductant needs concentrated in ironmaking | Electricity for melting; economics depend on the local power price and grid |
| Ironmaking from ore on site | Yes, in the blast furnace | No; any DRI or hot metal was made upstream |
| Scrap share capability | Uses scrap, generally up to about 30% of the metallic charge | Can use up to 100% scrap when suitable material is available |
| Typical cost sensitivities | Iron ore, metallurgical coal/coke, limestone, furnace efficiency and emissions controls | Scrap or DRI prices, electricity, electrode and operating efficiency, and product chemistry |
These are route-level distinctions, not guarantees for every plant. A mill may use a mixed charge, produce several grades, buy intermediate iron units, or operate equipment that changes the balance of energy and materials.
How the BF-BOF route makes steel
The integrated route starts with ore-based ironmaking. Iron ore is mostly iron oxides; the process must remove oxygen and leave metallic iron. Coking coal is converted into coke, a porous carbon material that supplies heat, structural support and the principal reducing action in the blast furnace.
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- Prepare the burden. Iron-bearing materials, coke and limestone are sized and blended for stable furnace operation. Limestone acts as a flux, combining with unwanted minerals to form slag.
- Reduce ore in the blast furnace. A blast of hot air supports coke combustion. Carbon monoxide and heat reduce iron oxides, producing liquid hot metal (pig iron) and a separate slag phase.
- Transfer hot metal to the basic oxygen furnace. The converter receives hot metal, a controlled amount of scrap and fluxes. High-purity oxygen is blown through the bath, oxidizing excess carbon and other elements. Scrap absorbs heat and contributes metallic iron.
- Adjust the steel chemistry. Sampling and alloy additions bring carbon, manganese and other elements within the specification for the intended grade. Secondary refining may be used where tighter cleanliness or composition is required.
- Cast and roll. Liquid steel is continuously cast into slabs, blooms or billets, then reheated or processed through rolling mills into coil, plate, sections, bars and other forms.
Because the blast furnace makes new iron from ore, BF-BOF plants are especially exposed to iron-ore quality and metallurgical-coal or coke markets. The route can incorporate substantial recycled steel, but scrap cannot replace the ore-based ironmaking function completely in an integrated operation.
How the EAF route makes steel
An electric arc furnace melts metallic feedstocks with electrical energy. The usual charge is ferrous scrap, but a plant can add DRI, hot briquetted iron or hot metal when it needs extra iron units, a more predictable chemistry or a lower level of residual elements than its scrap supply provides.
- Sort and charge metallics. Scrap is graded and loaded with the planned blend of DRI, hot metal and alloys. The blend must meet limits for residual elements and contaminants imposed by the target product.
- Strike an electric arc. Graphite electrodes create arcs that melt the charge. Oxygen injection, carbon additions and burners can supplement the electrical input and speed melting.
- Refine and heat. Operators remove impurities into slag, add alloys and control temperature. The exact practice depends on the grade and the proportion of scrap versus virgin iron units.
- Cast and roll. As with BF-BOF steel, the refined liquid is cast and sent to rolling or finishing equipment.
An EAF does not make iron from ore by itself. If DRI or hot metal is part of the charge, the ore-reduction step happened in a separate upstream facility. Consequently, an EAF’s apparent plant emissions and cost cannot be interpreted without identifying the origin of those iron units and the electricity used.
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Worldsteel publishes route examples for producing 1,000 kilograms of crude steel. They are approximate averages, not a universal operating recipe; actual plants change the mix with furnace design, feedstock quality, product grade and operating practice.
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| Input for 1,000 kg crude steel | BF-BOF route average | Recycled-steel EAF example |
|---|---|---|
| Iron ore | 1,370 kg | 586 kg |
| Metallurgical coal or coal | 780 kg metallurgical coal | 150 kg coal |
| Recycled steel | 125 kg | 710 kg |
| Limestone | 270 kg | 88 kg |
| Electricity | Not stated in this route example | 2.3 GJ |
The EAF example still lists iron ore and coal because it is not a claim that every EAF is 100% scrap. It illustrates a recycled-steel charge that also uses other iron and carbon inputs. A plant running a different scrap share or using DRI will have a different material and energy balance.
What determines the cost of a tonne of steel?
Feedstock prices and quality
BF-BOF economics track iron-ore prices, metallurgical coal and coke, limestone and the cost of any scrap added to the converter. EAF economics track scrap, DRI or hot-metal prices and electricity, plus consumables and alloy additions. Price alone is not enough: chemical composition, moisture, size, strength and unwanted residuals affect yield, furnace productivity and whether a feedstock can make a particular grade.
High-quality ore can support efficient furnace operation; inconsistent or contaminated materials may require blending, extra treatment or a larger share of virgin iron. In an EAF, obsolete scrap with high residual copper or tin can restrict the products a mill can make unless it is diluted with DRI or hot metal. The cheapest nominal feed is not necessarily the lowest-cost usable feed.
Energy type, price and availability
Worldsteel notes that energy cost depends heavily on the type of energy and a facility’s location. BF-BOF energy inputs are predominantly coal-based because coke supplies both heat and reduction in the blast furnace. A scrap-heavy EAF relies predominantly on electricity for melting. Local power tariffs, demand charges, contract structure, interruptions and the grid’s available capacity can therefore have an outsized effect on EAF costs.
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As production shifts some energy exposure from globally traded coal toward locally priced electricity, two otherwise similar EAFs can face very different costs in different regions. Energy efficiency also varies with route, input quality, scrap percentage, product mix, operating control and material efficiency. A route label by itself cannot predict the energy bill.
Scrap supply, collection and quality
Scrap reduces the need for newly mined ore and can lower energy use and emissions. Both routes use it: EAFs can charge up to 100% scrap, while BF operations can generally use up to about 30%. The practical limit is set by furnace technology, chemistry, product requirements and the scrap available to the plant.
There is not enough recovered scrap to satisfy total global steel demand. Steel remains in buildings, infrastructure, vehicles and machinery for years or decades before it becomes available for collection. Even when the total quantity is adequate, regional collection systems and sorting quality can leave a mill short of the grade it needs. Scrap prices can consequently rise when several EAFs compete for the same local supply.
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Two mills on the same route can have different costs because of furnace size, utilization, maintenance, yield and process control. Energy and material efficiency change with the quality of ore and reductant, the percentage and quality of scrap, and the amount of steel lost during casting and rolling.
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Product mix matters as well. A plant making commodity bars may use a different charge and finishing sequence from one making tightly specified automotive sheet or heavy plate. Extra refining, cleanliness control, alloy additions, surface finishing and dimensional tolerances consume time and materials. The relevant cost is therefore the cost of producing the specified saleable product, not simply the cost of melting one tonne of liquid steel.
Location and input-market exposure
Location changes the delivered cost and reliability of the inputs a plant can obtain. An integrated mill needs dependable access to ore, coking coal, fluxes and high-temperature process infrastructure. An EAF needs a stable electricity supply and a regional scrap or DRI market. The same route can be advantaged in one region and disadvantaged in another because energy contracts, feedstock grades and availability differ.
For that reason, a published spot price for ore, scrap or electricity cannot be added together to produce a credible global steel cost without specifying the plant’s contracts, conversion efficiencies, yield, product and accounting period.
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Ore-based ironmaking accounts for a large share of BF-BOF emissions because carbon is used to remove oxygen from ore. EAF emissions depend strongly on the electricity mix and on whether the charge is scrap, DRI or hot metal. A comparison must state its boundary: plant-only emissions are not the same as a life-cycle total that includes upstream mining, ironmaking or power generation.
Best Value
Worldsteel’s 2025 climate report gives a 2024 industry figure of 2.18 tonnes of CO2e per tonne of steel across scopes 1, 2 and 3. That is a global, all-route average, not the footprint or production cost of an individual mill.
Recycling is important, but it cannot eliminate ore-based production while demand continues to grow faster than end-of-life steel becomes available. Today’s system needs both primary ironmaking and recycling capacity, with the balance shaped by regional resources and the products being made.
What low-emissions hydrogen steel costs today
Hydrogen-based direct reduction paired with an EAF is an emerging option in regions with suitable hydrogen and electricity supplies. Hydrogen replaces much of the carbon-based reduction step in making DRI; the resulting iron is then melted in an EAF. The economics depend on hydrogen production cost, electricity, electrolyzer and shaft-furnace utilization, ore quality, financing and local infrastructure.
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As the World Steel Association’s 2025 climate report puts it: “There is no single solution to enable low and near-zero steelmaking, and a broad portfolio of technological options is required to be deployed alone or in combination as local circumstances permit.”
How to build a defensible steel-cost estimate
If you need more than a market quotation, define the calculation before collecting prices. A useful estimate should specify:
- Plant and region: include the electricity market, fuel contracts, currency and date.
- Production route: BF-BOF, scrap EAF, EAF with DRI, EAF with hot metal, or a hybrid configuration.
- Product and grade: identify whether the figure is for crude steel, a cast semi-finished form or a finished coil, plate, bar or section.
- Metallic charge: state the percentages and grades of scrap, ore, DRI and hot metal.
- Operating assumptions: include yield, utilization, energy efficiency, maintenance and material losses.
- Accounting boundary: say whether the result covers only the plant, includes purchased electricity, or includes upstream mining and ironmaking.
Only after those choices are fixed should you multiply each input by its delivered quantity, add energy and processing costs, and divide by saleable tonnes. Comparing two figures that use different boundaries can create an apparent cost advantage that is only an accounting difference.
Quick Recap
Key takeaways for buyers and analysts
- BF-BOF converts ore to hot metal with coke, then uses oxygen and scrap to make steel.
- EAF melts scrap and/or DRI or hot metal with electricity; it does not reduce ore on its own.
- Route-average input quantities are useful for orientation, not for budgeting a specific mill.
- Electricity prices are especially important to EAFs, while coal and coke dominate much of BF-BOF’s energy exposure.
- Scrap can reduce virgin-material use, but supply, collection and residual elements limit how far it can replace ore.
- Product grade, plant efficiency, location and accounting scope can matter as much as the nominal route.
- Hydrogen-based production currently carries a region-dependent early-commercial premium rather than one fixed global cost.
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