And yet the potential exists for that figure to double over the next 30 years, according to Dr Steven Vercammen, Senior Knowledge Expert at management consulting firm McKinsey & Company.
Delivering a presentation on the “Decarbonization of the steel industry and its impact on the steel recycling sector” to the BIR Ferrous Division’s latest webinar on November 3, Dr Vercammen argued that, in world terms, the push to reduce carbon emissions will create “a large opportunity” to grow scrap’s share of current steelmaking raw materials beyond its current average of 30%. The key challenges, he added, are to extract more scrap from the system and to enhance quality.
Having traditionally followed iron ore and coking coal trends, scrap prices are likely to “disconnect” as a result of “this whole decarbonization pressure and the importance of using more scrap to be able to reduce CO2 emissions”, Dr Vercammen told the webinar hosted by BIR Ferrous Division President Gregory Schnitzer of Sims Metal Management.
Prices of value-added scrap will increase, agreed Dr Benedikt Zeumer, Partner at McKinsey & Company. “Recycled materials will be much more favourable in terms of CO2 emissions and probably also energy intensity,” he contended.
“China is moving in the direction of use of higher percentages of scrap and is reducing the percentage of steel made from iron ore,” concurred fellow guest speaker Scott Newell, Chairman of Newell Recycling Equipment in the USA and Vice Chairman of China Recycling Newell Equipment. “A few years ago, there was concern that China might become a huge scrap exporting country, with the effect that it would hurt scrap prices around the world. The opposite is what is happening. China will need to import scrap rather than iron ore and coal in order to reach the goals of a cleaner environment and more cost-effective steel production.”
Around 630 million tonnes of steel scrap are recycled worldwide every year, preventing nearly 950 million tonnes of CO2 emissions and making “a decisive contribution to climate protection”, confirmed the BIR Ferrous Division’s Statistics Advisor Rolf Willeke in presenting the latest “World Steel Recycling in Figures” update. Adding in scrap usage within the foundry sector, annual CO2 emission savings amount to over 1 billion tonnes.
The speaker highlighted a 47.1% surge in China’s steel scrap consumption to a world-topping 137.95 million tonnes in the first six months of 2021, thus reflecting the objective announced in China’s latest Five-Year Plan to reduce CO2 emissions in crude steel production through increased steel scrap usage.
Also in the January-June 2021 period, the 33.2% year-on-year increase in Turkey’s overseas steel scrap purchases to 12.872 million tonnes confirmed the country’s standing as “the world’s foremost steel scrap importer”, said Mr Willeke. Despite Brexit, meanwhile, the EU remained the world’s top steel scrap exporter in growing its shipments by an “enormous” 49.3% to 11.241 million tonnes.
In a series of market reports, George Adams of SA Recycling contended that mills in the USA “continue to make record profits on wide margins between scrap and new steel prices”. Barring unforeseen events, he added, “the US scrap market can be expected to remain steady and range-bound through to the end of 2021 on continued logistical delays and steady new steel demand”, with any bias towards “a slight upside, especially for shredded”.
Scrap prices in Japan have remained “in a rather high range” over recent months whereas exports have been on a downtrend, according to Ted Taya of Shinsei Scrap Co Ltd. Reporting on market conditions in Europe, Denis Reuter of TSR Recycling GmbH & Co. KG in Germany said the outlook appears “difficult” for the remainder of the year, not least because steel production cuts of 15-20% are projected for this period in response to soaring energy prices.
It was announced during the webinar that Mr Reuter is to succeed Mr Schnitzer as President of the BIR Ferrous Division.