19 August 2022 – There is fierce competition for steel scrap. In the first half of 2022 alone, the EU exported almost as much steel scrap as in the whole of 2021 or 2020. It quickly becomes clear why ferrous and non-ferrous scrap is already being called the new gold.
Scrap is the new gold
Ferrous and non-ferrous scrap has been an integral part of the production chain of metal producers, especially in the steel industry, for quite some time.
Tying up important raw materials
The new EU Waste Shipment Regulation has therefore been explicitly designed, not only in our estimation but also that of other industry experts, to keep scrap as an important raw material in the European Union, to reduce costs for domestic steel producers and to ensure sufficient supply for decarbonisation efforts.
Is steel scrap supply in danger of drying up?
The export figures for scrap from the EU speak a clear language about how important the raw material “scrap” has become. In the first six months of 2022 alone, as much scrap was exported from the EU as was exported in almost the whole of 2021 or 2020, despite a scrap price rally that saw scrap prices triple compared to March 2020. Eurometal President Fernando Espada already called scrap the new gold.
No free ETS allowances without stainless steel scrap
Scrap is already the main raw material for stainless steel producers in the EU, which is why the meaningfulness of pricing in Europe based on base price and alloy surcharges has already been questioned. According to their own information, many European steel producers already use a very high proportion of stainless steel scrap in their Electric Arc Furnaces (EAF). In some cases up to 90%. So why pay for expensive raw materials that are not even used in the production of stainless steel in Europe, but are obtained from recycled raw materials?
The higher the proportion of scrap in the EAF, the easier it is for manufacturers to meet the EU’s increasingly stringent benchmark values for CO2 emissions in order to claim the free and much sought-after emission allowances (ETS). Not only for stainless steel, but also for ordinary carbon steel.
Scrap price rally in 2022
The scrap price rally in early 2022, shortly after the outbreak of the Ukraine war, quickly showed how sensitive and significant the market for recycled steel and other non-ferrous scrap has become for the global economy.
Scrap more than just the new gold
In the face of dwindling raw material reserves, changing global positions, the immense need for metal for the green transformation, and also the expansion drive of the Indian steel industry towards an annual production volume of 300 million tonnes of steel, which is seen as dangerous by many manufacturing countries, is likely to make the new gold one of the most sought-after commodities in the world for the foreseeable future.
Scrap prices 90% higher than in 2020
At any rate, European scrap prices are currently on the rise again – partly due to the climatic changes. And despite high volatility in recent months, they are still almost 90% higher than in March 2020.
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We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.
Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.
