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Protection urged for ‘political ping-pong’ stainless sector

Markus Moll.

Green policies have the potential to further harm Europe’s already challenged stainless steel-making sector, delegates were told at the 75th anniversary convention in Amsterdam of the Bureau of International Recycling.

Markus Moll, managing director of Steel & Metals Market Research in Austria, warned during a guest address to the stainless steel session that Europe was no longer cost-competitive. ‘Without protection, we are losing this industry,’ he said, adding that Europe’s stainless steel industry was ‘increasingly becoming the ping-pong ball of politics’ with stricter climate goals coinciding with competition from major mills in Asia drawing from supply chains ‘that gives them the lowest cost base in the world’.

Moll noted that the rapid growth of nickel pig iron-based stainless steel production had dragged down the overall 18/8 scrap ratio to an estimated 41% in 2022, ‘the lowest global total seen in a long time’. China production was expected to grow 4.5% whereas European production was likely to record a decline of 3% following a fall of nearly 12% in 2022.

He also suggested a radical shift in the economic model with mills buying scrap directly while ‘recyclers do the processing for a fee: that would be fairer’.

Frank Pothen, a senior research associate at the Fraunhofer Center for International Management and Knowledge Economy in Germany, reported on the ‘substantial ecological benefits from using scrap’ in stainless steel. A Fraunhofer study earlier this year had found that CO2 emissions were reduced by 6.7 tonnes for every tonne of stainless steel scrap used.

One suggestion from the study was to allow a ‘scrap bonus’ of environmental cost savings to be part of pricing mechanisms included integrating mining into the EU emission trading scheme. Another was to integrate raw materials and intermediate products into the Carbon Border Adjustment Mechanism (CABM), the EU’s attempt to price the carbon emitted during the production of carbon intensive goods that are entering the EU and to encourage cleaner industrial production in non-EU countries.

Having argued that incentives to use scrap were better than mandatory utilisation quotas, he also insisted that EU export barriers not only would reduce scrap prices in Europe but also would cut scrap use outside of the EU, thereby undermining climate policy efforts. ‘We should let the scrap go where it is needed the most and has the most benefit and let the market decide where that is.’

Pothen also suggested a continuous review of CBAM ‘not only to have a level playing field between steel and stainless steel produced in Europe and that outside Europe but also one between scrap and other raw materials from which you can make steel. We have to ensure the positive effects that raw materials from recycling have are reflected in the market mechanism.’

Board member Ritesh Maheshwari of India-based Shabro Metallic, reported the stainless sector in Europe was suffering renewed price pressure and a sharp slowdown in production with some mills reportedly operating at only 50% of capacity utilisation.

Stainless steel demand had also declined in the USA following a drop in consumer spending on durable goods, whereas US stainless scrap exports had surged 120% year on year during the first two months of 2023 to more than 73 000 tonnes on improved demand from India, Taiwan, Mexico and Canada.

Early 2023 had brought an improvement in market conditions for Europe’s stainless steel sector following the low demand suffered in 2022, reported committee chairman Joost van Kleef.

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