Scrap use cuts CO2 emissions and producers are increasingly looking for more sustainable operations than conventional steel-making.
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The recent COP26 gathering of more than 100 countries focussed global attention on the climate crisis. While there has been criticism from the recycling community that conserving and recovering vital materials was largely overlooked, it is clear that global efforts to reduce carbon emissions present a significant opportunity to grow scrap’s share of the steelmaking sector beyond its current average of 30%.
That was the view of Steven Vercammen, senior knowledge expert at consultants McKinsey, during the BIR ferrous division’s latest webinar. He identified two key challenges: 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 decarbonisation pressure and the importance of using more scrap to be able to reduce CO2 emissions’, he argued. One factor, Vercammen said, was China’s increasing consumption of steel scrap which he believed could double from its current 240 million tonnes by 2050.
‘China is moving in the direction of use of higher percentages of scrap and is reducing the percentage of steel made from iron ore,’ commented fellow panellist 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’, BIR’s statistics advisor Rolf Willeke calculated in his update of the latest steel recycling numbers. Adding in scrap usage within the foundry sector, annual CO2 emission savings amounted to over one billion tonnes, he added.
Willeke highlighted a 47.1% surge in China’s steel scrap consumption to 137.95 million tonnes in the first six months of 2021, reflecting the objective announced in China’s latest Five-Year Plan to reduce CO2 emissions in crude steel production through increased steel scrap usage. In the January-June 2021 period, it was pointed out, a 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’.
The EU remained the world’s top steel scrap exporter, growing its shipments by 49.3% to 11.241 million tonnes.
Prices for HMS 1/2 80:20 cfr Turkey from the EU rose in October, a welcome reversal in the trend of the previous three months of decline. After the US$ 466 per tonne recorded in August, the same cargoes in September declined further to US$ 432 per tonne. Traders hoping the October returns around the US$ 470 would mark a return to growth would have been encouraged by reports in early November of deals closer to US$ 500.
The World Steel Association (worldsteel) believes that demand for steel this year will grow by 4.5%, a significant rise on the 0.1% recorded during 2020. Its latest short range outlook assumes that future waves of the Covid-19 virus will be less damaging and disruptive with a forecast growth in 2022 of 2.2%, a stronger recovery than expected. There have been upward revisions in the forecast across the board except for China.
The worldsteel report notes that, although the manufacturing sector’s recovery remained more resilient to new waves of infection, supply-side constraints led to a levelling off of the recovery in the second half of the year and were preventing a stronger recovery.
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