The ferrous scrap industry ‘has great long-term prospects’ despite the current difficult market conditions, traders have been assured by an expert in commodity markets. A focus on more environmentally friendly steelmaking is being anticipated as a driver for the greater use of scrap.
The analysis came from Renate Featherstone, principal analyst at Wood Mackenzie in the UK, during an online forum on ferrous metals organised by world recycling organisation BIR.
Featherstone said steelmaking accounted for around 10% of global carbon emissions and producers were coming under mounting pressure from governments to look to ‘green’ steel.
‘The first logical step to reducing emissions when demand is growing is to recycle and reuse all available scrap, she said.
‘Only when we maximize scrap use do we significantly reduce overall virgin iron production and get emissions closer to government targets. This is why scrap is so important.’
In the current climate, she said, the restrictions on scrap imports in China had inflated prices, offering better margins to operators of BOF rather than EAF plants.
Wood Mackenzie’s projections suggested integrated steelmaking would remain the main source of steel in China over the next two decades but predicted the share of global steelmaking claimed by electric furnaces could rise to 30% by 2026 and then to 34-35% by the year 2040 – potentially 52% outside of China and India. ‘Even though there are difficult market conditions today, the scrap industry has great long-term prospects,’ the analyst concluded.
Featherstone said global crude steel production was likely to take at least five years to recover to 2019 levels. Demand in China was forecast to fall by 1% in 2020 – ‘much better than people thought at the beginning of the year’ – whereas a slump of 16% was anticipated for the rest of the world.
Her presentation was followed by questions and observations. An invited panel included George Adams of SA Recycling in the USA who argued that the anticipated increase in scrap use would apply such significant downward pressure on the iron ore price that its use in steelmaking could therefore be encouraged.
Featherstone said a shift to scrap would still be maintained because of incentives and governmental policies. She also argued that if ‘green’ steel did prove more expensive it would be used for products with higher margins, such as the automotive sector.
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