As global steelmakers face the challenge of reducing or even eliminating their carbon emissions, they must have access to freely traded scrap to supportthe switch from basic-oxygen furnace based production, according to the Bureau of International Recycling President Tom Bird while speaking to S&PGlobal Commodity Intelligence.
“The circular economy is global, it is not local,” said Bird during an interview at the ISRI 2022 Annual Convention in Las Vegas. “If we are to supportcountries in Southeast Asia putting in steelmaking processes that actually reduce carbon emissions going forward, we have to be able to supply themwith material as well.”
If Europe and the rest of the world are going to continue to trend closer to the US approximate split of 70% electric arc furnace steelmaking to 30% BOFproduction, it’s imperative that countries have access to freely traded material.
“It’s going to take everyone to get us around the split you have in the US. Making sure we can freely trade scrap to enable those countries moving awayfrom primary products to secondary that they have access to the material within their own economies. They need to be importing, therefore we have toget it out to them,” said Bird.
He was wary of recent measures of what he referred to as “backdoor protectionism” In Europe that aimed to reduce the amount of scrap exported underthe guise of environmental reasons or health and safety standards. “We can’t cut [other countries] off by imposing regulations in Europe because theEuropean steelmakers want to keep it,” said Bird.
Steelmakers to acquire scrap supply
Steelmakers, particularly n Europe were expected to push more into the scrap market by acquiring suppliers to secure the crucial raw materials. “If youlook at a company like ArcelorMittal, they are looking to invest in [scrap companies]. I think that is what we could well see going forward. You are goingto see steel mills needing to secure their supplies of steel scrap if they are to achieve their carbon targets,” added Bird.
The expected trend would be like what occurred nearly 15 years ago in the US with steelmakers like Nucor and Steel Dynamics acquiring the David J.Joseph company and OmniSource, respectively.
“I believe we are going to see investments from big steel companies down the line to scrap companies particularly in Europe,” said Bird.
