In my report last year, I warned of “clouds on the horizon” as we entered 2022 in the form of proposed changes to the EU Waste Shipment Regulation (WSR) that had “the potential to heavily restrict exports to many parts of the world”. Well, here we are 12 months later and our industry remains under the same Sword of Damocles.

On January 17 2023, the plenary vote in the European Parliament brought approval of changes to the
WSR that will place a heavy burden on EU exports
to industrialized and also developing countries through the need for intergovernmental agreements and inspections, audits and checks on facilities in third countries. Such a stringent control regime will mean that flows are likely to be severely limited. No distinction is made between lower-value recyclables and the ferrous sector’s high-value products which help steelmakers around the world achieve their decarbonization goals.

In the 13th edition of our hugely respected publication “World Steel Recycling in Figures”, Statistics Advisor
Rolf Willeke confirmed that this has now been given
the subtitle “A raw material for green steelmaking” in order to highlight the environmental importance of steel scrap use. Most recent data indicate that, each
and every year, steel scrap recycling prevents nearly 950 million tonnes of CO₂ emissions that would have resulted from producing steel using virgin raw materials. Such achievements should never be forgotten or undersold.

At the same time, we should waste no opportunity
to stress that the scale of these achievements owes much to free access to global markets. As Mr Willeke has consistently stated, steel scrap is an ecologically unrivalled raw material used worldwide in steelworks and foundries, as well as an internationally-traded commodity subject to global market prices. As such, it should be subject to no more trading controls than any other raw material.

It seems entirely counter-intuitive that this threat to exports has arisen at a time when the global steel industry is under customer and consumer pressure to deliver “greener”, decarbonized steel, most obviously achieved through greater use of scrap. In effect, decarbonization and a healthy recycling industry go hand in hand.

Eric Niedziela, Vice President Climate Action at ArcelorMittal Europe, confirmed at our divisional
meeting last May that European steelmakers would be requiring substantially increased quantities of scrap
to boost their attempts to reduce the carbon footprint
of their operations. But as pointed out in Barcelona by BIR President Tom Bird, this should not be achieved at the expense of free trade in scrap which, if seriously compromised, could lead to lower recycling rates and
a drop-off in investment that would harm not only the interests of the steel sector but also of the environment. Cinzia Vezzosi, Immediate Past President of the European Recycling Industries’ Confederation, warned the same meeting that stopping free trade out of Europe would leave almost 20 million tonnes of steel scrap with no obvious home. How can this make sense?

Europe does not have a monopoly on apparently counter-productive legislation: in late November last year, for example, South Africa issued a directive to regulate trade in ferrous scrap and semi-finished products in a bid to tackle metal theft. As BIR noted in a letter to the South African government, export restrictions have proved in the past to be ineffective in preventing metal theft from public infrastructure.

Our meeting in Dubai last October highlighted opportunities for scrap exporters to support the “greening” of steelmaking capacity, with Sanjoy Kumar Ghosh of BSRM Steels Ltd in Bangladesh pointing to his country’s growing need for scrap imports to support new infrastructure projects. His words provided further evidence that restrictions on EU scrap exports would not be a problem for Europe alone; it would have dramatic repercussions on markets globally.

Also in Dubai, Lee Allen of Fastmarkets lamented the loss of economic momentum during 2022, apparent in the reduced demand both for finished steel and our scrap. Energy availability/ price pressures forced many in industry to cut production while rising interest rates in many parts of the world also dampened economic and industrial activity. The impact on our own businesses has been clearly visible at the weighbridge, with significantly diminished yard infeed.

Despite a slight improvement in general market sentiment in late 2022, the early part of 2023 has brought no major alleviation of these pressures. Certainly, there seems little possibility of a significant relaxation in energy costs. By the time you read this report, I sincerely hope that I have been proved wrong and that we can resume the post-COVID recovery cut so abruptly short in 2022.