European steelmakers’ group Eurofer has reinforced the importance for Europe to curb exports of ferrous scrap to countries that don’t meet the same environmental standards as Europe, Axel Eggert, director general of the European Steel Association, told S&P Global Platts on April 22.
The comment came after Eggert talked about the importance of the circular economy during an event on climate transition on April 21. In order to succeed with a green climate initiative by 2050 Eurofer’s director said that it “should avoid that scrap is exported to facilities that do not meet the EU standards and we are asking the [European Commission] to make such a proposal.”
He also underlined that the role of recycling steel will become even more important to Europe as EU steelmakers strive to decarbonize.
Scrap is the main raw material used to produce steel via the electric arc furnace (EAF) route. Just over 40% of EU steel is produced via EAFs with the remainder produced in the more carbon-intensive blast furnace/basic oxygen furnace (BF/BOF) configuration.
In order to reduce its carbon footprint and become a more circular economy in Europe some BF/BOF steelmaking is expected to be shifted to EAF production, a move that will make scrap even more important.
Retaining local ownership
The European steel industry has always talked about the importance of retaining local ownership of raw materials, but now also faces the challenge of global CO2 emission reduction efforts that would be compromised if European scrap is exported and then re-melted in countries with low green standards.
Ferrous scrap is considered “waste” under EU law. The EC has opened a review under its Green initiative regarding its waste shipping policy and the final review was supposed to be published a few weeks ago. It is now understood that the deadline for the publication has been postponed to the end of Q2. By then it will clearer whether the Eurofer scrap proposal will be taken into consideration or not.
“Eurofer does not want a ban on exports but just wants the country of origin of the scrap shipped to meet the same criteria of countries of destination, as in the Basilea Convention,” a Eurofer scrap analyst added in a call with Platts on April 22. The Basilea convention is an international treaty that was designed to reduce the movements of hazardous waste between nations.
Europe 27 (UK not included) exported last year to third countries 17.5 million metric tons of ferrous scrap, while it imported from third countries only 4.1 million mt. The top five destinations of the EU 27 scrap exports were Turkey, Egypt, Pakistan, India and the US.
Temporary export bans
A number of countries implemented temporary export bans on ferrous scrap in 2020, amid concerns about raw material supply for domestic steel producers during the first months of the coronavirus pandemic, when scrap collection slowed amid lockdown restrictions globally.
The UAE introduced such a measure in May 2020 for a four-month period and in September extended the ban for another four months. However, the policy was largely considered ineffective, with trade into the key export market of India continuing relatively undisturbed, sources said. Elsewhere, South Africa banned scrap metal exports for a two-month period July 3.
Russia implemented an increase in the export duty on ferrous scrap on Jan. 30, 2021, to a minimum of Eur45/mt, up from a minimum of Eur5/mt, for the period of six months. Regulators hiked the duty to keep domestic scrap prices in check, as prices in the benchmark Turkish import market had risen sharply to a nearly 10-year high of $482.50/mt CFR Turkey for premium HMS 1/2 (80:20) material in early January. Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) April 22 at $429.50/mt CFR, up $2/mt on day.
European scrap prices have remained at sharply elevated levels since the beginning of 2021, with Platts’ monthly North Europe shredded scrap assessment reaching an all-time high of Eur372.50/mt delivered to the mill in January. The index has softened over subsequent months but has remained at historically elevated levels, with the April monthly assessment at Eur360/mt delivered.
— Annalisa Villa, Viral Shah