The word in s: Scrap image recycling

Scrap changes status, image, price and even name.

“Rag and bone” men with carts no longer shout around houses for “old iron, old iron?” – at least not in the UK, and scrap dealers are no longer ‘scrappers’ but increasingly upscale ‘recyclers’.

Technological advances and electronic sorting may still be essential in some settings. But the essential place of scrap – or secondary metal – as an energy-efficient decarbonization tool is recognized in the effort to establish a circular economy, or as the jargon puts it, “to close the loop”.

Scrap is the key “new gold” for producing green steel, said Fernando Espada, president of European steel distributors’ association Eurometal, at a recent association meeting in Barcelona.

At the latest Bureau of International Recycling event, also in Barcelona, ​​BIR President Tom Bird proclaimed “a golden age of recycling”, alluding, one might think, to the important golden age of Spanish literature.

The great transformation is at least partly linguistic.

The “s” word is out of fashion and may eventually die out. With the help of the decarbonization team, information campaigns on what scrap and secondary metal are, and their energy saving attributes, are still needed.

The metals community needs to make the public aware that steel produced from scrap metal in electric arc furnaces can produce only a third of the CO2 emissions of steel made from iron ore and coal in a blast furnace. And that the production of secondary or recycled aluminum – now used for a wide variety of finished products – requires only 5% of the energy and creates only 5% of the emissions of primary aluminum production using bauxite and of alumina, according to sources such as the World Economic Forum.

References to scrap metal as “waste” seem bound to be short-lived, given the current emphasis on saving energy.

China has stopped using the term “solid waste” and is going one step further: replacing “scrap metal” with “recycled steel”.

The new name has already taken off in parts of the United States, where the “s” word and the “w” word are out of fashion. “Resource” is another new option.

“We never dare to use the word ‘scrap’. It’s ‘recycled metal’ in California,” said John Morgan, president of the US recycling organization Institute of Scrap Recycling, or ISRI.

Europe still has to catch up with the new lexicon. The European Commission’s ‘Waste Shipment Regulation’ – designed to reduce the cost of scrap metal for EU steel mills and ensure sufficient regional supply for decarbonisation by limiting exports – is equally inglorious in its sentiment. only in his name.

Import/export set value of borders

The amount of trade restrictions appearing on scrap metal is an indicator of its growing value. Various countries have announced export restrictions, realizing the importance of keeping more recycled raw materials at home for their steel and metal production.

China, the largest producer and consumer of recycled steel, has strictly limited ferrous and non-ferrous scrap imports from 2018 to 2020, importing only materials of high enough quality to be easily remelted without harmful elements. or unwanted. This decision set global standards.

In line with the adoption of the name “recycled metal”, China now has a new set of national standards that detail for the first time the sources of scrap metal, its dimensions as well as the limits of hazardous material content. , a clear definition moving away from previous standards under which traders shipped all kinds of waste into the country.

China lifted some blanket bans on scrap metal imports in 2021 as its blue sky policies forced it to use more secondary materials to produce metals with lower energy consumption and carbon emissions. But strict customs quality controls remain in place.

The main metal and steel producer, Russia, has applied quotas or taxes on scrap exports since the beginning of 2021. It will extend restrictions on scrap exports outside the Eurasian Economic Union until the end of 2022, to provide domestic steel mills with enough scrap in the face of sanctions, even though recycling association Ruslom predicts a 43% drop in domestic demand for scrap this year amid severe economic decline caused by the invasion of Ukraine by the country.

Japan prefers to retain scrap, especially high-grade scrap, for domestic use due to decarbonization pressure, while South Korean steel mills are increasing their use of domestic scrap to 70% to reduce import dependency and for a greener steel industry.

South Africa, Iran, the United Kingdom and the European Union are other countries or regions that have recently imposed or held serious discussions on export restrictions – particularly on scrap metal.

The latter is widely expected to introduce legislation restricting scrap metal exports via amendments to its sadly named “Waste Shipment Regulation” on which the EC is due to vote in October. This is expected to be opposed by the European and international scrap communities: it could distort global markets and reduce price incentives to produce scrap within the EU where there would be more local availability.

The EU-27 was the world’s largest exporter of steel scrap last year, increasing outbound shipments by 11.5% year on year to 19.46 million tonnes, according to BIR statistics. The main buyer was Turkey with 11.3 million tonnes, up 11.3%.

The demand for recycled steel is increasing worldwide. Statistics from the trade departments and the German steel association WV Stahl show that the world’s foreign trade in steel scrap – including internal EU-27 trade – reached 109.6 million tonnes l year, i.e. 9.7% more than in 2020.

Limiting scrap metal flows by the EU would deprive developing countries of the raw materials they need for decarbonisation, which would go against the green cause, says Michael Lion, Chairman of the BIR’s International Trade Council within the EU and elsewhere in terms of trade and sustainability.

“Export controls would be the most tragic development in the industry in the past 40 years,” Lion says.

New price levels

Complex supply and demand dynamics drive price volatility: S&P Global Commodity Insights Platts’ valuation of Turkish imports of premium 1/2 (80:20) heavy smelter scrap has fluctuated between 665 $/mt and $320/mt in the four months following the start of the Ukrainian war. The range is still well above the March 2020 $207/mt, indicating that a new price threshold has been reached following the COVID-19 market crash, as decarbonization accelerates.

The volatility has sparked new interest in derivatives markets.

The London Metal Exchange’s Steel Scrap CFR Turkey contract, based on Platts’ valuation, traded at 2.6 million tonnes in January-July, compared to 2.7 million tonnes for the whole of 2021 and 2 .8 million tons in 2020.

Interest will grow further as refrigerators, cars and stoves from China’s first consumer boom in the early 2000s begin to be recycled. China aims to boost the use of recycled steel with a five-year goal of reaching 320 million tonnes of annual scrap metal usage by 2025, up from 233 million tonnes consumed in 2020, reducing the dependence of its steelmakers on imported iron ore and helping the country meet peak carbon emissions targets by 2030.

The Singapore Stock Exchange aims to launch a recycled steel derivatives contract in China within two to three years. Larger amounts of scrap will then enter the market, increasing visibility. For the contract to be successful, China must be a net exporter of scrap metal, said Will Chin, commodity manager at SGX.

The name of the contract? “Scrap metal has changed its image in China. Call it what you want, it’s important to get the market to recognize that it’s the most recycled material there is,” Chin said.

With reporting by Joanne Ju and Keith Tan