Trade tensions escalate due to scrap metal shortages

With the rise in global electric arc furnace steel production globally, demand for scrap, especially from China, will continue to grow and could lead to its own trade disputes as countries seek to gain the upper hand in exports, according to industry executives.

The EU announced the restriction of the export of scrap metal due to the intention to reduce the carbon footprint. In the US, with $ 16 billion in new capacity investments, almost all of which are EAF-based, this will put even more pressure on US scrap prices, especially premium grades.

In addition, Russia has adopted an increase in the export duty on steel scrap to 70 euros per tonne or 5%, whichever is higher, compared to 45 euros per tonne, or 5%, at present. With these Russian restrictions, Turkey will be forced to look for scrap metal elsewhere.

While the supply of scrap in the US will continue to shrink due to rising demand, Dempsey said one benefit is that the expanding mills are largely vertically integrated and have their own raw materials businesses. In addition, the abundant supply of natural gas in the US provides EAF steelmakers with other alternatives, he added.