Global steel scrap usage up further in 2017 on EAF rise: report

Posted on 31 May 2018

Source: Platts

Global usage of ferrous scrap for steelmaking rose last year on higher crude steel output, the Bureau of International Recycling said in a report published at its annual convention in Barcelona this week.

Crude steel production grew 3.9% on the year in 2017 to 1.69 billion mt, mainly due to higher production through scrap-intensive electric arc furnaces.

While production of crude steel through basic oxygen furnaces (BOF) rose 2.3% to 1.228 billion mt, output from EAFs grew 8% to 445 million mt, the report said.

This raised the share of crude output from EAFs globally to 26.3% last year, up 0.8% from 2016, with the overall proportion of steel scrap used for crude steel production at 35.5% in 2017.

Steel scrap consumption in the EU grew 5.6% on the year to 93.35 million, while US consumption grew 3.7% to 58.8 million mt.

Demand for steel scrap in Korea grew 11.3% to 30.3 million mt and Japan was reported up 6.6% on the year to 35.8 million mt. But the biggest surge was in Turkey, up 17% to 30.3 million mt.

The report shows Turkish steel scrap usage rose 4.4 million mt, just ahead of the 4.3 million mt rise in crude steel production, suggesting a further replacement of other steel raw materials with scrap.

In Japan and Korea, such a replacement of steel scrap with other raw materials has been even more significant, with Japan's usage of steel scrap up 2.23 million mt despite a slight reduction in crude steel output with a wider trend for more ecological and sustainable steelmaking.

China remains the biggest consumer of scrap at 147.9 million mt. But comparative figures are difficult as steel scrap usage in induction furnaces was not reported prior to 2016, the BIR report said.

Steel scrap usage in China is expected to grow significantly in coming years as the country adopts more stringent environmental policies and targets to produce "greener" steel that would increase EAF crude steel production from the current share of 6.5% of Chinese steel production. A recent analysis by S&P Global Platts shows such a replacement is already taking place, with more EAFs in China having come online during the winter, raising the expected consumption of steel scrap.

With climbing consumption of steel scrap, prices rose roughly 28% on average in 2017, reaching levels for imports into Turkey around $360/mt CFR for HMS 1/2 (80:20) in August last year, while prices for iron ore -- another steel-making raw material -- rose less quickly, Platts data shows.

As increased consumption of ferrous scrap in key regions were not fully met by higher domestic supply, imports in those countries rose accordingly.

The world's largest scrap importer, Turkey, purchased around 21 million mt in 2017 from abroad, up 18.4% on the year, covering around three quarters of the demand growth in the country with the other quarter from local supply.

Scrap imports by South Korea -- the second biggest global scrap importer -- rose 5.6% from 2016 to 6.2 million mt last year.

As in 2016, EU countries and the US remained the main exporting regions of steel scrap in the world, with Turkey the main recipient.

EU exports grew 12.9% to 20 million mt, while US exports of ferrous scrap were 15 million mt, up 17.1% on the year, according BIR data. 

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