The steel industry in South Africa has been in turmoil over the last few years since the government put in place a ban on scrap metal exports and also used the now suspended PPS system. Much debate has taken place with opposing parties all giving their reasons why the ban should be lifted and the other side wanting to extend the ban.
Comments such as: “After more than a year it (the ban) is threatening to collapse the whole industry,” and: “These interventions will divert significant volumes of scrap metal to the local market, leading to lower prices, which will likely disincentivise theft and vandalism of infrastructure,” have been common place.
The Steel and Engineering Industries Federation of Southern Africa (Seifsa) also encouraged Minister of Trade, Industry and Competition Ebrahim Patel not to take a narrow and short-term view on the decision on the way forward regarding the scrap metal regulations.
Now a recent report from the ING commodities division has concluded that with decarbonisation efforts around the world ramping up, ferrous scrap is rapidly becoming a highly sought-after commodity, especially as countries begin to implement new export restrictions to meet their key net-zero goals.
The analysis by the London-based ING Commodities Strategist Ewa Manthey reviews the current cross-border ferrous scrap trading landscape familiar to those who trade the secondary commodity globally, citing statistics gathered by the Brussels-based Bureau of International Recycling (BIR).
“The European Union is the largest exporter of scrap in the world and the main buyer was Turkey, which purchased more than 10.5 million metric tons of imported ferrous scrap in 2022,” said Manthey.
A global map of 2022 scrap-fed electric arc furnace (EAF) steelmaking market share shows Turkey with a 71.5 per cent EAF share, well ahead of the EU’s current 43.7 per cent market share and a 19.1 per cent EAF share in the United Kingdom.
The growing number of trade restrictions on scrap is a good indicator of its increasing value in the global decarbonisation drive. More countries are imposing export bans to protect this raw material as EAF production is slowly becoming the leading technology in steel production.
Whether it is good strategy or instead a protectionism request by local steel producers, ING sees ferrous scrap export restrictions as growing and poised to grow yet more.
“Exports of ferrous scrap are most actively restricted in Africa, MENA (Middle East and North Africa) countries and Asia, according to data from the Organisation for Economic Co-operation and Development (OECD),” said Manthey.
She adds most of these countries tend to be scrap-deficit nations, with historically low steel consumption and insufficient scrap resources, and singles out export duties as the most common restriction but also notes that outright bans “are used almost as often as duties.”
The EU, like the US, for decades has been a scrap-surplus location. Nonetheless, the European Parliament approved a proposal to revise the Waste Shipment Regulation (WSR) earlier this year.
Now that this report has emerged, we wonder what Seifsa and all the other naysayers will have to say. You can read the story further on in the magazine. The world map indicating which countries have restrictions in place gives an interesting perspective.
