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The Changes and Implications of Major Countries' Scrap Steel Markets in Achieving Carbon Neutrality Goals

2023.07.31 Yoon-Hee Lee

Yoon-Hee Lee

#Hashtag

#carbon neutral #EAF #net zero #steel #steel scrap
Steel companies are driving a transition in production processes through the utilization of scrap steel to achieve carbon neutrality goals. While the self-sufficiency rate of scrap steel in the South Korean steel industry is increasing, it still relies on imports of over 4 million tons. Anticipating changes in the global scrap steel market, particularly from major consuming country China and major exporting countries Japan and the United States, South Korea needs to swiftly establish a stable procurement base for scrap steel, focusing on stabilizing imports and enhancing domestic processing capabilities.
Table of Contents

  • 1. Global Scrap Steel Consumption Structure

  • 2. Outlook on Global Scrap Steel Generation

  • 3. Changes in Scrap Steel Market in Major Countries: ① China

  • 4. Changes in Scrap Steel Market in Major Countries: ② Japan

  • 5. Changes in Scrap Steel Market in Major Countries: ③ United States

  • 6. Summary and Implications

Executive Summary

  • In the process of transitioning production processes for achieving carbon neutrality in the steel industry, an increase in the use of blast furnace scrap and expansion of investments in electric furnaces are emerging as the most realistic alternatives and early-stage initiatives. Consequently, securing scrap steel reliably has become a crucial challenge in the global steel industry.

  • Global scrap steel consumption is expected to continue increasing, with a rise in demand for high-quality scrap, but the supply of scrap is anticipated to become increasingly dependent on end-of-life scrap, as self-generated or processed scrap diminishes.

    • Scrap steel supply is projected to increase from 676 million tons in 2021 to 778 million tons in 2030 and 964 million tons in 2050, with end-of-life scrap accounting for 70-75% of the total.

  • China, the largest consumer of scrap steel, boasts a domestic self-sufficiency rate of 99.8% and accumulates over 10 billion tons of steel reserves, indicating ample domestic procurement capability even with a projected increase in scrap steel demand. However, importation of high-quality scrap appears inevitable.

    • Presently, China does not export scrap steel, but if surplus arises due to limited electric furnace conversion and increased scrap recovery rates, it might seek to export.

  • Japan's scrap steel demand is expected to rise in line with its carbon neutrality strategy. By 2030, a balance is foreseen between demand and supply domestically, with a shift towards domestic supply likely resulting in decreased scrap steel exports.

    • Japan also faces challenges related to the shortage of high-quality scrap and the upgrading of low-grade scrap.

  • The United States, maintaining a stable steel reserve, could see an increase in scrap steel exports in the future if investments in electric furnaces continue and scrap recovery rates support such growth.

    • Exportation to the Asia region, particularly the Mountain Pacific area, is expected to continue.

  • South Korea, consuming over 28.3 million tons of scrap steel in 2021, relies on imports for over 4 million tons. Strengthening supply capacity for stable procurement of scrap steel, the most realistic alternative for achieving carbon neutrality goals, is urgently needed.

    • Anticipated changes in scrap steel procurement conditions due to electric furnace investments in import source countries like Japan and the United States necessitate efforts to stabilize imports and enhance domestic processing capabilities.

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