Speaking at the second session of the 19th SteelOrbis Steel Conference “New Horizons in Steel Markets” held today, December 3, in Istanbul, Martin Rajnoha and Serkan Somer, principals in the management consulting company Arthur D. Little, underlined the importance of scrap availability in terms of the green transition and gave their suggestions for the Turkish steel market in relation to this issue.
In his speech, Serkan Somer reminded participants that the steel industry, which generates seven percent of carbon emissions globally, has to cut emissions by 25 percent in the next six years to meet the Paris Agreement. While the agreement requires the cutting of emissions by 25 percent by 2030 and by 90 percent by 2050, the current situation indicates that emissions continue to rise year on year. Mr. Somer said that there are regulatory, commercial and social changes that need to be implemented for the green transition of the steel industry. In this context, large-scale companies that succeed in achieving these changes will have a competitive advantage, while several major steel players in Europe have already committed to investing €31 billion in green steel, which will mean additional scrap consumption of up to 15-19 million mt. Accordingly, this consumption will reduce the availability of high-grade scrap and increase scrap prices in the coming period.
On the other hand, Martin Rajnoha mentioned the advantages of scrap use in steel production. Stating that capturing and storing emissions and using hydrogen as a reduction agent are the two main ways to ensure green production, he stated that the DRI process is already 65 percent more expensive than scrap usage.
Both of the Arthur D. Little officials stated that the steel industry must implement internal processes to secure scrap produced during steel production and make long-term agreements with its own customers to ensure a continuous supply of clean scrap. According to Somer, it is difficult for the Turkish steel industry to supply scrap from the domestic market in the current conditions. So, similar to major steel producers in the global market, Turkish mills should invest in scrap recyclers in alternative destinations such as Africa and the Middle East.