Since the opening of the Western world towards the Chinese and former USSR markets in the last 20 years, commodities demand has increased drastically, together with higher price volatility, stated Stefano Ferrari, chief research officer at siderweb, at the opening of the convention titled “Scrap’s centrality in the steel market”, which took place during the international fair Ecomondo 2024 held in Rimini, Italy, on November 5-8.
The scenario he described is now changing with the surge of new phenomena such as geopolitical tensions, progressive market closures all over the world and technological advancements. These new factors, in fact, are having a strong impact on consumers’ needs and on demand and offer trends, not only in terms of raw materials but also in terms of human capital.
The steel and scrap markets are also influenced by these trends. In the next 15 years, scrap demand will grow, according to the consensus that emerged during the convention. The reasons for this forecast are, on the one hand, steel production growth, and, on the other hand, the gradual shift to EAF-based steel production in China and Europe.
Boston Consulting Group has predicted that scrap demand will rise by 3.3 percent from 2021 to 2030, and the EU could go from a 15 million mt surplus to a 10 million mt surplus. In the light of this, scrap collection will become more and more difficult in the next few years, and recycling of old scrap in particular will become crucial.
Amid growing tensions, players in the industry - especially steelmakers and scrap traders - will have to adapt their scrap collection methods. The former could verticalize the process of scrap collection and selection, while the latter could enhance their selection and purification processes.
On the issue of scrap quality, Cinzia Vezzosi, president of Assofermet (the association representing Italian distributors of scrap, raw materials, and steel products), confirmed the upward trend for the availability of old scrap, which, however, needs a longer transformation period before it can be used for the production of new steel. In spite of this, the material plays a key role in the decarbonization process, even if its quality is lower than that of so-called ‘new scrap’. In fact, many countries such as Turkey or the US, are already using old scrap in production processes.
The new purification technologies for old scrap will likely be supported by AI, said Vezzosi, which had also been the central theme of Assofermet’s Fall Convention 2024 held in Milan on September 26. “AI cannot be forgotten any more. It’s a tool, and, as such - if it’s used properly - it can become a great opportunity for European companies, which, however, are still far behind China, the US and the Middle East in terms of AI usage,” Vezzosi stated during her speech at Rimini.
