A new report by Belgium-based non-governmental organization NGO Shipbreaking, Belgium-based think tank Sandbag and the University of Tuscia has highlighted how Europe’s transition toward low-carbon steel depends heavily on the availability of high-quality ferrous scrap. While the EU already recycles large volumes of steel, contamination levels, regulatory constraints and market dynamics limit access to the clean scrap required for premium flat steel production. One of the most significant untapped opportunities is ship recycling, which could supply 10-15 million mt of high-purity scrap annually, but only if systemic barriers are addressed.
Scrap quality determines Europe’s steel decarbonisation path
According to the study, steel is the EU’s most recycled material and ferrous scrap is already central to emission-reduction strategies. Yet scrap purity is increasingly constrained by tramp-element contamination, especially copper, tin and chromium.
European scrap is categorized into four quality levels, with only the top grades suitable for high-end flat steel used in automotive or other demanding applications. Lower grades are largely limited to long products and structural steels. The growing presence of coated products, electric motors, wiring harnesses and household appliances in the waste stream is accelerating copper contamination, a major technical obstacle because copper cannot be removed during melting and causes hot-shortness in casting.
The distribution of scrap flows across Europe and internationally was also analyzed. It was noted that a large part of the scrap circulating within Europe is composed of intermediate or lower-quality categories, while exports are dominated by lower-grade obsolete scrap. Imports tend to consist of cleaner or more specialized scrap types. This imbalance affects the availability of high-purity scrap within Europe, especially as the continent’s flat steel producers consider shifting toward electric arc furnace (EAF) routes to reduce emissions.
EAF, DRI and HBI: technical solutions to meet purity requirements
Basic oxygen furnace (BOF) routes are limited in how much scrap they can process, whereas EAFs can use large scrap volumes when supplemented with low-contamination iron units such as direct reduced iron (DRI) and hot briquetted iron (HBI). This combination makes it possible to achieve the purity levels required for flat steel even when using a high scrap input.
Supplementing high-quality scrap with these additional iron units can reduce reliance on primary iron production and enable more rapid decarbonisation, particularly in the production of premium flat products. The availability of imported HBI may be an effective way to support this transition while Europe expands its own low-carbon DRI capacity.
Ship recycling: a major but underutilized source of clean scrap
Shipbreaking represents one of Europe’s largest untapped sources of high-purity steel scrap. Technical studies show that 70-95 percent of a ship’s weight can be recovered as usable steel.
The report’s fleet analysis indicates:
- The EU/European Free Trade Association merchant fleet includes 11,902 vessels older than 10 years.
- Ship retirements will spike in the mid-2030s, surpassing 700 demolitions per year.
- Potential steel recovery: 10-15 million mt/year, equal to up to 20 percent of Europe’s annual scrap consumption.
However, access remains limited because many EU-owned vessels are dismantled outside the Organization for Economic Co-operation and Development (OECD), typically in yards lacking selective dismantling practices. These facilities produce mixed, contaminated scrap streams, preventing the recovery of cleaner, segregated grades critical for flat steel production.
It was emphasized that stronger enforcement of waste shipment rules could redirect a portion of this fleet to compliant European recycling yards, significantly boosting clean-scrap availability.
Regulatory inconsistencies undermine scrap quality and circularity
A major challenge identified is the EU’s classification of ferrous scrap as “waste” rather than as a strategic industrial input. This categorization results in fragmentation across member states in areas such as traceability systems, quality control and dismantling standards for vehicles, machinery and ships
The lack of standardized protocols leads to contamination issues and reduces the volume of scrap suitable for high-value applications.
Electricity prices as a decarbonisation barrier
EAF production relies heavily on competitively priced electricity. Power costs vary widely across the EU due to grid-fee structures, renewable energy availability and differing national policies.
In regions with high electricity prices, the economic case for scrap-based EAF steelmaking becomes significantly weaker. Aligning energy policy with decarbonisation objectives is therefore essential to support the steel industry’s transition.
Future scenarios
The report ultimately identified the following as ways to increase the supply of high-quality scrap:
- Waste-shipment rules are strictly enforced, redirecting more EU-owned ships to compliant recyclers.
- Domestic recycling capacity is expanded and modernized.
- Member states adopt harmonized dismantling standards for ships, vehicles and machinery.
- Traceability systems are improved to better match scrap grades with the appropriate steelmaking route.
- Energy policies are coordinated to support a competitive and decarbonized EAF sector.
Together, these measures could enable high-purity scrap to play a larger role in Europe’s steel decarbonisation strategy, particularly for flat steel production.
