EuRIC seeks gradualism in application of any restrictions on EU scrap exports

Thursday, 18 November 2021 14:25:27 (GMT+3)   |   Brescia
       

*The following interview was held before the announcement of the EU’s proposal regarding waste shipment regulation.

The European Commission is this week expected to announce its proposal to revise Regulation No. 1013/2006, i.e., its waste shipment regulation, which is likely to affect the ferrous and non-ferrous scrap trade. Although no documents have been circulated so far, European recyclers fear that the draft will include a general restriction on exports of raw materials from recycling (RMR), including scrap. SteelOrbis discussed the issue with Cinzia Vezzosi, president of EuRIC, the European Federation of Recycling Companies, that, together with over 300 European recycling associations and companies, has been asking for guarantees to protect free, fair and sustainable RMR trade.

"So far, only rumors have circulated. What is certain, though, is that the changes to the current regulation will affect all waste and obviously all supply chains, not just that of scrap. We expect a different behaviour towards non-OECD countries, as they have a different economic and industrial framework than ours and therefore do not meet certain requirements. It seems that the Commission is aiming to limit exports to those countries where the conditions that are respected at our plants are not respected," Vezzosi stated. Recyclers are concerned not only about the contents of the draft, but also about the timing for the application of its measures. "We ask for gradualness. This is because it is evident that currently there is no industrial capacity at European level capable of absorbing all the scrap that we currently export. Companies are updating themselves, but it will take years for Europe to reach a situation of larger use of internally-generated scrap. The green transition of steel companies might take a decade, and it is clear that in this time frame we recycling companies cannot lower the quality of our work and service exclusively to meet the need to keep the material within the European borders. Indeed, our skill in collecting it, sorting it, preparing it and making it a raw material represents a good circular economy that should be preserved as much as possible," Vezzosi explained.

The president of EuRIC recalled that at the European level only a little over 40 percent of steel production derives from EAFs and that in Italy, although the situation is the opposite (about 87% of production derives from EAFs and local scrap demand is higher than supply), "Italian steel mills have absolutely no difficulty in finding the material they need in the European market. In 2020, they bought 5 million tons of scrap from EU countries." Considering the trade with non-EU countries, "Italy in the same year imported 310,000 tons of scrap, while it exported 450,000 tons. Therefore, we are in a situation of substantial balance. Steel mills usually buy from third countries to keep domestic prices down when they need to. We do not complain about this, but if they want to be free to buy where they prefer, the same kind of freedom should be granted to us on the export side."

Recycling companies fear that a limitation on scrap exports would result in an excessive increase in supply in the European market, which in turn would cause a drop in the price of the material. Vezzosi underlined that "every recycling company bears important costs and therefore, in order to survive, it needs the price of the selected scrap, which we have called RMR, to have a relevant economic value. If the material became too abundant, it would lose value, our warehouses would be devalued, and there would be an interruption in the circular economy, as collecting scrap may become unprofitable."

The companies represented by EuRIC want to be an integral part of the challenge of implementing the European Green Deal, Vezzosi said, adding, however, that they are asking for conditions that allow them to "remain on their feet in a healthy way. We have no difficulty in making our material available to the steel industry, but we have to imagine different ways to do so, such as increasing the use of scrap at steel mills, including integrated ones. This should lead to an increase in demand and therefore allow us to remain healthy in the event of export restrictions. But it is clear that this transition cannot take place overnight. Gradualness is always needed." Vezzosi also said that thinks that all interests must be balanced, as this would benefit the entire economic system, given that "the suffering of one category would affect everyone".

In conclusion, the EuRIC president said she hopes that all stakeholders will sit down to discuss and find gradual solutions that satisfy everyone. "If only EU producers are safeguarded and everyone else were to collapse, what would we get? We don't want to arrive at apocalyptic scenarios. We believe that the steel industry is strategic, but that burdens and honours must be distributed equally."


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