No global scrap shortage looming as mills transition to EAF, CMC says

There is no global scrap shortage looming, the top executive at Commercial Metals Co (CMC) told a packed room at Fastmarkets’ Scrap & Steel North America 2023 event in Dallas, adding that while there is no decarbonization blueprint for the steel industry to follow, the shift to electric-arc furnace (EAF) steel production is key to meeting “green” targets

As for speculation that a scrap shortage is looming while the world transitions away from blast furnaces and toward EAFs, Barbara Smith, CMC’s chairman of the board, president and chief executive officer, said no such shortfall is expected, calling such predictions “rumors” and “scare tactics.”

“Our research indicates that the scrap reservoir will be more than sufficient to meet this critical and long-term need. There will be enough scrap to go around as the world continues to transition to EAF production,” she said on Wednesday January 18.

Smith added that the US currently exports 20 million tons per year, which illustrates that there is plenty of material.

Growing economies such as China and India will help the scrap reservoir to “expand exponentially” as they become more industrialized, she added.

The long-term trend is not just for more scrap but also cleaner scrap, Smith pointed out.

The demand for high-quality scrap has never been greater, and the need for innovating new ways to recover value from scrap material has never been more compelling

“The demand for high-quality scrap has never been greater, and the need for innovating new ways to recover value from scrap material has never been more compelling,” she said.

A significant effort is being made to pull residuals out of scrap during processing, and more needs to be done.

“We must innovate these and other technologies to ensure we are equipped for that future,” she said, noting that, compared with historical norms, more scrap is already being recovered in the recycling process due to new technology.

And when more advanced technology becomes available, there is also a future for byproducts of metal recycling that are now landfilled. For instance, shredder fluff (automotive shredder residue) will eventually become converted to fuel and skip the landfill altogether, Smith predicted.

Going green

The race is on to achieve net-zero greenhouse gas emissions by 2050, but — as Fastmarkets has previously reported — there is no global standard in place to support the transition to low-emission steel.

“There’s not a clear set of solutions and technology currently available to solve the net-zero challenge, but from my perspective we do know that scrap is a big part of the solution,” Smith said.

Still, the shift to electric-arc furnaces is critical, Smith argued.

“The investments companies make just [to] sustain traditional steelmaking would be better used to shift their production to electric-arc furnaces — and do it quickly, because the difference between their procedures and processes and their short-term impact and long-term economic and environmental viability is significant,” Smith said.

The importance of companies considering their environmental impact and environmental stewardship cannot be overlooked, Smith said.

EAF steelmaking produces 75% less carbon dioxide than traditional steelmaking, she noted, adding that the US is already way ahead of the curve in terms of low-emissions steelmaking.

EAFs account for 75% of US steel capacity, versus 46% in the European Union and 40% in Canada, putting the US “well ahead of the global pack,” she said. Roughly 10% of steel in China is produced via EAF, but that figure is expected to hit 20% by 2030, Smith said.

Steelmaking in the US is less carbon-intensive than in other countries and regions, including Turkey (by 50%), China (by 65%) and Europe (by 37%), she said.

Globally, blast furnace steelmaking accounts for 75% of production.

One challenge for the transition to EAF capacity is that it requires a smaller workforce than blast furnace steelmaking.

This is “among the biggest challenges… As an industry, we can’t leave them behind as we leave behind traditional steelmaking,” she said.

Still, there is potential for job creation related to the need for more workers to recycle more scrap, and this will help to meet that void as traditional steelmaking comes offline, Smith said.

To keep up with the green steel discussion, visit our green steel spotlight page. Learn more.

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